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contributions back. The premiums paid for the C-group term
policy exceeded by a wide margin the cost of term life insurance.
We recognize that the conversion credit balance in a C-group
term policy would be forfeited completely were the policy to
lapse and not be converted. Such was the case, for example, when
Neonatology let Dr. Mall’s Inter-American C-group term policy
lapse on March 15, 1992;29 in that case, Dr. Mall forfeited the
conversion credit balance of $8,585.88. Petitioners focus on the
possibility and actual occurrence of such a forfeiture and
conclude therefrom that the premiums are all attributable to
current life insurance protection. We disagree with this
conclusion. The mere fact that a C-group term policyholder may
forfeit the conversion credit balance does not mean, as
petitioners would have it, that the balance was charged or paid
as the cost of term life insurance. The current-year insurance
purchased from Inter-American on the life of Dr. Mall cost only
$1,689.85 for the certificate year then ended, and the fact that
Neonatology choose to deposit with Inter-American an additional
$8,216.05 ($9,906 premium less $1,689.85 cost of insurance)
expecting that Dr. Mall would eventually receive that deposit
29 Other C-group term policies which lapsed during the
Neonatology and Lakewood subject years without conversion were
the other two Inter-American C-group term policies; i.e., the
ones owned by Drs. Hirshkowitz and Desai. Although petitioners
do not explain why these policies were allowed to lapse without
conversion, we note that the lapse of these policies occurred
right after Inter-American’s forced liquidation.
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