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GUARANTEED BANK Loax PROGRAM In this alternative procedure the death notification cable would inform the next of kin or legal representative that if financing was required to dispose of the remains as desired, he or she could go to the nearest national bank or other lending institution and obtain a loan that would be guaranteed by the U.S. Government.
The loan transaction would be between the lending institution and the next of kin or legal representative, with the U.S. Government serving as guarantor for the repayment of the loan in the event the borrower defaulted within a stipulated time frame and the lender has exhausted his available legal remedies and has been unable to effect recovery of the debt. We would anticipate that the interest rate would be the going rate at the time the loan was executed. The lending institution would not be required to establish the credit-worthiness of the borrower.
Having obtained the loan, the next of kin or legal representative would transmit the funds to the Department through commercial channels and the Department in turn would authorize the consular officer to proceed with the arrangements for the disposition of the remains according to the next of kin's or legal representative's instructions. In short, the Department would handle the case as it now handles trust fund cases involving transmittal of funds abroad.
This alternative procedure would of course require a guarantee arrangement between the U.S. Government and the lending institutions that might agree to participate.
National banks or lending institutions are readily accessible to most Americans, at least during the 5 normal workdays. There would be a minimum of administrative paperwork and few additional services would be required of either the Department or its consular officers abroad. The cost to the U.S. Government would be limited to covering defaulted loans, and the Government itself would not get into the loan collecting aspect of the transaction.
Assuming that national banks and other lending institutions would agree to participate in this alternative procedure, the major shortcoming would be the difficulty or impossibility of the next of kin's or legal representative's obtaining a loan on weekends or holidays. In view of the urgency involved in death cases, this lack of availability would be a serious impediment. Also, the default rate could be high.
This guaranteed bank loan alternative would involve minimal administrative costs to the U.S. Government. Assuming that 400-500 next of kin or legal representatives might take advantage of such a loan guarantee program and that 40-50 percent of them might default (the present rate of default on repatriation loans) the total additional costs of the program to the U.S. Government could amount to as much as $500,000 to $625,000.
PRIVATE COMPANY INSURANCE POLICY
As an alternative procedure, a private insurance company, either a nonprofit organization or a standard insurance company, might market a policy covering the disposition of remains of deceased Americans abroad. The policy might be designed to cover local burial, cremation and disposal of the ashes, or preparation and shipment of the body to the United States. The Department would give the policy maximum publicity through the international travel industry. The policy might be sold at airports as are flight accident insurance policies now. This alternative has been discussed with several private insurance companies, which promised to take the proposal under advisement and come back to the Department of State with their views.
Except for the publicity provided by the Department, this procedure would entail no additional costs whatever for the U.S. Government. All financial aspects would be kept in the private sector, among the insuring firm, the policy holder and the next of kin, with the U.S. Government through the Department merely acting as conduit for transmitting information.
DISADVANTAGES Only persons who purchased a policy would be covered, thus leaving some persons uncovered, depending on marketing techniques and attractiveness of the policies.
COSTS This alternative procedure would entail no significant additional cost to the U.S. Government. No additional positions and no additional appropriated funds would be required.
COMPULSORY SURCHARGE ON PASSPORT FEE
The present charge for a passport is $10, plus an execution fee of $3 for the initial application. If an additional $3 were charged and this surcharge were placed in a special "disposition of remains account,” enough funds would be generated to defray the cost of preparing and returning the bodies of all Americans who die abroad each year and whose families wish the bodies or ashes to be returned.
Approximately 3,300,000 fee passports are issued each year so that the $3 surcharge would generate about $9,900,000 annually. As noted earlier, of the 6,584 Americans who died abroad (excluding Canada) in 1977, the bodies of 1,702 were returned for burial in the United States. The ashes of 366 were returned. Our posts estimate that an additional 173 bodies might have been returned had Government funds been available for this purpose, thus making 2,241 at most whose bodies or ashes would have been returned in 1977. To this figure should be added about 100 bodies (for calendar 1979) to account for the estimated increase in the number of American deaths abroad each year due to the greater number of Americans traveling internationally, and another 100 (necessarily a rough estimate) for Americans who die in Canada, for a total of 2,441. At an average cost of $3,000 for returning embalmed bodies, the total cost of returning all bodies of Americans
who die abroad whose next of kin desire such return would be about $7,323,000. The $9,900,000 generated by the $3 surcharge would be sufficient to cover this cost and any additional costs due to inflation, fluctuations downward in the value of the dollar in international markets, large numbers of American deaths due to disasters and any miscalculations in the variables.
The $3 passport surcharge would be a form of compulsory insurance which would be of potential benefit to the families of all Americans traveling or residing abroad.
The problems of processing promissory notes would be eliminated since no loans would be involved. The time factor problem in the next of kin's obtaining and transmitting funds would also be eliminated since the cost for returning to the United States the remains of all Americans who die abroad would be automatically covered. The consular officer would proceed with arranging for the return of the remains immediately upon receiving information on the next of kin's desires and the Department could transmit the funds to cover the expenses, drawing on the funds in the special account generated by the $3 surcharge. The death notification cable would simply instruct the next of kin or legal representative to inform the Department of his or her desire with respect to disposition of remains, noting that if the choice is for embalming and shipment of the body, the U.S. Government would defray the cost, including that for a decent but a moderately priced casket. The discrimination element in providing for the return of bodies of Americans who die abroad while not providing for the return of bodies from one State in the Union to another would be eliminated because passport holders would be paying for this coverage with the $3 surcharge. While legislation would be required to authorize the surcharge, no additional appropriations would be necessary.
There are some countries—Canada, Mexico, and some of the Caribbean islands—that do not require American tourists to have valid passports for entrance. Large numbers of Americans travel to these countries each year. The question arises, therefore, whether Americans who visit these countries without a passport, and hence would not have paid the $3 surcharge, should be covered for the disposition of their remains should they die in one of these countries.
About 15 million Americans presently hold passports with validity up to a period of 5 years. Since these people would not have paid the $ surcharge, should they be covered for return of their remains if they die abroad?
This alternatire would require the consular officer to make every effort to assure that local funeral directors' charges for preparation of the body and for the casket are reasonable, and not inflated in the knowledge that the U.S. Government is defraying the costs.
This alternative would also involve certain additional administrative costs for collecting the $3 surcharge, for transmitting it to the special account and for accounting purposes.
The passport fee has traditionally been based on the cost of providing services and of the book itself. A surcharge to provide dispositionof-remains insurance would depart from this tradition.
Last, some Americans may object to the principle of compulsory insurance of this type and some may object to paying $3 for this service.
The additional costs to the U.S. Government would be small. One additional position would be required in the Department to administer the program, but no additional positions would be required overseas.
VOLUNTARY SURCHARGE ON PASSPORT FEE
This alternative would be identical to the previous alternative except that passport applicants would be given the option of paying the $ surcharge for coverage or not paying it. The option would be clearly explained to all applicants.
By making the surcharge voluntary, any objections based on the principle of compulsion would be eliminated.
Many passport applicants may not opt for coverage since few people about to travel abroad like to contemplate the possibility of their dying while on their trip.
There would be some administrative problems in operating this alternative. Some system would have to be devised to ascertain rapidly whether or not a deceased American is covered. Possibly a simple notation "Insured" or a symbol to that effect placed in all passports issued after a certain date and whose holders paid the surcharge would be sufficient. The death notification cable would inform the next of kin and the Department whether or not the deceased was insured, based upon the consular officer's examination of the passport, and if insured, the Department would authorize the consular to expend the funds required to comply with the next-of-kin's desires for preparation and shipment of the remains.
is in the compulsory passport fee surcharge alternative, this voluntary surcharge alternative would entail only small additional costs to the U.S. Government, including one additional position in the Department.
RECOMMENDATIONS Of the various alternative procedures described in this report, those that would provide loans to families of American citizens who die abroad for the disposition of remains have least to recommend them. The time, effort, and administrative costs would not be commensurate with the services rendered, and the lack of availability at all times of
an appropriate person to witness the execution of the required promissory note would militate against meeting the deadlines set by many foreign governments for disposition of remains. A sizable appropriation would be necessary, and the default rate on loans would
probably be high.
The guaranteed bank loan alternative does not appear to be viable because of the impossibility of families of the deceased to obtain a loan on weekends or holidays. This lack of availability would be a very serious obstacle to the expeditious action required in processing disposition-of-remains cases. In this alternative, too, the default rate would probably be high with the result that the U.S. Government would have to repay considerable sums to the lending banks.
The private company insurance policy alternative has much to recommend it, but it has one limitation: Only those who purchase a policy would be covered. The voluntary passport fee surcharge suffers from this same deficiency.
The $3 compulsory passport fee surcharge would appear to be the simplest alternative. It is the least expensive, easily administered, meets the time constraints for disposition of remains, places little financial risk on the U.S. Government or American taxpayer, and could provide coverage for almost all Americans traveling or residing abroad.
It would entail, however, precedental legislation to increase the passport fee to cover expenses not related to the issuance of a passport, and would compel
citizens to buy what they may not need or desire. Consequently, the Department believes that the Government should do its utmost to encourage the private sector of the economy to provide a viable alternative.
If the insurance industry can provide attractive, inexpensive coverage in conjunction with a vigorous marketing program, there should be no need for U.S. Government financial assistance. We have had seyeral discussions with interested insurance companies in the United States as well as with a group from Lloyds of London. We hope to see some proposals in early 1979.