Vets insurance scams continue to circulate

Monday, Dec. 16, 2002 | 11:07 a.m.

Every year the Veterans Affairs Department announces the distribution of dividends to active policyholders of certain veterans life insurance policies.

And every year new life is breathed into a six-decade-old hoax linked to the announcement.

Last week the VA said it would distribute more than $568 million in dividends to 1.5 million active policyholders of veterans life insurance. Veterans activists are bracing for a landslide of inquiries.

"We get 500 to 600 calls a year on our hotline from veterans who say they got misinformation or that someone tried to scam them over the dividends issue," Ed Gobel, president of the Council of Nevada Veterans Organizations, said. "Word gets around as veterans talk about it, and it snowballs from there."

Thousands of veterans each year try to file applications for fictitious dividends because they are told the VA will send them insurance dividend checks for hundreds of dollars if they just request them.

Scam artists offer to expedite such applications for a fee.

The VA warns, however, that no applications need to be filed because legitimate recipients automatically receive their annual dividend through one of nine payment options they selected in advance.

The hoax dates back to the 1950s and often is resurrected through handbills, newspaper ads and other written sources, veterans officials said.

The dividends are available only to veterans with government life insurance policies who served between 1917 and 1956. Veterans of later eras are covered by government insurance programs that do not pay dividends, the VA said.

Current active-duty servicemen and reservists are covered by Servicemembers' Group Life Insurance, which also does not pay a dividend. Dividends also are not paid on a special life insurance program for disabled veterans or on a program offering mortgage life insurance coverage.

"To avoid being misinformed, we tell veterans to rely only on the 800 number the VA has established for insurance questions," Gobel said.

Veterans who have questions about their policy can call the VA Insurance toll-free number: (800) 669-8477.

Over the next year veterans will receive dividends on the anniversary date of their policies, with the amount varying according to age, type of insurance and length of time the policy has been in force, the VA said.

The dividends represent a return of trust fund earnings on the premiums paid by policyholders through the years. These funds reflect that veterans are living longer than predicted and that higher-than-expected yields were earned by the trust funds from investments in government securities, the VA said.

Only those veterans with policies that have been kept in force when premiums were required are eligible for the payout. The VA says some stories that have circulated inaccurately suggest that those who have not maintained insurance also are eligible for a special distribution if they contact the VA.

Here's who will be getting 2003 dividend payments and how much: