May 27, 1980 M29-1, Part VI\
Change 3

CHAPTER 6. PROCESSING UNCOLLECTIBLE AND RETURNED CHECKS

6.01 UNCOLLECTIBLE CHECKS (MAKER DECEASED)

a\. When an insured tenders a check in payment of a premium and the
check is returned as uncollectible showing Maker Deceased, the insurance
folder will be obtained. If the remittance in question was included in
the award as premium or unearned premium process as follows:

\(l\) Prepare an amended VA Form 29-368d, Report of Status for
Settlement of Death Claims, showing the present status of the account in
item 10. The information changed and the reason for change will be shown
in item 24.

\(2\) Prepare a VA Form 29-1610, Transfer Worksheet
(Interfund/Intrafund), to transfer the amount of the uncollectible item
from the premiums-cash collections account to the undistributed
insurance collections account.

\(3\) A photocopy of the original VA Form 29 -3 68d as previously
prepared will be attached to copy 3 of the amended VA Forms 29-368d and
29-1610 and sent to the Accounting activity. Copy 2 of the amended VA
Form 29-368d will be sent to the Awards Unit, Finance activity. The
original of the amended VA Form 29-368d will be filed in the insurance
folder.

b\. When the insurance lapses because the returned check paid the
premium month in which the insured died, the account can normally be
adjusted under VA Regulation 3407.3 (A) and (B). If the account is not
adjustable under these regulations and payment of premiums was timely
submitted by check, and the check was not honored because of the
insured\'s death, the following actions will be taken:

\(l\) The supervisor will review the case to determine if the return of
the uncollectible check will result in the insurance not being in force
at the time of death of the insured. The extended insurance provision
will not be used to consider the insurance in force until the statement
is received from the bank.

\(2\) A letter will be released to the bank (on which the check was
drawn) with the following questions:

\(a\) Did the insured have sufficient funds in his or her account at the
date of death to cover the check?

\(b\) Was there a lien, attachment or any condition, other than the
insured\'s death, which would have barred payment of his or her check?

c\. When the statement from the bank is received and it shows there were
sufficient funds in the insured\'s account to cover the check, prepare
an amended VA Form 29-368d in final form as follows:

\(1\) In item 10, enter the premium due date following the date of
death. Place an asterisk adjacent to this entry.

\(2\) In item 16C (and D if applicable), enter the amount to be deducted
from settlement to pay premiums through the date of death. Place an
asterisk adjacent to this entry.

\(3\) In item 24, Remarks, enter the notation: \*See attached bank
statement. Amount in item 16C required to pay premiums through date of
death.

d\. If there were insufficient funds to cover the insured\'s check, or
any condition, other than death, which would have prevented payment,
take the following actions:

\(l\) Prepare VA Form 29-368d in final form showing lapse of the
insurance.

\(2\) In item 24, Remarks, enter the following notation: Check for \$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ returned W/O Pmt. because of insured\'s
death. bee attached bank statement.

e\. If the VA Form 29-368d has not been released, the following actions
will be taken:

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May 27, 1980

M29-1, Part VI

Change 3

\(l\) The debit entry will be posted to the RPO, including the reason
for return.

\(2\) The uncollectible check will be placed in a plain envelope clearly
marked to indicate its contents and the reason for which the check was
returned and filed in the insurance folder.

f If the uncollectible check (maker deceased) is received after the
award has been paid and the premium is needed, prepare a supplemental VA
Form 29-368d to establish an accounts receivable. The amount of premium
due will be shown in item l6C (and D, if required) with appropriate
remarks in item 24. Copies 2 and 3 will be sent to the Accounting
Section, Finance activity. The original will be filed in the insurance
folder.

6.02 RETURNED CHECKS (PAYEE DECEASED)

a\. When checks \[(Ins. Div/Ins. Misc.)\] are returned to the VA because
of the death of the payee, a VA Form \[1409, Transmittal-Checks Retumed
to Agent Cashier,\] will be sent by the agent cashier \[to the Treasury
Regional Disbursing Office, for preparation of a TD Form 1664X, Returned
Check Notice. A copy of the VA Form 1409, together with any accompanying
correspondence will be forwarded to the Administrative Division via the
Insurance Files Section.\]

b\. \[The Administrative Division, upon receipt of VA Form 1409/TD dorm
1664X indicating death, and a notice has not previously been received,
will take action to confirm the date of death and activate BIRLS
(Beneficiary Identification and Records Locator Subsystem) to generate
inputs into the insurance master record for processing the death
claim.\]

c\. Upon receipt \[of the TD Form 1664X in the Death Claims activity,
the claims clerk will take the following action:

\(l\) Cancel the check as outlined in paragraph 6.02d.

\(2\) Prepare a supplemental VA Form 29-368d in triplicate.

\(3\) If a VA Form 29-444, Award Brief and Authorization for Payment of
Insurance, has been processed, photocopy same.

\(4\) The insurance folder with the related material will be sent to the
claims examiner (reviewer) for review.

\(5\) After review, the TD Form 1664X, origInal of the supplemental VA
Form 29-368d and the insurance folder will be sent to the Voucher Audit
activity. Copy 2 of the supplemental VA Form 29-368d and a photocopy of
the VA Form 29-444 will be sent to the Operations Section, Finance
activity and copy 3 to the Accounting Section, Finance activity.

\(6\) When a VA Form 29-444 has not been processed, request Voucher
Audit to return the case.\]

d\. \[To-cancel a returned check that was returned to the Treasury
Regional Disbursing Office, the following action will be taken\]:

\(1\) \[A stamp will be impressed on the reverse side of the TD Form
1664X.\]

\(2\) \[The stamp will appear as follows:

Check is proper for canceilation.

On-Tape Reason for Cancellation\
Off-Tape (no input)

For off-tape cancellations, indicate below the purpose for which check
was originally issued:

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May 27,1980 M29-2, Part vI\
Change3

Dividend\_\_\_\_\_\_\_ Cash Surrender RO#\_\_\_\_\_\_\_\
Year Other (Explain) XC#**\_\_\_\_\_\_\_\_\_\
** Premium Refund\
Policy Loan\
SF 1098 Number
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\
Signature of Authorizing Employee\]

\(3\) \[The stamp must fit the reverse side of the TD Form 1664X. Holes
should be punched at the bottom of the form before stamping so as not to
remove any data. All necessary information will be entered. However, the
SF 1098 number will be left blank. The TD Forms 1664X, the insurance
folder, and all supporting documents required for the cancellation will
be forwarded to the Voucher Audit acitvity, Finance activity. They will
enter the schedule number on the SF 1098 and in the appropriate block of
the stamp on the reverse side of each TD Form 1664X. The TD Form 1664X
will be filed in the insurance folder. A copy of the SF 1098 will not be
filed in the folder.\]

e\. Return of Cash Surrender Check. Whenever a check for cash surrender
is returned because of death and before the end of the premium month in
which the surrender was made effective, or as of the date of the check
for cash surrender, whichever is later, the check will be canceled and
the cash surrender invalidated. A VA Form 29-368d, XC-OFF-TAPE-ACTIVE,
for payment of the face amount of the policy, less any indebtedness,
will be prepared in triplicate. The case will be forwarded to the
Voucher Audit \[activity\] for review. Upon completion of that
activity\'s review, the case will be retumed to the Death Claims
activity for adjudication of the claim.

NOTE: If the check for cash surrender is returned after the period
specified above, the case will be forwarded to the Chief, Insurance
Program Management Division (290), VA Center, Philadelphia, for a
determination as to whether the insurance may be restored.

f\. **Return of Policy Loan Check.** When a policy loan check is
returned because of death of the insured, the loan check will be
canceled. An amended VA Form 29-368d will be prepared to reflect the
amount of the check for the policy loan, plus any mterest charged. The
amended VA Form 29-368d will be sent to Voucher Audit for review. The
case will be returned to the

Death Claims activity for further action.

6.03 REMITTANCE SUBMITTED BY THIRD PARTY AFTER DEATH OF INSURED

a\. When a remittance is received after date of death of the insured,
the Miscellaneous Accounts and Services (unit\] will refund remittances
that are submitted by a third.party remitter. If the remittance is not
the exact amount of the premium, the Finance activity will be contacted
for any record of indebtedness.

b\. If there is a record of indebtedness, the Miscellaneous Accounts and
Services \[unit\] will prepare VA Form SF-1081, Voucher and Schedule of
Withdrawals and Credits, for an intrafund transfer.

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