Article 4

Article 4

50 U. S. Code Appendix
War and National Defense Act
Oct 17, 1940, CH. 888, 54 STAT. 1178
Article 4 - Insurance

Sec.
540. Definitions.
541. Persons entitled to benefits of article; applications; amount of insurance protected.
542. Form of application; reports to Secretary of Veterans Affairs by insurer; policy deemed modified upon application for protection.
543. Determination of policies entitled to protection; notice to parties; lapse of policies for nonpayment of premiums, etc.
544. Rights and privileges of insured during period of protection.
545. Deduction of unpaid premiums upon settlement of policies maturing during protection.
546. Guaranty of premiums and interest by United States; settlement of amounts due upon expiration of protection; subrogation of United States; crediting debt repayments.
547. Regulations; finality of determinations.
548 to 554. Repealed or Omitted.

Sec. 540. Definitions

As used in this article (sections 540 to 548 of this Appendix) -

(a) The term "policy" shall include any contract of life insurance or policy on a life, endowment, or term plan, including any benefit in the nature of life insurance arising out of membership in any fraternal or beneficial association, which does not provide for the payment of any sum less than the face value thereof or for the payment of an additional amount as premiums if the insured engages in the military service of the United States as defined in section 101 of article I of this Act (section 511 of this Appendix) or which does not contain any limitation or restriction upon coverage relating to engagement in or pursuit of certain types of activities which a person might be required to engage in by virtue of his being in such military service, and (1) which is in force on a premium-paying basis at the time of application for benefits hereunder, and (2) which was made and a premium paid thereon not less than 180 days before the date the insured entered into the military service. The provisions of this Act (sections 501 to 593 of this Appendix) shall not be applicable to policies or contracts of life insurance issued under the War Risk Insurance Act, as amended, the World War Veterans Act, as amended, or the National Service Life Insurance Act of 1940, as amended.

(b) The term "premium" shall include the amount specified in the policy as the stipend to be paid by the insured at regular intervals during the period therein stated.

(c) The term "insured" shall include any person in the military service of the United States as defined in section 101, article I, of this Act (section 511 of this Appendix), whose life is insured under and who is the owner and holder of and has an interest in a policy as above defined.

(d) The term "insurer" shall include any firm, corporation, partnership, or association chartered or authorized to engage in the insurance business and to issue a policy as above defined by the laws of a State of the United States or the United States.

SOURCE--(Oct. 17, 1940, ch. 888, art. IV, Sec. 400, 54 Stat. 1183; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 773; July 11, 1956, ch. 570, Sec. 1, 70 Stat. 528; Mar. 18, 1991, Pub. L. 102-12, Sec. 9(11), 105 Stat. 40.)

REFERENCES IN TEXT

The War Risk Insurance Act, as amended, referred to in subsec. (a), is act Oct. 6, 1917, ch. 105, 40 Stat. 398, as amended, which enacted sections 502 and 575 of former Title 38, Pensions, Bonuses, and Veterans' Relief, amended section 241 of former Title 34, Navy, and sections 287 and 357 of former Title 38, and enacted provisions set out as notes under section 211 of this Appendix, and which was repealed by acts June 7, 1924, ch. 320, title VI, Sec. 600(5), 601(1), 43 Stat. 629, and June 17, 1957, Pub. L. 85-56, title XXII, Sec. 2202(96), 71 Stat. 166. For complete classification of this Act to the Code prior to its repeal, see Tables.

The World War Veterans' Act, as amended, referred to in subsec. (a), probably means act June 7, 1924, ch. 320, 43 Stat. 607, known as the World War Veterans' Act, 1924, which was classified principally to chapter 10 (Sec. 421 to 574) of former Title 38, Pensions, Bonuses, and Veterans' Relief, and which was repealed by Pub. L. 85-857, Sec. 14(51), Sept. 2, 1958, 72 Stat. 1271. For distribution of sections 421 to 574 of former Title 38 in Title 38, Veterans' Benefits, see Table preceding section 101 of Title 38.

The National Service Life Insurance Act of 1940, as amended, referred to in subsec. (a), is act Oct. 8, 1940, ch. 757, title VI, pt. I, Sec. 601 to 623, 54 Stat. 1008, as amended, which was classified generally to subchapter I (Sec. 801 to 824) of chapter 13 of former Title 38, Pensions, Bonuses, and Veterans' Relief, and which was repealed by Pub. L. 85-857, Sec. 14(75), Sept. 2, 1958, 72 Stat. 1272, and the provisions thereof reenacted generally as subchapter I (Sec. 701 (now 1901) et seq.) of chapter 19 of Title 38, Veterans' Benefits, by the first section of Pub. L. 85-857 which enacted Title 38. Section 5(a) of Pub. L. 85-857 provides that references in other laws to any provision of law replaced by Title 38 shall, where applicable, be deemed to refer also to the corresponding provision of Title 38. For distribution of sections 801 and 824 of former Title 38, see Tables preceding section 101 of Title 38.

AMENDMENTS

1991 - Subsec. (a). Pub. L. 102-12 substituted "not less than 180 days before" for "before the date of enactment of the Soldiers' and Sailors' Civil Relief Act Amendments of 1942 or not less than one hundred and eighty days before".

1956 - Subsec. (a). Act July 11, 1956, substituted "one hundred and eighty" for "thirty" before "days before the date the insured entered into the military service".

1942 - Act Oct. 6, 1942, amended section generally, substituting provisions defining "policy", "premium", "insured", and "insurer" for provisions defining the same terms.

EFFECTIVE DATE OF 1956 AMENDMENT

Section 2 of act July 11, 1956, provided that: "The amendment made by this Act (amending this section) shall take effect with respect to applications for benefits made after the date of enactment of this Act (July 11, 1956)".

VETERANS' LIFE INSURANCE REFUNDS

Pub. L. 85-586, Aug. 1, 1958, 72 Stat. 487, authorized Administrator of Veterans' Affairs to make refunds, without interest, which were due on account of amounts collected by United States Government by offset or otherwise from persons who made valid application for and were legally entitled to protection of article IV of the Soldiers' and Sailors' Civil Relief Act of 1940 (sections 540 to 554 of this Appendix), as it existed prior to amendments of Oct. 6, 1942, application to be made to Veterans' Administration, within two years after Aug. 1, 1958, and authorized appropriation of additional sums for such purposes.

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Sec. 541. Persons entitled to benefits of article; applications; amount of insurance protected

The benefits and privileges of this article (sections 540 to 548 of this Appendix) shall apply to any insured, when such insured, or a person designated by him, or, in case the insured is outside the continental United States (excluding Alaska and the Panama Canal Zone), a beneficiary, shall make written application for protection under this article (said sections), unless the Secretary of Veterans Affairs in passing upon such application as provided in this article (said sections) shall find that the policy is not entitled to protection hereunder. The Secretary shall give notice to the military and naval authorities of the provisions of this article (said sections), and shall include in such notice an explanation of such provisions for the information of those desiring to make application for the benefits thereof. The original of such application shall be sent by the insured to the insurer, and a copy thereof to the Secretary. The total amount of insurance on the life of one insured under policies protected by the provisions of this article (said sections) shall not exceed $10,000. If an insured makes application for protection of policies on his life totaling insurance in excess of $10,000, the Secretary is authorized to have the amount of insurance divided into two or more policies so that the protection of this article (said sections) may be extended to include policies for a total amount of insurance not to exceed $10,000, and a policy which affords the best security to the Government shall be given preference.

SOURCE-- (Oct. 17, 1940, ch. 888, art. IV, Sec. 401, 54 Stat. 1183; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 774; Mar. 18, 1991, Pub. L. 102-12, Sec. 9(12), 105 Stat. 40.)

AMENDMENTS

1991 - Pub. L. 102-12 substituted "Secretary of Veterans Affairs" for "Administrator of Veterans' Affairs", "Secretary" for "Veterans' Administration" in two places, and "Secretary" for "Administrator" in last sentence.

1942 - Act Oct. 6, 1942, amended section generally, substituting provisions relating to persons entitled to benefits, applications, and amount of insurance protected for provisions relating to applications for benefits and forms.

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Sec. 542. Form of application; reports to Secretary of Veterans Affairs by insurer; policy deemed modified upon application for protection
Any writing signed by the insured and identifying the policy and the insurer, and agreeing that his rights under the policy are subject to and modified by the provisions of this article (sections 540 to 548 of this Appendix), shall be sufficient as an application for the benefits of this article (said sections), but the Secretary of Veterans Affairs may require the insured and insurer to execute such other forms as may be deemed advisable. Upon receipt of the application of the insured the insurer shall furnish such report to the Secretary concerning the policy as shall be prescribed by regulations. The insured who has made application for protection under this article (said sections) and the insurer shall be deemed to have agreed to such modification of the policy as may be required to give this article (said sections) full force and effect with respect to such policy.

SOURCE--(Oct. 17, 1940, ch. 888, art. IV, Sec. 402, 54 Stat. 1183; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 774; Mar. 18, 1991, Pub. L. 102-12, Sec. 9(13), 105 Stat. 40.)

AMENDMENTS

1991 - Pub. L. 102-12 substituted "Secretary of Veterans Affairs" for "Veterans' Administration" in first sentence and "Secretary" for "Veterans' Administration" in second sentence.

1942 - Act Oct. 6, 1942, amended section generally, substituting provisions relating to form of application, reports to Veterans' Administration by insurer, and policy being deemed modified upon application for protection for provisions relating to persons entitled to benefits.

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Sec. 543. Determination of policies entitled to protection; notice to parties; lapse of policies for nonpayment of premiums, etc.

The Secretary of Veterans Affairs shall find whether the policy is entitled to protection under this article (sections 540 to 548 of this Appendix) and shall notify the insured and the insurer of such finding. Any policy found by the Secretary to be entitled to protection under this article (said sections) shall not, subsequent to date of application, and during the period of military service of the insured or during two years after the expiration of such service, lapse or otherwise terminate or be forfeited for the nonpayment of a premium becoming due and payable, or the nonpayment of any indebtedness or interest.

SOURCE-- (Oct. 17, 1940, ch. 888, art. IV, Sec. 403, 54 Stat. 1184; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 775; Mar. 18, 1991, Pub. L. 102-12, Sec. 9(14), 105 Stat. 40.)

AMENDMENTS

1991 - Pub. L. 102-12 substituted "Secretary of Veterans Affairs" for "Administrator of Veterans' Affairs" in first sentence and "Secretary" for "Administrator of Veterans' Affairs" in second sentence.

1942 - Act Oct. 6, 1942, amended section generally, substituting provisions relating to determining entitlement to protection, notice, and lapse of policies for nonpayment of premiums for provisions relating to list of applicants for benefits and rejection of improper applications.

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Sec. 544. Rights and privileges of insured during period of protection

No dividend or other monetary benefit under a policy shall be paid to an insured or used to purchase dividend additions while a policy is protected by the provisions of this article (sections 540 to 548 of this Appendix) except with the consent and approval of the Secretary of Veterans Affairs. If such consent is not procured, such dividends or benefits shall be added to the value of the policy to be used as a credit when final settlement is made with the insurer. No cash value, loan value, or withdrawal of dividend accumulation, or unearned premium, or other value of similar character shall be available to the insured while the policy is protected under this article (said sections) except upon approval by the Secretary of Veterans Affairs. The insured's right to change a beneficiary designation or select an optional settlement for a beneficiary shall not be affected by the provisions of this article (said sections).

SOURCE--(Oct. 17, 1940, ch. 888, art. IV, Sec. 404, 54 Stat. 1184; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 775; Mar. 18, 1991, Pub. L. 102-12, Sec. 9(15), 105 Stat. 40.)

AMENDMENTS

1991 - Pub. L. 102-12 substituted "Secretary of Veterans Affairs" for "Veterans' Administration" in two places.

1942 - Act Oct. 6, 1942, amended section generally, substituting provisions relating to rights and privileges of insured during period of protection for provisions relating to applications on policies exceeding $5,000.

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Sec. 545. Deduction of unpaid premiums upon settlement of policies maturing during protection

In the event of maturity of a policy as a death claim or otherwise before the expiration of the period of protection under the provisions of this article (sections 540 to 548 of this Appendix), the insurer in making settlement will deduct from the amount of insurance the premiums guaranteed under this article (said sections), together with interest thereon at the rate fixed in the policy for policy loans. If no rate of interest is specifically fixed in the policy, the rate shall be the rate fixed for policy loans in other policies issued by the insurer at the time the policy brought under the Act (sections 501 to 593 of this Appendix) was issued. The amount deducted by reason of the protection afforded by this article (sections 540 to 548 of this Appendix) shall be reported by the insurer to the Secretary of Veterans Affairs.

SOURCE--(Oct. 17, 1940, ch. 888, art. IV, Sec. 405, 54 Stat. 1184; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 775; Mar. 18, 1991, Pub. L. 102-12, Sec. 9(16), 105 Stat. 40.)

AMENDMENTS

1991 - Pub. L. 102-12 substituted "Secretary of Veterans Affairs" for "Administrator of Veterans' Affairs".

1942 - Act Oct. 6, 1942, amended section generally, substituting provisions relating to deduction of unpaid premiums upon settlement of policies maturing during protection for provisions relating to lapse of policies for nonpayment of premiums.

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Sec. 546. Guaranty of premiums and interest by United States; settlement of amounts due upon expiration of protection; subrogation of United States; crediting debt repayments
Payment of premiums and interest thereon at the rate specified in section 405 hereof (section 545 of this Appendix) becoming due on a policy while protected under the provisions of this article (sections 540 to 548 of this Appendix) is guaranteed by the United States, and if the amount so guaranteed is not paid to the insurer prior to the expiration of the period of insurance protection under this article (said sections), the amount then due shall be treated by the insurer as a policy loan on such policy, but if at the expiration of said period the cash surrender value is less than the amount then due, the policy shall then cease and terminate and the United States shall pay the insurer the difference between such amount and the cash surrender value. The amount paid by the United States to an insurer on account of applications approved under the provisions of this article, as amended (said sections), shall become a debt due to the United States by the insured on whose account payment was made and, notwithstanding any other Act, such amount may be collected either by deduction from any amount due said insured by the United States or as otherwise authorized by law. Any moneys received as repayment of debts incurred under this article, as originally enacted and as amended (said sections), shall be credited to the appropriation for the payment of claims under this article (said sections).

SOURCE--(Oct. 17, 1940, ch. 888, art. IV, Sec. 406, 54 Stat. 1184; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 775; Apr. 3, 1948, ch. 170, Sec. 6, 62 Stat. 160.)

AMENDMENTS

1948 - Act Apr. 3, 1948, inserted last sentence.

1942 - Act Oct. 6, 1942, amended section generally, substituting provisions relating to guaranty of premiums and interest by United States, settlement of amounts due upon expiration of protection, subrogation of United States, and crediting debt repayments for provisions relating to reports by insurers to Veterans' Administration.

CROSS REFERENCES

Termination of war for purposes of sections 540 to 548 of this Appendix, see note to section 584 of this Appendix.

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Sec. 547. Regulations; finality of determinations

The Secretary of Veterans Affairs shall provide by regulations for such rules of procedure and forms as he may deem advisable in carrying out the provisions of this article (sections 540 to 548 of this Appendix). The findings of fact and conclusions of law made by the Secretary in administering the provisions of this article (said sections) shall be final, and shall not be subject to review by any other official or agency of the Government.

SOURCE--(Oct. 17, 1940, ch. 888, art. IV, Sec. 407, 54 Stat. 1185; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 775; Sept. 2, 1958, Pub. L. 85-857, Sec. 14(76), 72 Stat. 1272; Mar. 18, 1991, Pub. L. 102-12, Sec. 9(17), 105 Stat. 40.)

PRIOR PROVISIONS

Section 407 of act Oct. 17, 1940, as originally enacted, which, by the provisions of section 408 of act Oct. 17, 1940, as amended (section 548 of this Appendix), is continued in force as to applications for protection executed prior to Oct. 6, 1942, read as follows: "The Administrator of Veterans' Affairs shall verify the computation of monthly difference reported by each insurer and shall, within ten days thereafter, deliver each month to the proper officer of such insurer, a certificate in the amount of the monthly difference certified in respect of each insurer. Such certificate shall be signed by said Administrator in the name of the United States, shall be in such form as the Administrator shall determine, shall be payable to the insurer within sixty days after the approval of the statement of account, as provided in section 411 hereof (section 551 of this Appendix), and shall bear interest at a rate to be prescribed by the Secretary of the Treasury, payable with the principal. Such certificate shall not be transferred except with the approval of said Administrator and shall remain with the insurer until settlement is made in accordance with this article."

AMENDMENTS

1991 - Pub. L. 102-12 substituted "The Secretary of Veterans Affairs shall" for "The Administrator of Veterans' Affairs is hereby authorized and directed to" in first sentence and "Secretary" for "Administrator of Veterans' Affairs" in second sentence.

1958 - Pub. L. 85-857 struck out provisions which required the Administrator of Veterans' Affairs to report annually to the Congress on the administration of sections 540 to 548 of this Appendix. See section 529 of Title 38, Veterans' Benefits.

1942 - Act Oct. 6, 1942, amended section generally, substituting provisions relating to regulations and finality of determinations for provisions relating to certificate of difference between premiums defaulted and paid and interest.

EFFECTIVE DATE OF 1958 AMENDMENT

Amendment by Pub. L. 85-857 effective Jan. 1, 1959, see section 2 of Pub. L. 85-857, set out as an Effective Date note preceding part I of Title 38, Veterans' Benefits.

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Sec. 548. Repealed. Pub. L. 102-12, Sec. 9(18), Mar. 18, 1991, 105 Stat. 40

Section, acts Oct. 17, 1940, ch. 888, art. IV, Sec. 408, 54 Stat. 1185; Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 776, related to law governing applications for protection prior to Oct. 6, 1942.

Sec. 549 to 554. Omitted

Sections 549 to 554 of this Appendix were omitted in the general amendment of article IV by act Oct. 6, 1942, ch. 581, Sec. 13, 56 Stat. 773.

Section 549, act Oct. 17, 1940, ch. 888, art. IV, Sec. 409, 54 Stat. 1185, related to deduction of unpaid premiums from proceeds of policies.

Section 550, act Oct. 17, 1940, ch. 888, art. IV, Sec. 410, 54 Stat. 1185, related to lapsing of policy for failure to pay past due premiums upon termination of service.

Section 551, act Oct. 17, 1940, ch. 888, art. IV, Sec. 411, 54 Stat. 1185, related to accounts stated between insurers and United States.

Section 552, act Oct. 17, 1940, ch. 888, art. IV, Sec. 412, 54 Stat. 1185, related to payment of balances due insurers by Secretary of the Treasury.

Section 553, act Oct. 17, 1940, ch. 888, art. IV, Sec. 413, 54 Stat. 1186, related to policies excepted from application of article.

Section 554, act Oct. 17, 1940, ch. 888, art. IV, Sec. 414, 54 Stat. 1186, related to insurers within application of article.



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