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Extended term and paid-up insurance

By Sharon Ross,2014-05-13 02:26
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Extended term and paid-up insurance

    8.14-1 ?8.14Provision for extended term insuranceother than 5-year level premium term 8.14-1

     or limited convertible 5-year level premium term policies

    Extended term and paid-up insurance

?8.14 Provision for extended term insuranceother than 5-year level premium term or

     limited convertible 5-year level premium term policies.

    (a) After the expiration of the first policy year and upon default in the payment of a premium within the grace period, if a permanent plan National Service Life Insurance policy other than the

    modified life plan has not been surrendered for cash or for paid-up insurance, the policy shall be

    extended automatically as term insurance. The extended term insurance shall be for an amount of

    the insurance equal to the face value of the policy less any indebtedness for such time from the due

    date of the premium in default as the cash value less any indebtedness and a charge for

    administrative cost for insurance issued under 38 U.S.C. 1925, will purchase when applied as a net

    single premium at the attained age of the insured. For this purpose the attained age is the age on the

    birthday anniversary nearest to the effective date of the policy plus the number of years and months

    from that date to the date the extended term insurance becomes effective. The extended term

    insurance shall not have a loan value, but shall have a cash value.

    (b) Upon default in payment of a premium within the grace period on any permanent plan of National Service Life Insurance other than the modified life plan and any plan of insurance issued

    under 38 U.S.C. 1925, if the policy has been in force by payment or waiver of premiums for not less

    than 3 months nor more than 11 months, the policy shall be extended automatically as term

    insurance. The extended term insurance shall be for an amount of insurance equal to the face value

    of the policy less any indebtedness for such time from the due date of the premium in default as the

    reserve of the policy less any indebtedness will purchase when applied as a net single premium at the

    attained age of the insured. For this purpose the attained age is the age on the birthday anniversary

    nearest to the effective date of the policy plus the number of months from that date to the date

    extended term insurance becomes effective. Extended term insurance under this provision shall not

    have a cash or loan value. This paragraph shall be effective from and after August 2, 1948.

    (c) Upon default in payment of a premium within the grace period, if a modified life plan of National Service Life Insurance has not been surrendered for cash or paid-up insurance and if the

    policy has been in force by payment or waiver of premiums for not less than 3 months, or for not less

    than 1 year for insurance issued under 38 U.S.C. 1925, the policy shall be extended automatically as

    of insurance equal to (1) the Initial Face Amount of Insurance (face amount of policy in force prior

    to insured’s 65th birthday) less any indebtedness, for lapses which occur prior to the insured’s 65th

    birthday, or (2) the Ultimate Face Amount of Insurance (face amount of policy in force on or after

    insured’s 65th birthday) less any indebtedness, for lapses which occur on or after the insured’s 65th

    birthday. The extended term insurance shall be for an amount of insurance equal to:

    (i) The initial face amount of insurance (face amount of policy in force prior to the

    insured’s 65th or 70th birthday, depending on the plan of insurance), less any indebtedness, for

    lapses which occur prior to the insured’s 65th or 70th birthday, depending on the plan of insurance,

    or

(No. 12 2/25/00)

    8.14-2 ?8.14Provision for extended term insuranceother than 5-year level premium term 8.14-2

     or limited convertible 5-year level premium term policies

     (ii) The ultimate face amount of insurance (face amount of policy in force on or after

    insured’s 65th or 70th birthday, depending on the plan of insurance) less any indebtedness, for

    lapses which occur on or after the insured’s 65th or 70th birthday, depending on the plan of

    insurance. If a modified life plan policy is on extended term insurance at the end of the day

    preceding the insured’s 65th or 70th birthday, depending on the plan of insurance, the amount of

    extended term insurance in effect under such policy shall be automatically reduced by one-half

    thereof. If the policy lapsed prior to the end of the first policy year, the extended term insurance shall

    not have a cash or loan value. If the policy lapsed after the first policy year, the extended term

    insurance shall not have a loan value, but shall have a cash value. (Authority: 38 U.S.C. 1906)

    [30 FR 3647, Mar. 19, 1965, as amended at 47 FR 11658, Mar. 18, 1982. Redesignated at

    61 FR 29290, June 10, 1996; redesignated at 65 FR 7437, Feb. 15, 2000]

    Supplement Highlights reference: 9(4)

(No. 12 2/25/00)

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