§1904 Plans of Insurance

Summary

Lets the government offer life insurance in seven 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. A level premium term policy can be switched or converted into any of the permanent plans while it is in force and while the term lasts, if the owner pays the difference in reserve. A conversion to an endowment cannot be done while the insured is totally disabled. Under rules the Secretary sets, participating or nonparticipating policies can be converted to a "modified life" plan. The new policy keeps the same basic terms except: premiums and all cash, loan, paid-up, and extended values use the 1958 Commissioners Standard Ordinary mortality table with 3% interest; and at the end of the day before the insured’s 65th birthday the policy’s face amount or extended term amount is automatically cut in half without lowering the premium. If the modified policy is in force by payment or by waiver of premiums on the day before the insured’s 65th birthday, the owner can apply and pay before that birthday to get ordinary National Service Life Insurance starting on the 65th birthday, at least $500, in $250 steps, but not more than half the modified policy’s face amount then in force. If premiums are being waived for total disability on the day before the 65th birthday, the maximum amount is granted automatically and premiums stay waived during the continuous total disability. After June 30, 1972, the same rules can apply but the automatic half-reduction and the option to convert to ordinary life can occur at age 70 instead of 65. The Secretary may also, within one year from the effective date of that change and under reasonable terms, allow an exchange without proof of good health for the greater of the amount then in force or the amount that was in force on the day before the insured’s 65th birthday.