Mr. TALMADGE, from the Committee on Finance, REPORT [To accompany S. 2003] The Committee on Finance, to which was referred the bill (S. 2003) to provide a special Government life insurance program for veterans of the Vietnam era, having considered the same, reports favorably thereon with an amendment and recommends that the bill as amended do pass. SUMMARY OF THE BILL The bill would establish a new Vietnam era veterans' life insurance program. Veterans of the Vietnam era (that is, those with service since August 5, 1964) would be eligible to apply for this new Government life insurance; the maximum face value would be the same as the maximum amount (presently $10,000) under the servicemen's group life insurance program for servicemen on active duty. Insurance could be issued under seven different types, all of them permanentthat is, the premium would remain the same during the life of the veteran. The insurance would be "participating"-veterans would receive dividends which could be used to pay part of their next year's premium. The premium would be waived while the veteran was totally disabled. A disability income provision could be added to the policy at the veteran's option. Appropriations would repay the Vietnam era veterans' life insurance trust fund for the cost of both excess mortality and waiver of premiums which are traceable to the extra hazard of military, naval, or air service. BACKGROUND Ever since the War Risk Insurance Act of 1917 it has been recognized that the Government has a special role in meeting the insurance needs of servicemen, who are exposed to a substantially higher risk of 37-010-69-1 death than their civilian counterparts. And between World War I and the Korean war, the Federal Government provided its veterans with an opportunity to purchase up to $10,000 in low cost Government life insurance. The U.S. Government life insurance program had its origin in World War I. The national service life insurance program was established in 1940 to handle the insurance needs of World War II servicemen and veterans. Veterans' special life insurance was established for Korean veterans. But since 1956, only veterans with a service-connected disability have been able to purchase Government life insurance. Under present law a serviceman on active duty may be insured for $10,000 in servicemen's group life insurance for which he pays a premium of $2 monthly. This insurance protection continues without further premium payment for 120 days following his separation from service. Within this 120 days, he may purchase a commercial insurance policy from any of about 600 commercial companies without a medical examination. He is guaranteed the right to purchase this insurance at standard commercial rates. This is a clear advantage for the veteran who was disabled in service, but it presents no advantage to the veteran in good health, since any civilian could purchase the same policy at the same rate. Thus only a veteran who was disabled in service receives advantageous treatment under present law. The committee bill would establish a new program of low-cost Vietnam era veterans' life insurance available to all discharged veterans whether disabled or not. The bill would in no way restrict the right of the veteran to purchase commercial insurance as under present law; it would merely afford him the opportunity of purchasing Government life insurance. ELIGIBILITY Under the committee bill any veteran who has served on active duty for at least 6 months, any part of which occurred during the Vietnam era (that is, after August 5, 1964) and who was discharged under conditions other than dishonorable, would be eligible to apply for Vietnam era veterans' life insurance. If he served for less than 6 months, but was discharged or released from active duty for a serviceconnected disability, he would also be eligible. Any eligible veteran could apply for the insurance within 120 days after his discharge from active duty. Veterans who have already completed their active duty before the bill is enacted would have 120 days from the date of enactment of the bill. If a veteran has not chosen to apply for Vietnam era veterans' life insurance within 120 days after his discharge, he would have an additional opportunity under the bill as reported if he marries for the first time within 5 years of his discharge. He would then be able to apply within 6 months of his marriage, providing he could show that he was in good health. AMOUNT OF INSURANCE Vietnam era veterans' life insurance can be issued in multiples of $500, with a minimum amount of $1,000 and a maximum amount equal to the maximum amount of servicemen's group life insurance that a serviceman on active duty may be insured. Under present law this maximum amount is $10,000; under S. 1479 reported by the Finance Committee, the limit would be raised to $15,000, and in combination with S. 1650, a bill reported by the committee which would provide double indemnity coverage in combat areas and for extrahazardous duty, the maximum would be raised to $30,000. Thus if all three bills became law as reported by the Finance Committee, the maximum amount of Vietnam era veterans' life insurance would be $30,000. If the veteran already has national service life insurance or U.S. Government life insurance, the total insurance under all three programs could not exceed the maximum amount of servicemen's group life insurance. The face value could be paid in one sum, or in a number of monthly installments under several different kinds of arrangements. Unless the insured elected otherwise, the insurance would be paid in 36 monthly installments. PLANS OF INSURANCE Seven different plans of insurance would be available in the Vietnam era veterans' life insurance program. Each of these plans is designed to fit some specific need of the insured. All plans are "permanent"that is, the premiums remain the same throughout the life of the insured. Unlike national service life insurance for World War II veterans, Vietnam era veterans' life insurance would not be available on a term insurance basis. While term insurance is the most economical kind of insurance, the premiums for the same amount of insurance rise as the insured gets older, and the increases are substantial and even prohibitive in many cases after age 50 or 60. Faced with sharply increased premiums in their term insurance, many older World War II veterans find it difficult to understand the increasing cost of insurance protection, and they have criticized rate increases based on sound actuarial calculations. It was to avoid this problem that the committee bill provides only insurance plans under which premiums will not increase. Modified life.-Modified life is the lowest premium plan of Vietnam era veterans' life insurance. Its low price is made possible by the fact that the face value of the insurance decreases by half at age 65, when most peoples' insurance needs are lower. For example, a $10,000 modified life policy would pay $10,000 in the event of death before age 65, but only $5,000 in the event of death after age 65. Ordinary life.-The ordinary life policy provides insurance protection by the payment of a fixed premium throughout the lifetime of the insured. Like all other plans of Vietnam era veterans' life insurance, the ordinary life policy has cash, loan, paid up, and extended insurance values beginning with the first policy year. Twenty-payment life. The 20-payment life policy provides insurance protection throughout the lifetime of the insured by the payment of a. fixed premium for 20 years. At the end of the 20-year period premium payments cease, but the insurance continues in force and guaranteed values continue to accumulate. Limited payment life policies are designed for those who desire. protection for their whole life but who wish to eliminate premium payments after their earning power has been reduced, or has ceased altogether. death than their civilian counterparts. And between World War I and the Korean war, the Federal Government provided its veterans with an opportunity to purchase up to $10,000 in low cost Government life insurance. The U.S. Government life insurance program had its origin in World War I. The national service life insurance program was established in 1940 to handle the insurance needs of World War II servicemen and veterans. Veterans' special life insurance was established for Korean veterans. But since 1956, only veterans with a service-connected disability have been able to purchase Government life insurance. Under present law a serviceman on active duty may be insured for $10,000 in servicemen's group life insurance for which he pays a premium of $2 monthly. This insurance protection continues without further premium payment for 120 days following his separation from service. Within this 120 days, he may purchase a commercial insurance policy from any of about 600 commercial companies without a medical examination. He is guaranteed the right to purchase this insurance at standard commercial rates. This is a clear advantage for the veteran who was disabled in service, but it presents no advantage to the veteran in good health, since any civilian could purchase the same policy at the same rate. Thus only a veteran who was disabled in service receives advantageous treatment under present law. The committee bill would establish a new program of low-cost Vietnam era veterans' life insurance available to all discharged veterans whether disabled or not. The bill would in no way restrict the right of the veteran to purchase commercial insurance as under present law; it would merely afford him the opportunity of purchasing Government life insurance. ELIGIBILITY Under the committee bill any veteran who has served on active duty for at least 6 months, any part of which occurred during the Vietnam era (that is, after August 5, 1964) and who was discharged under conditions other than dishonorable, would be eligible to apply for Vietnam era veterans' life insurance. If he served for less than 6 months, but was discharged or released from active duty for a serviceconnected disability, he would also be eligible. Any eligible veteran could apply for the insurance within 120 days after his discharge from active duty. Veterans who have already completed their active duty before the bill is enacted would have 120 days from the date of enactment of the bill. If a veteran has not chosen to apply for Vietnam era veterans' life insurance within 120 days after his discharge, he would have an additional opportunity under the bill as reported if he marries for the first time within 5 years of his discharge. He would then be able to apply within 6 months of his marriage, providing he could show that he was in good health. AMOUNT OF INSURANCE Vietnam era veterans' life insurance can be issued in multiples of $500, with a minimum amount of $1,000 and a maximum amount equal to the maximum amount of servicemen's group life insurance that a serviceman on active duty may be insured. Under present law |