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with commercial interest does not recharacterize the deposited
funds as the cost of term insurance simply because Neonatology
ultimately decided to abandon the funds. Although it is true
that Neonatology and the insurancemen represented in form that
Neonatology paid the entire $9,906 to Inter-American as a premium
on term life insurance, the fact of the matter is that neither
Neonatology nor Inter-American actually considered the excess
premium to fund the cost of term life insurance. The substance
of the purported premium payment outweighs its form, and, after
closely scrutinizing the facts and circumstances of this case,
including especially the interrelationship between the two
policies underlying the C-group product and the expectations and
understandings of the parties to the contracts underlying that
product, we are left without any doubt that the amount credited
to the conversion account balance was neither charged nor paid as
the cost of current life insurance protection. The parties to
those contracts have always expected and understood that the
conversion credit balance would be returned to the insured in the
future by way of no-cost policy loans.
We also recognize that the conversion credit balance would
not be paid in addition to the underlying policy’s face value
when the insured died, and, if the insured had borrowed from the
balance, that the death benefit would be reduced by the amount of
any outstanding loan. In the case of Dr. Sobo, for example, his
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