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Volume 5 - Opinions of Counsel SBEA No. 41

Opinions of Counsel index

Veterans’ exemption (eligible funds) (National Service Life Insurance - conversion of policy) - Real Property Tax Law, § 458:

The “difference in reserve” refunded as a result of converting National Service Life Insurance from an endowment policy to a straight life policy constitutes eligible funds for purposes of the veterans’ exemption (Real Property Tax Law, §458).

Our opinion has been requested as to whether the “difference in reserve” refunded as a result of converting National Service Life Insurance from an endowment policy to a straight life policy constitutes “eligible funds” for purposes of the veterans’ exemption from real property taxation (Real Property Tax Law, §458).

Included in the definition of eligible funds are the proceeds of insurance, or dividends or refunds on such insurance from the United States Government. Pursuant to section 704 of Title 38 of the United States Code, veterans may obtain National Service Life Insurance in a number of different forms. Included are endowment policies and ordinary life policies. In our opinion, the conversion of an endowment policy to an ordinary life policy is merely a substitution of one form of insurance for another without any change in its nature as insurance.

Accordingly, it is our opinion that a cash refund of the difference in reserve existing due to the difference between types of N.S.L.I, policies upon policy conversion constitutes the proceeds of insurance granted by the United States Government within the meaning of section 458, and therefore is eligible funds for purposes of such section.

November 7, 1975

Updated: