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Life Insurance

Dividend Payment Options Available

If your Government life insurance policy number begins with the letters V, RS, W, J, JR, JS or K, you have a policy that pays dividends. The table below describes the dividend options that are available to you. We cannot tell you what option is best for you. Only you can make that decision. Only one option can be in effect for a policy at any one time. If you have more than one policy in force, different options can be selected for each policy. You may change your option at any time by calling our toll-free number (1-800-669-8477).

Click here for information about the Special Dividend Rumor.

Dividend Option How it Works
Use Dividend to Pay Your Annual Premium

This dividend option automatically applies your annual dividend toward your annual policy premium. If your dividend is less than your annual premium, you will receive a bill for the difference. If your dividend exceeds your policy's annual premium, the excess dividend can be

  1. paid to you in cash, 
  2. used to purchase paid-up additional insurance, or 
  3. paid against a policy loan or lien if you have one.
Buy Paid-Up Additional Insurance

This option allows you to use your dividends to purchase additional paid-up insurance, thereby increasing the amount of insurance you have in-force. The insurance purchased with your dividends is in addition to your basic coverage and can be purchased at any age. You can accumulate a substantial amount of paid-up additional insurance coverage over a period of years because you earn dividends on both your basic coverage and the paid-up additions themselves. This option is available on all policies except those with a policy number beginning with the letter K. The paid-up additions you purchase will:

  • Provide additional protection for your beneficiaries
  • Have cash and loan values
  • Earn dividends
  • Not require payment of premiums
Leave Dividends in an Account That Earns Interest and Protects Your Policy Against Lapse

This option allows you to keep your dividend in a credit account which earns interest. These interest earnings are not taxable. You may withdraw money from the credit account at any time by either calling our toll-free number 1-800-669-8477 or requesting the withdrawal in writing. Another feature of this option is that if you forget to send us your premium payment, we will automatically withdraw enough money from your credit account to pay one month's premium. You will be notified when premiums are withdrawn from your account. Interest earned on the account changes annually and is dependent on the particular insurance program. Interest earned is not taxable. The 2007 rates are as follows:

  • National Service Life Insurance - 5.50%
  • U S Government Life Insurance - 5.25%
  • Veterans' Special Life Insurance - 6.50%
  • Veterans' Reopened Insurance - 5.75%
Leave Dividends in an Account That Earns Interest This option is similar to the dividend credit option, except that it is not available to term insurance policyholders. Also, if you fail to pay premiums, we will not automatically withdraw a monthly premium from your deposit account. Withdrawals from your deposit account must be authorized by calling our toll-free number or by writing to us. Interest earned is not taxable.
Repay a Loan or Lien If you have a loan or lien against your policy, you may select this option to reduce the amount owed.
Pay Premiums as far in Advance as Possible Your dividend is used to pay premiums in advance as far as the amount will allow. This option is not available if premiums are being paid automatically by allotment from retired pay, by deduction from VA compensation or pension or by checking account deduction (VAMATIC).
Receive Dividends in Cash On your policy anniversary date, you will receive your dividend via either a U.S. Treasury check or a direct deposit of funds into your bank account.