Life Insurance
Premium Rates "Capped" For NSLI & VSLI Term Policies
NSLI (V) Policies
NSLI "V" term policies can be renewed indefinitely. At older ages, premium rates increase significantly to cover the higher death rates at those ages. Although we continually encouraged term policyholders to convert to a permanent plan of insurance (which has fixed premium rates), many policyholders retained their term coverage.
As term policyholders reached their sixties and seventies, they found it difficult to pay the high premium rates. This situation received much Congressional interest as policyholders petitioned their representatives for financial relief. In 1984, the Insurance Actuarial Staff developed a partial solution to the problem by "capping" premium rates at the age 70 rate. This means that a term policyholder's premium will never increase over the age 70 premium rate.
Effective September 11, 2000, "capped" NSLI term policies receive a termination dividend if a policy lapses, or if the policyholder voluntarily cancels their policy. The termination dividend will be used to purchase paid-up additional whole life insurance.
VSLI (RS) Policies
To provide financial relief from the high premium rates at advanced ages, "RS" term premiums were capped at the age 70 renewal rate effective May 1, 1989. This means that the annual premium for these policies will not exceed $69.73 per $1,000 of coverage. Effective September 11, 2000, "capped" VSLI term policies receive a termination dividend if a policy lapses, or if the policyholder voluntarily cancels their policy. The termination dividend will be used to purchase paid-up additional whole life insurance.
