|
||
The Servicemen's Indemnity and Insurance Acts of 1951 provide for the payment of an indemnity of $10,000 in the event of the death of a person in active service with the Armed Forces and also amended the National Service Life Insurance Act of 1940. Members of the Armed Forces on active duty on and after June 27, 1950, are automatically insured against death, without cost, for $10,000. If the person has been on active service over 30 days, this protection continues for 120 days after separation from service.
After separation from active service, the serviceman has the option of applying within 120 days of the date of separation for a NSLI type of policy up to $10,000 on the five-year term plan, renewable for successive five-year periods at attained age. This term life insurance () policy is issued without a medical examination, is nonparticipating, and cannot be converted.
The Social Security Act was first passed by Congress in 1935 but has been amended several times. It provides: (1) a contributory old-age pension plan for workers employed in specified industries and occupations; (2) grants-in-aid to state pension plans to cover persons generally not under the contributory plan; and (3) a number of other noncontributory benefits for aid to dependent children, aid to the blind, etc.
The Social Security fund is administered by a board of trustees consisting of the Secretary of the Treasury, the Secretary of Labor, and the Chairman of the Social Security Board. The provisions of the 1935 act seemed to indicate intent to finance the plan along lines followed by legal-reserve life insurance companies. There has been, however, an increasing trend toward the view that the fund should not be self-supporting but should be supplemented by a special payroll tax as well as by general taxation.
Other federal insurance carriers deal with financial institutions. The Federal Deposit Insurance Corporation was created by the Banking Act of 1933 to provide types of life insurance () for bank deposits. The insurance is mandatory for all banks which are members of the Federal Reserve System and is optional for other banks. The fund is financed entirely by an annual assessment against insured banks of one twelfth of 1% of their average deposits for the year.
The Federal Savings and Loan Insurance Corporation was created in 1934 by the National Housing Act to protect the accounts of savers in federal savings and loan associations and in state-chartered thrift and home-financing institutions. The fund is financed principally by an annual premium of one eighth of 1% of their savings and creditor liabilities paid by the insured institutions. In addition, there is an admission fee of four one-hundredths of 1% of the total savings accounts and creditor liabilities of admitted associations.
Mortgage and property improvement loan insurance was established by the National Housing Act of 1934 to provide a system of mortgage insurance as an aid to home buyers and mortgage lenders. The program is administered by the Federal Housing Administration. Its principal function is to insure mortgage loans made by private lending institutions on residential properties. The fund is financed out of premiums charged on outstanding balances, usually 0.5 to 1% annually.