It will be noted that the 20-year endowment policy represents the most popular plan selected, 37 per cent of all policies issued being on this plan. The largest amount of insurance, however, has been approved on the 20-payment life plan, 34 per cent of the total amount of converted insurance approved being on this plan.

COMPARISON BY PLANS OF CONVERTED INSURANCE POLICIES ISSUED WITH CONVERTED INSURANCE POLICIES IN FORCE

The following chart shows the percentage relationship of the various plans of converted insurance as originally selected by policyholders with the percentage relationship of the various plans of converted insurance in force:

It is interesting to note that whereas the largest number of policies were originally converted on the 20-year endowment plan, the largest number of policies in force are on the 20-payment life plan. The table also shows that in the selections that have been made there is a consistently marked decrease in the relative number of selections on the 20-year endowment plan and a small but steady increase in the number of selections on the five other plans of insurance, this increase within recent months being most pronounced in the ordinary life plan. This selection tendency generally indicates that as the veterans grow older and assume family responsibilities they select those policy forms offering the greatest amount of protection at the lowest premium rates.

CONVERTED INSURANCE POLICIES ISSUED, CLASSIFIED BY AVERAGE

AMOUNTS

The average amounts of the various forms of converted policies issued to date are shown in the following table:

When insurance on a yearly renewable term basis is converted to insurance on a level premium basis there is a tendency on the part of the insured to reduce the amount of insurance carried. The reason for this is apparently the difference in premium rate. The yearly renewable term insurance is being provided at the net rate to cover the yearly protection only without providing for any reserve accumulation and requires a higher premium each year as the insured grows older. The level premium provides for the accumulation of a reserve and is the means by which the premium is fixed on a level basis throughout the premium-paying period. The average term policy in force as of June 30, 1924, was $7,684, the average converted policy $3,894. Since premium rates on the 20-year endowment policy are

higher than on the other forms, for the average policyholder, men carrying this policy do not carry as much insurance as do those who select a lower priced form.

CONDITION OF WORK

During the fiscal year 1924 the work of the insurance division has been transacted on a current basis. As a regular procedure applications for loans, cash surrenders, conversions, and receipts for premium payments are handled within 48 hours after their receipt in the bureau. The following facts with reference to important operating functions present an idea of the magnitude of the work accomplished during the last fiscal year:

A total of 44,496 converted policies, for a face value of $193,586,404, were issued; 4,015,142 premiums, totaling $49,744,792.43, were collected, credited, receipts issued thereon, and the remittances analyzed, recorded, and deposited in the United States Treasury; 28,663 applications for reinstatement of insurance, aggregating $128,285,791, were examined and approved; 764,018 letters from policyholders were disposed of; 2,248,363 letters to ex-service men were originated; 4,244,376 premium notices were mailed; and 319,466 dividends for $2,347,882.73 were calculated and paid.

APPLICATIONS FOR TERM INSURANCE

The World War Veterans' Act (Public, 242, 68th Cong., S. 2257) approved June 7, 1924, repealed the war risk insurance act as amended and made no provision for the granting of yearly renewable term insurance. Under the law, therefore, applications for yearly renewable term insurance submitted after June 7, 1924, can not be approved by the bureau.

Prior to the passage of the World War veterans' act, June 7, 1924, men who entered the active military and naval service of the United States were permitted, under the law, to obtain yearly renewable term insurance under practically the same conditions as during the war. During the past fiscal year 3,420 applications for term insurance, aggregating $18,153,000, were approved.

The following table shows the number and amount of applications for term insurance received from month to month and to date:

APPLICATIONS FOR CONVERTED INSURANCE

During the year this division has continued the established policy of keeping clearly before term-certificate holders the advantages of converting this insurance at an early age. However, because of the tendency of these certificate holders when converting to reduce the amount of insurance protection, it has been recognized that for men in some conditions of life the continuance of term insurance in its present form is desirable. During the year, 45,736 applications for conversion, aggregating $196,731,918, were recorded; 44,496 applications, aggregating $193,586,404, were approved; and 2,522 applications, aggregating $7,961,099, were disapproved.

The following table shows in detail the number of applications received and acted upon from month to month:

REINSTATEMENT OF TERM AND CONVERTED INSURANCE

The following table shows the number and amount of term and converted insurance policies reinstated by months during the fiscal year 1924 and to date:

TERM-INSURANCE PREMIUM INCOME

There has been collected to date from all sources in yearly renewable term-insurance premiums $419,484,960.92. A comparison of this amount with the amount paid out in claims on account of permanent total disability and death to June 30, 1924 ($529,116,107.79), shows that to June 30, 1924, the Government has actually expended for all term-insurance benefits $109,631,146.87 over and above the amount received in premiums.

Attention is directed to the fact that yearly renewable term insurance is payable in monthly installments extending over a period of 20 years, and that the present annual installment payable on term insurance now amounts to approximately $90,000,000. During the fiscal year 1924, $14,553,507.72 in term-insurance premiums were collected. It is therefore evident that the current income on account of yearly renewable term-insurance premiums is far from sufficient to meet payments on account of matured liabilities which will be due in future years, and that Congress will be obliged to make annual appropriations to take care of these payments.

The following table shows by sources the amount of premium income on account of term insurance received and deposited to the credit of the military and naval insurance appropriation to June 30, 1924:

During the war period premiums on term insurance were paid by deduction from pay rolls and pay vouchers. As the men were discharged from the military and naval service it was necessary for them to remit insurance premiums direct to the United States Veterans' Bureau. All premiums on yearly renewable term insurance paid to the bureau are received by the insurance cashier and credited to the military and naval insurance appropriation.

The following table shows the number and amount of yearly renewable term-insurance premiums received by the insurance cashier by months during the fiscal year 1924 and to date:

CONVERTED-INSURANCE PREMIUMS RECEIVED BY INSURANCE CASHIER

Converted-insurance premiums are deposited to the credit of the United States Government life (converted) insurance fund from which are paid claims on account of permanent total disability and death, dividends, refunds, etc., under converted insurance.

The following table shows the number and amount of convertedinsurance premiums received by the insurance cashier by months. during the fiscal year 1924 and to date.

DIVIDENDS ON UNITED STATES GOVERNMENT CONVERTED INSURANCE

The fund from which dividends on converted insurance are apportioned is accumulated from two sources: Savings due to deferred mortality, and excess interest earnings on the amount earned on invested funds over the assumed rate of 31⁄2 per cent.