§1904 Plans of insurance

Summary

You can get insurance on several plans: five-year level premium term, ordinary life, twenty-payment life, thirty-payment life, twenty-year endowment, endowment at age 60, and endowment at age 65. Level premium term policies can be changed into any of the permanent plans while the policy is active and still in the term, by paying any extra reserve needed. You cannot convert a policy to an endowment if the insured is totally disabled. The Secretary can write rules allowing participating or nonparticipating policies to be converted into a “modified life” plan. Modified life policies keep the same basic terms as the old policy, but premiums and cash, loan, paid-up, and extended values use the 1958 Commissioners Standard Ordinary mortality tables and 3% interest. At the end of the day before the insured’s 65th birthday the face amount (or extended term amount) of a modified life policy is automatically cut in half, with no drop in premium. People who qualify under other parts of the law may get modified life policies on the same terms. If a modified life policy is in force by payment or by waiver of premiums on the day before the insured’s 65th birthday, the insured can apply and pay for an ordinary life policy without a medical exam. That new ordinary life must be at least $500, in $250 steps, and not more than half the face amount of the modified policy on the day before the 65th birthday. The ordinary life takes effect on the 65th birthday and uses the same mortality and interest rules as the modified policy for premiums, values, and annuity settlements. If the insured is totally disabled and premiums are being waived on the day before the 65th birthday, the maximum amount available is granted automatically and premiums stay waived during continuous total disability. After June 30, 1972, the same rules can apply but with the automatic half reduction and the conversion opportunity moved to the day before the 70th birthday. The Secretary may also allow, within one year of that change, exchanges without proof of good health up to the larger of the insurance then in force or that in force on the day before the insured’s 65th birthday.