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[Dollars in thousands]
June 30, June 30, June 30, June 30,
Financing. Operations are financed from premiums and other receipts. Additional funds are derived from the appropriation, Veterans insurance and indemnities, instead of direct appropriations to this fund. It is estimated that the payment will be $2.7 million in 1965 and $3.2 million in 1966.
Operating results and financial condition.-Because premium and other receipts continue to be insufficient to cover operations, the deficit is expected to continue to increase with capital impairment reaching an estimated $37.9 million by June 30, 1966.
The capital of the fund consists of $4.5 million-$3.5 million appropriated directly in 1952, 1956-58 and $1 million transferred from Readjustment benefits appropriation
5. Policy loans made..
6. Policy liens established..
Other revenue (optional settle
21.98 Unobligated balance available, start of year (obligations in excess of availa
24.98 Unobligated balance available end of year (obligations in excess of availa
New obligational authority.
Deficit, start of the year..
Payment from "Veterans insurance and in
Administrative budget accounts, pay
Revenue, Expense and Retained Earnings (in thousands of dollars)
1966 1965 estimate estimate
Financial Condition (in thousands of dollars)
Accounts receivable, net.
SOLDIERS' AND SAILORS' CIVIL RELIEF
For payment of claims as authorized by article IV of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (50 U.S.C. App. 540-548), $25,000, to remain available until expended.
Program and Financing (in thousands of dollars)
1965 1966 estimate estimate
The fund finances claims arising from the guarantees of premiums due on commercial life insurance policies held by servicemen while they are in service and for 2 years after discharge (72 Stat. 487). The Government guarantees the repayment of any indebtedness not liquidated by the insured himself. Any payment by the Government on cases approved subsequent to October 6, 1942, creates a debt owed the Government by the insured. Administrative expenses are paid from the appropriation, General operating expenses.
Budget program-Insurance program.-Claims paid on guaranteed premiums are made to commercial insurance companies in cases where the servicemen failed to make premium premium payments which were guaranteed by the Government.
The activity of the fund is indicated in the following table:
Financing.-Payment of claims against this fund are financed from collections of claims receivable, revenue, and appropriations as needed. The last appropriation to this account was made in 1959 through Public Law 85-766. It is anticipated that present unobligated balances and additional income will fund this program only through 1965; therefore, an appropriation of $25 thousand will be required in 1966.
Operating results and financial condition. The payment of refund claims has created expenses substantially in excess of the small revenue of the fund, thereby increasing 5 the deficit to $1.9 million in 1964 with nominal losses continuing through 1966 with an estimated deficit of $2 million.
21.98 Unobligated balance available, start of
24.98 Unobligated balance available, end of
Total Government equity...
1965 1966 estimate estimate
1,647 9,658 -2,873 -33,665
Under existing legislation, 1965.-A supplemental request will be made to transfer surplus retained earnings from the Veterans special term insurance fund to advance initial capital to the Veterans reopened insurance fund. This fund will finance payment of claims and administrative costs on nonparticipating insurance policies issued after April 30, 1965, and prior to May 4, 1966, under the three insurance programs (1) Veterans servicedisabled standard insurance, (2) Veterans service-disabled rated insurance, and (3) Non-service-disabled rated insurance established by provisions of the National Service Life Insurance Act of 1940, as amended (38 U.S.C. 725 (b) and (c)).
Each program will be self-contained and premiums may be adjusted to insure that each is self-sustaining, as required by law. Separate accounting and actuarial records must be maintained for the three programs for the purpose of determining the actual program costs and to provide the basis for adjusting each program premium rate 7,528 independently.
Service-disabled standard insurance program. This program will finance payment of claims on policies issued to veterans with service-connected disabilities, but who are insurable according to the standards of good health established by the Administrator.
The estimated number of policies and amount of insurance in force follows (dollars in thousands):
2. Service-disabled rated insurance:
3. Non-service-disabled rated in
surance: Death claims.
4. Interest to Treasury.
5. Payment to "General operating
Net income, non-service-disabled rated insurance program....
Budget program—(a) Death claims.-Payments to beneficiaries are expected to reach $812 thousand in 1966. The mortality rate will be exceptionally high because of the short average life expectancy of the insureds. Therefore, an incontestability clause will be included in the contracts to mitigate the otherwise uncontrollable initial capital impairment in this program.
Financing. Payments are financed primarily from premium receipts and interest income from investments.
Operating results and financial condition. It is expected that premium and interest income will be sufficient to pay death and disability claims and to set up necessary
Service charge program.-Amounts collected from policyholders for administrative expenses are credited to this program. Payments are made to the appropriation, "General operating expenses," and to the General fund receipts in the Treasury for cash advances and interest thereon.
Budget program-1. Payment to "General operating expenses" appropriation. The administrative cost of issuing insurance policies, processing claims, and maintaining accounts is estimated to be $1,650 thousand in 1965, and $4 million in 1966.
2. Interest on loans payable (Treasury). The sum of $1,650 thousand is being advanced from the Veterans special term insurance fund as initial capital. This amount, with interest, must be repaid to the "General fund receipts" in the Treasury. The estimated interest payment in 1965 is $9 thousand and about $57 thousand in 1966. The principal will be repaid to the Treasury as soon as practicable.
Financing. Operations will be financed from administrative cost premiums collected from policyholders. It is estimated that amounts collected through 1966 will be insufficient to cover the administrative costs. Collections in future years will be sufficient to repay borrowings and allow the program to operate on a self-sustaining basis.