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credited to the conversion credit balance at or about the end of
each certificate year, and, to the extent that the interest on
the funds reflected in the balance actually exceeds the credited
amount, the excess is returned to the policyholder as an
experience refund. The experience refund is credited to the
policyholder as a reduction of the next premium due on the
policy.
V. The Neonatology Plan
Mr. Cohen introduced Dr. Mall to the SC VEBA, and she
decided on her own, without seeking the advice of an independent
knowledgeable professional, to cause Neonatology to invest
therein. Dr. Mall knew that term life insurance was
substantially more expensive to buy through the SC VEBA than
through other plans offered to her by the American Medical
Association and the American Academy of Pediatrics. She believed
that the SC VEBA was the best investment for Neonatology because
it offered her the proffered tax benefits and accumulated value.
Dr. Mall received correspondence on the SC VEBA but generally
chose not to read it before investing in the SC VEBA.
Neonatology established the Neonatology Plan under the SC
VEBA on January 31, 1991, effective January 1, 1991, and the
Malls were the only persons covered by that plan during the
relevant years. Mr. Mall was not a paid employee of Neonatology,
and he was not eligible to join the plan. Dr. Mall and PES, the
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