§1904 Plans of Insurance

Summary

Insurance can be sold on several plans, including five-year level premium term, ordinary life, 20-payment life, 30-payment life, 20-year endowment, endowment at age 60, and endowment at age 65. Level term policies can be changed into one of the permanent plans while they are active and still in the term, if the owner pays the difference in reserve. Participating and nonparticipating policies may be changed under rules the Secretary sets into a "modified life" plan. Modified life keeps the same basic terms but uses the 1958 Commissioners Standard Ordinary Basic Table of Mortality and interest at 3% per year for premiums and values. For modified life policies, the face amount (or extended term amount) is automatically cut in half at the end of the day before the insured’s 65th birthday. For nonparticipating cases, term insurance under section 621 of the National Service Life Insurance Act of 1940 is treated as if issued under section 1923(b), and people eligible under section 1922(a) or section 1925 may receive modified life on the same terms. If a modified life policy is in force by payment or waiver of premiums the day before the insured turns 65, the owner can apply in writing and pay before that birthday to get ordinary National Service Life Insurance without a medical exam. That ordinary policy must be at least $500, in $250 steps, and no more than half the face amount of the modified policy in force the day before the birthday. It becomes effective on the insured’s 65th birthday. Premiums and values for that ordinary policy follow the same mortality and interest rules as the modified policy. If the insured is totally disabled the day before turning 65 and premiums are being waived under section 1912 (or the insured is entitled to such a waiver), the maximum allowed ordinary insurance is granted and premiums stay waived during the disability. After June 30, 1972, the same rules can apply but the automatic half-reduction and the ordinary-policy option occur at the day before the insured’s 70th birthday instead of the 65th. Within one year from the effective date of this subsection, the Secretary may allow an exchange without proof of good health for an amount equal to the insurance then in force or that was in force the day before the insured’s 65th birthday, whichever is greater, if the applicant files in writing and pays the required amounts.