[Code of Federal Regulations]
[Title 38, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 38CFR8.14]

[Page 509-510]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
                CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS
 
PART 8_NATIONAL SERVICE LIFE INSURANCE--Table of Contents
 
Sec.  8.14  Provision for extended term insurance--other 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

[[Page 510]]

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
    (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]