[PUBLIC LAW 589 - 79TH CONGRESS] [CHAPTER 728 - 2D SESSION] [H.R. 6371] AN ACT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP57-00384R001200020007-2
• Release Decision: RIFPUB
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• Document Page Count: 10
• Document Creation Date: December 9, 2016
• Document Release Date: August 6, 2000
• Sequence Number: 7
• Content Type: REGULATION

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[PUB.LIC LAW 589-79TH CONGRESS]
.[CHAPTER 728-2n SESSION]
[H. R. 6371]
AN ACT
To amend certain provisions of the National Service Life Insurance Act of 1940,
as amended, and for other purposes.
Be it enacted by 'the Senate and House of Representatives Of the
United States of America in Congress assembled, That (a) section
601 (f) of the National Service Life Insurance- Act of 1940 is hereby
amended effective as of October 8, 1940, to read as follows :
"(f) The terms `parent', `father', and `mother' include a father,
mother, father through adoption, mother through 'adoption, persons
*mw who have stood in loco parentis to a member of the military or naval
forces at any time prior to entry into active service for a period of -
not less than one year, and a stepparent, if designated as beneficiary
by the insured."
(b) The amendment made by subsection (a) of this section to
section 601 (f) of the National Service Life Insurance Act of 1940, as
amended, shall not be construed (1) to require the discontinuance,
for any period prior to the first day of the third calendar month fol-
lowing receipt of claim by or on behalf of a person brought within
the permitted class of beneficiaries by such amendment, of any insur-
ance award made prior to the date of enactment of this Act, or (2) to
require duplicate payments of benefits in any case.
SEC. 2. Section 602 (c) of the National Service Life Insurance
Act of 1940 is hereby amended effective as of October 8, 1940, to read
as follows :
"(c) (1) Any person upon reenlistment or reentrance into or
reemployment in active service and before discharge or resignation
therefrom and any person in the active service upon discharge to
accept a commission and- before resignation therefrom, shall be
granted such insurance upon application therefor in writing (made
within one hundred and twenty days following such reenlistment,
reentrance, reemployment, or discharge to accept a commission), and
upon payment of premiums and evidence satisfactory to the Adminis-
trator showing such person to be in good health at the time of such
application.
(2) Subject to the provisions of the first proviso under the cap-
tion `Transfer of Appropriations' contained in title II of the First
Supplemental Surplus Appropriation Rescission, Act, 1946 (Public
Law 301, Seventy-ninth Congress), any individual who has had
active service between October 8, 1940, and September 2, 1945, both
dates inclusive, shall be granted such insurance upon application
therefor in writing and upon payment or authorization for deduction
of premiums and evidence satisfactory to the Administrator showing
such person to be in good health at the time of such application. In
any case in which application for life or disability insurance or for
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[Pvs. Lew 569.1
reinstatement of such insurance is made prior to January 1, 1950,
the Administrator shall not deny, for the purposes of this or any
other section of this part, that the applicant is in good health because
of any disability or disabilities, less than total in degree, resulting
from or aggravated by such active service. In any case in which
insurance is granted by reason of the immediately preceding sentence,
the premiums paid on such insurance shall be credited directly to the
national service life-insurance appropriation and any payments of
benefits on such insurance shall be made directly from such appro-
priation. The maximum amount of insurance for which an indi-
vidual is otherwise eligible to apply under this paragraph shall be
decreased by the amount of any insurance which he may have
surrendered for its cash-surrender value.
"(3) Any person in the active service between October 8, 1940, and
September 2, 1945, both dates inclusive, who, while in such service,
made application in writing for insurance while performing full mili-
tary or naval duty, which application was denied solely on account of
his condition of health, and the applicant thereafter shall have in-
curred a total and permanent disability in line of duty or died in line
of duty, shall be deemed to have applied for and to have been granted
such insurance as of the date of such application and such insurance
shall be deemed to be or to have been continued in force to the date of
death of such person. In any case in which insurance deemed to have
been granted under this paragraph matures or has matured, there
shall be deducted from the proceeds of such insurance the premiums
payable thereon from the date of application to the date of incurrence
of total and permanent disability in line of duty or to the elate of
death, if permanent and total disability was not incurred. Any pay-
ments on such insurance shall be made directly from the national service
life insurance appropriation. The amount of insurance deemed to
have been granted under this paragraph, when added to any other
insurance in force under the War Risk Insurance Act, as amended,
the World War Veterans' Act, 1924, as amended, or this part, shall
not in the aggregate exceed $10,000."
Src. 3. Section 602 (f) of the National Service Life Insurance Act
of 1940 is hereby amended to read as follows :
"(f) Such insurance shall be issued upon the five year level premium
term plan, with the privilege of conversion as of the date when any
premium becomes or has become due, or exchange as of the date of the
original policy, upon payment of the difference in reserve, at any time
after such policy has been in effect for one year and within the term
period, to policies of insurance upon the following plans: Ordinary
life, twenty-payment life, thirty-payment life, twenty-year endow-
ment, endowment at age sixty, and endowment at age sixty-five : Pro-
vided, That conversion to an endowment plan may not be made while
the insured is totally disabled. All level premium term policies shall
cease and terminate at the expiration of the term period. Provisions
for cash, loan, paid-up, and extended values, dividends from gains and
savings refund of unearned premiums, and such other provisions
as may be found to be reasonable and practicable may be provided for
in the policy of insurance or from time to time by regulations promul-
gated by the Administrator."
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[PvB. LAW 690.)
Sue. 4. Section 602 (g) of the National Service Life Insurance Act
of 1940, as amended, is hereby amended by substituting a colon for the
period at the end thereof and adding the following: "Provided, That
the provisions of this subsection as to the restricted permitted class of
beneficiaries shall not apply to any national service life-insurance
policy maturing on or after the date of enactment of the Insurance
Act of 1946."
Sc., 5. (a) So much of subsection (h) of section 602 of the National
Service Life Insurance Act of 1940, as amended, as precedes paragraph
(3 thereof is hereby amended to read as follows :
`(h) Insurance maturing prior to the date of enactment of the
Insurance Act of 1946 shall be payable in the following manner:
"(1) If the beneficiary to whom payment is first made is
under thirty years of age at the time of maturity, in two hun-
dred and forty equal monthly installments : Provided, That the
Administrator, under regulations to be promulgated by, him,
may include a provision in the insurance contract authorizing
the insured or the beneficiary to elect in lieu of this mode of
payment and prior to the commencement of payments, a refund
life income in monthly installments payable for such period
certain as may be required in order that the sum of the install-
ments certain, including a last installment of such reduced
amount as may be necessary, shall equal the face value of the
contract, less any indebtedness, with such payments continuing
throughout the lifetime of such beneficiary: Provided further,
That in any case in which insurance benefit payments were com-
menced prior to September 30, 1944, the beneficiary, whether or
not the first beneficiary, shall have the right to elect to receive
a refund life income, as provided in such optional settlement,
payable in monthly installments adjusted as of the date of the
maturity' of such policy, credit being allowed for payments
previously made on the insurance. The right of election with
respect to cases in which benefit payments were commenced prior
to September 30, 1944, shall terminate two years after the date
of enactment of the Insurance Act of 1946. The Administrator
is directed to send, within one year after the date of enactment
of the Insurance Act of 1946, to each beneficiary of insurance
on which payments were commenced prior to September 30,
1944, a notice explaining the right of election. Any such notice
shall be sent by registered mail addressed to the last known
address of the addressee.
"(2) If the beneficiary to whom payment is first made is thirty
or more years of ige at the time of maturity, in equal monthly
installments for one hundred and twenty months certain, with
such payments continuing during the remaining lifetime of such
beneficiary : Provided, That the Administrator, under regulations
to be promulgated by him, may include a provision in the insur-
ance contract authorizing the insured or the beneficiary to elect,
in lieu of this mode of payment and prior to the commencement
of payments, a refund life income in monthly installments payable
for such period certain as may be required in order that the sum
of the installments certain, including a last installment of such
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reduced amount as may be necessary: shall equal the face value of
the contract, less any indebtedness, with such payments continuing
throughout the lifetime of such beneficiary : Provided further,.
That such optional settlement shall not be available in any case
in which such settlement wogld result in payments of installments
over a shorter period than one hundred and twenty months : Pro-
vided further, That in any case in which insurance benefit pay-
ments were commenced prior to September 30,1944, the beneficiary,.
whether or not, the first beneficiary, shall have the right to elect
to receive a refund life income, as provided in such optional
settlement, payable in monthly installments adjusted as of the
date of the maturity of such policy, credit being allowed for
payments previously made on the insurance. The right of election
with respect to cases in which benefit payments were commenced
prior to September 30, 1944, shall terminate two years after the
date of enactment of the?Insurance Act of 1946. The Adminis-
trator is directed to send, within one year after the date of enact-
ment of the Insurance Act of 1946, to each beneficiary of insurance
on which payments were commenced prior to September 30, 1944,.
a notice explaining the right of election. Any such notice shall.
be sent by registered mail addressed to the last known address
of the addressee."
(b) Subsections (i); (j), and (k) of section 602 of the National
Service Life Insurance Act of 1940, as amended, are amended by
adding at the end of each of such subsections the following: "The.
provisions of this subsection shall not be applicable to insurance matur-
ing on or after the date of enactment of the Insurance Act of 1946."'
SEc. 6. Section 602 (m) of the National Service Life Insurance
Act of 1940 is hereby amended, effective as of October 8, 1940, to read
as follows :
"(m) (1) The Administrator shall, by regulations, prescribe the
time and method of payment of the premiums on such insurance, but
payments of premiums in advance shall not be required for periods
of more than one month each, and may at the election of the insured
be deducted from his active-service pay or be otherwise made : Pro-
vided, That an amount equal to the first premium due under a national
service life-insurance policy may be advanced from current appropria-
tions for active service pay to any person in the active service in the.
Army, Navy, Marine Corps, or Coast Guard, which. amount shall con-
stitute a lien upon any service or other pay accruing to the person for
whom such advance was made and shall be collected therefrom if not
otherwise paid: Provided further, That no disbursing or certifying
officer shall be responsible for any loss incurred by reason of the
advance herein authorized : And provided further, That any amount
so advanced in excess of available service or other pay shall constitute
a lien on the policy within the provisions of section 5, Public Law
Numbered 866, Seventy-sixth Congress, approved October 1.7,1940.
"(2) In any case in which the insured provided for the payment
of premiums on his insurance by authorizing in writing the deduction
of premiums from his service pay, such insurance shall be deemed
not to have lapsed so long as he remained in active service prior to
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the date of enactment of the Insurance Act of 1946, notwithstanding
the fact that deduction of premiums was discontinued because-
A the insured was discharged to accept a commission; or
"(B) the insured was absent without leave; if restored to active
duty ? or
"(6) the insured was sentenced by court martial, if he was
restored to active duty, required to engage in combat, or killed
in combat.
In any case in which the insured under any insurance continued in
force by the provisions of this paragraph died while such insurance
was so continued in force, any premiums due on such, insurance shall
be deducted from the proceeds of the insurance. Any premiums
deducted or collected on any such insurance shall be credited to the
national service life insurance appropriation and any payments of
benefits on any such insurance shall be made directly from such appro-
priation."
SEc. 7. Section 602 (n) of the National Service Life Insurance Act
of 1940, as amended, is amended to read as follows :
"(n) Upon application by the insured and under such regulations
as the Administrator may promulgate, payment of premiums on
such insurance, may be waived during the continuous total disability
of the insured, which continues or has continued for six or more
consecutive months, if such disability commenced (1) subsequent to
the date of his application for insurance, (2) while the insurance
was in force under premium-paying conditions, and (3) prior to the
insured's sixtieth birthday: Provided, That upon application made
within one year after the date of enactment of the Insurance Act
of 1946' the Administrator shall grant waiver of any premium becom-
ing due not more than five years prior to the date. of enactment of
such Act which may be waived under the foregoing provisions of
this subsection : Provided further, That the Administrator, upon any
application made subsequent to one year after the date of enactment
of the Insurance Act of 1946, shall not grant waiver of any premium
becoming due more than one year prior to the receipt in the Veter-
ans' Administration of application for the same, except as herein-
after provided. Any premiums paid for months during which
waiver is effective shall be refunded. The Administrator shall pro-
vide by regulations for examination or reexamination of an insured
claiming benefits under this subsection, and may deny benefits for
failure to cooperate. In the event that it is found that an insured
is no longer totally disabled, the waiver of premiums shall cease as
of the date of such finding and the policy of insurance may .be con-
tinued by payment of premiums as provided in said policy : Provided
further, That in any case in which the Administrator finds that the
insured's failure to make timely application for waiver of premiums
or his failure to submit satisfactory evidence of the existence or con-
tinuance of total disability was due to circumstances beyond his
control, the Administrator may grant waiver or continuance . of
waiver of premiums : And provided further, That in the event of
death of the insured without filing application for waiver, the bene-
ficiary, within one year after the death of the insured or the enact-
ment of this amendment, whichever be the later, or, if the beneficiary
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be insane or a minor, within one year after removal of such legal
disability, may file application for waiver with evidence of the
irt`sured's right to waiver under this section. Premium rates shall
be calculated without charge for the cost of the waiver of premiums.
herein provided and no deduction from benefits otherwise payable
shall be made on account thereof."
SEc. 8. Section 602 (p) of the National Service Life Insurance-
Act of 1940, as amended, is amended to read as follows:
"("y Such insurance may be made effective, as specified in the
application, not later than the first day of the calendar month fol-
lowing the date of application therefor, but the United States shall
not be liable thereunder for death occurring prior to such effective
date. Notwithstanding the foregoing provisions of this subsection,
in any case in which prior to the date of enactment of the Insurance
Act of 1946 application was made for insurance to become effective
subsequent to the date of application and the applicant died in line
of duty prior to the date such insurance was to become effective,
the United States shall be liable to the same extent as it would have
been if such insurance had been in force on the date of death of the
applicant. Any payments of benefits made as a result of the enact-
ment of the preceding sentence shall be made directly from the
national service life insurance appropriation."
SEc. 9. Section 602 of the National Service Life Insurance Act
of 1940, as amended, is hereby amended by adding at the end thereof
the following new subsections :
"(t) Insurance maturing on or subsequent to the date of enact-
ment of the Insurance Act of 1946 shall be payable in accordance
with the following optional modes of settlement :
" 1) In one sum.
"(2) In equal monthly installments of from thirty-six to two
hundred and forty in number, in multiples of twelve.
"(3) In equal monthly installments for one hundred and
twenty months certain with such payments continuing during
the remaining lifetime of the first beneficiary.
"(4) As a refund life income in monthly installments payable
for such period certain as may be required in order that the
sum of the installments certain, including a last installment of
such reduced amount as may be necessary, shall equal the face
value of the contract; less any indebtedness, with such payments
continuing throughout the lifetime of the first beneficiary :
Provided, That such optional settlement shall not be available
in any case in which such settlement would result in payments
of installments over a shorter period than one hundred and
twenty months.
Unless the insured elects some other mode of settlement, the insur-
ance shall be payable to the designated beneficiary or beneficiaries
in thirty-six equal monthly installments. The first beneficiary may
elect to receive payment under any option which provides for pay-
ment over a longer period of time than the option elected by the
insured, or if no option be designated by the insured, in excess of
thirty-six months. If the option selected requires payment to any
one beneficiary of monthly installments of less than $10, the amount
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payable to such beneficiary shall be paid in such maximum number
of monthly installments as are a multiple of twelve as will provide
a monthly installment of not less than $10. If the present value
of the amount payable at the time any person initially becomes
entitled to payment thereof is not sufficient to pay at least twelve
monthly installments of not less than $10 each, such amount shall
be payable in one sum. Options (3) and (4).-shall not be available
if any firm, corporation, legal entity (including the estate of the
insured), or trustee is beneficiary, or in any case in which an endow-
ment contract matures by reason of the completion of the endowment
period.
"(u) With respect to insurance maturing on or subsequent to the
date of enactment of the Insurance Act of 1946, in any case in which
the beneficiary is entitled to a lump-sum settlement but elects some
other mode of settlement and dies before receiving all the benefits
due and payable under such mode of settlement, the present value
of the remaining unpaid amount shall be payable to the estate of
the beneficiary; and in any case,in which no beneficiary is designated
by the insured, or the designated beneficiary does not survive the
insured, or a, designated beneficiary not entitled to choose a lump-sum
settlement survives the insured, and dies before receiving all the
benefits due and payable, the commuted value of the insurance
remaining unpaid shall be paid in one sum to the estate of the
insured : Provided, That in no event shall there be any payment
to the estate of the insured or of the beneficiary of any sums unless
it is shown that any sums paid will not escheat.
"(v) (1) The Administrator is hereby authorized and directed, upon
application by the insured and proof of good health satisfactory to
the Administrator and payment of such extra premium as the Admin-
istrator shall prescribe, to include in any national service life-insurance
policy on the life of the insured provisions whereby an insured who
is shown to have become totally disabled for a period of six consecutive
months or more commencing after the date of such application and
before attaining the age of sixty and while the payment of any premium
is not in default, shall be paid monthly disability benefits from the
first day of the seventh consecutive month of and during the continu-
ance of such total disability of $5 for each $1,000 of such insurance in
effect when such benefits become payable : Provided That in any case
in which the applicant while not totally disabled and prior to January
--me' 1, 1950, furnishes proof satisfactory to the Administrator that his
inability to furnish proof of good health is the result of an actually
service-incurred injury or disability, the requirement of proof of good
health shall be waived, but in such case the extra premium for disability
coverage paid by any such insured shall be credited directly to the
national service life-insurance appropriation and any disability pay-
ments made to such insured shall be made directly from the national
service life-insurance appropriation: Provided further, That policies
containing additional provisions for the payment of disability benefits
may be separately classified for the purpose of dividend distribution
from otherwise similar policies not containing such benefit.
"(2) Whenever benefits under the total-disability provision author-
ized by section 602 (v) (1) hereof become, or have become, payable
because of total disability of the insured as a result of disease or injury
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traceable to the extra hazard of the military or naval service, as such
hazard may be determined by the Administrator of Veterans' Affairs)
the liability shall be borne by the United States, and the Administrator
is hereby authorized and directed to transfer from the national service
life-insurance appropriation to the national service life-insurance fund
from time to time any amounts which become or have become, payable
to the insured on account of such total disability, and to transfer from
the national service life-insurance fund to the national service life-
insurance appropriation the amount of the reserve held on account of
the total-disability benefit. When a person receiving such payments
on account of total disability recovers from such disability, and is
then entitled to continue protection under the total-disability provi-
sion, the Administrator is hereby authorized and directed to transfer
to the national service life-insurance fund a sum sufficient to set up the
then required reserve on such total-disability benefit.
"(w) Subject to the provisions of section 612 of the National Service
Life Insurance Act of 1940, as amended, all contracts or policies of
insurance heretofore or hereafter issued, reinstated, or converted shall
be incontestable from the date of issue, reinstatement, or conversion
except for fraud, nonpayment of premium, or on the ground that the
applicant was not a member of the military or naval forces of the
United States.
"(x) When an optional mode of settlement of insurance hereto-
fore or hereafter matured is available to a beneficiary who is a minor
or incompetent, such option may be exercised by his fiduciary, person
qualified under Public Law 373, Seventy-second Congress, February
25, 1933 (47 Stat. 907; 25 U. S. C. 14), or person recognized by the
Administrator as having custody of the person or the -estate of such
beneficiary, and the obligation of the United States under the insur-
ance contract shall be fully satisfied by payment of benefits in accord-
ance with the mode of settlement so selected.
"(y) (1) Any level premium term insurance which has lapsed may
be reinstated within the term upon written application, payment of
two monthly premiums, and evidence satisfactory to the Adminis-
trator that the applicant, subject to the provisions of the second
sentence of section 602 (c) (2), supra, is in good health.
"(2) Any level premium term insurance which has lapsed may be
reinstated within the term upon written application, made within six
months after the date of such lapse or within six months after the'
date of enactment of the Insurance Act of 1946, whichever is the
later, and payment of two monthly premiums, provided such applicant
is in as good health on the date of application and tender of premiums
as he was on the due date of the premium in default and furnishes
evidence thereof satisfactory to the Administrator : Provided, That
when the insured makes inquiry prior to the expiration of the grace
period disclosing a clear intent to continue. insurance protection, an
additional reasonable period not exceeding sixty days may be granted
for payment of premiums due, but the premiums in any such case must
be paid during the lifetime of the insured."
SEC. 10. Section 602 of the National Service Life Insurance Act of
1940, as amended, is hereby amended effective as of October 8, 1940,
by adding at the end thereof the following new subsection
"(z) Without prejudice to any other cause of disability,, the perrmna-
nent loss of the use of both feet, of both hands, or of both eyes, or of
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one foot and one hand, or of one foot and one eye, or of one hand and
one eye, or the total loss of hearing of both ears, or the organic loss of
speech, shall be deemed total disability for insurance purposes."
SEC. 11. Section 607 (b) of the National Service Life Insurance Act
of 1940, as amended, is hereby amended effective as of October 8, 1940,
by inserting after the first sentence thereof the following : "Where life
contingencies are involved in the calculation of the value of such
benefits of insurance heretofore or hereafter matured, the calculation
of such liability or liabilities shall be based upon such mortality table
or tables as the Administrator may prescribe with interest at the rate
of 3 per centum per annum."
SEC. 12. Section 608 of the National Service Life Insurance Act of
1940, as amended, is hereby amended effective as of October 8r 1940, to
read as follows:
"SEC. 608. The Administrator, subject to the general direction of the
President, shall administer, execute, and enforce the provisions of this
Act, shall have power to make such rules and regulations, not incon-
sistent with the provisions of this Act, as are necessary or appropriate
,,. to carry out its purposes, and shall decide all questions arising here-
under. All officers and employees of the Veterans' Administration
shall perform such duties in connection with the administration of this
Act as may be assigned to them by the Administrator. All official acts
performed by such officers and employees designated therefor by the
Administrator shall have the same force and effect, as though per-
formed by the Administrator. Except in the event of suit as provided
in section 617 hereof, or other appropriate court proceedings, all
decisions rendered by the Administrator under the provisions of this
Act, or regulations properly issued pursuant thereto, shall be final and
conclusive on all questions of law or fact, and no other official of the
United States, except a judge or judges of United States courts, shall
have jurisdiction to review any such decisions."
SEC. 13. Section 616 of the National Service Life Insurance
Act of 1940, as amended, is hereby amended by substituting a colon
for the period at the end thereof and adding the following : "Pro-
vided, That assignments of all or any part of the beneficiary's inter-
est may be made by a designated beneficiary to a widow, widower,
child, father, mother, grandfather, grandmother, brother, or sister
of the insured, when the designated contingent beneficiary, if any,
-joins the beneficiary in the assignment, and if the assignment is
delivered to the Veterans' Administration before any payments of
the insurance shall have been made to the beneficiary : Provided
further, That an interest in an annuity, when assigned, shall be
payable in equal monthly installments in such multiple of twelve as
most nearly equals the number of installments certain under such
a ser
.,y, or in two hundred and forty installments, whichever is the.
lessser.'
SEC. 14. Section 617 of the National Service Life Insurance Act
of 1940, as amended, is hereby amended effective as of October 8,
1940, to read as follows:
"SEC. 617. In the event of disagreement as to any claim arising
under this Act, suit may be brought in the same manner and subject
to the same conditions and limitations as are applicable to the
United States Government life (converted) insurance under the pro-
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[Pus. Lew 669.) U
visions of sections 19 ands. 500 of the World War Veterans' Act,
1924, as amended."
Sic. 15. The World War Veterans' Act, 1924, as amended, is
hereby amended by adding thereto a new section 313, to read as
follows :
"SEC. 313. Whenever benefits under the total disability provision
authorized by section 311 become or have become, payable because
of total disability of the insured as a result of disease or injury
traceable to the extra hazard of the military or naval service, as
such hazard may be determined by the Administrator of Veterans'
Affairs= the liability shall be borne by the United States, and the
Administrator is hereby authorized and directed to transfer from
the military and naval insurance appropriation to the United States
Government life insurance fund from time to time any amounts
which become or have become payable to the insured on account of
such total disability, and to transfer from the United States Govern-
ment life insurance fund to the military and naval insurance appro-
priation the amount of the reserve held on account of the total
disability benefit. - When a person receiving such payments on
account of total disability recovers from such disability", and is then
entitled to continued protection under the total disability provision,
the Administrator is hereby authorized and directed to transfer to
the United States Government life insurance fund a sum sufficient
to set up the then required reserve on such total disability benefit."
'SEC. 16. This Act may be cited as the "Insurance Act of 1946".
Approved August 1, 1946.
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