Subchapter III. Rent, Installment Contracts, Mortgages, Liens, Assignment, Leases, Communications Service Contracts
50 U.S.C. § 3957: SCRA Shield for a Life Policy Pledged as Collateral
Official heading: Protection of life insurance policy
In one line
If you assigned a life insurance policy as loan collateral before service, the assignee cannot exercise its rights under that assignment during service or one year after without a court order, unless premiums are unpaid or the insured dies.
- Protection lasts the period of military service plus one year
- Does not apply when premiums are due and unpaid, on the death of the insured, or with the insured’s written consent given during the protected period
Text checked October 9, 2026
What § 3957 does to your money
Some loans are secured by a life insurance policy: you assign the policy to the lender, which can surrender it for its cash value if you default. If you made that assignment before military service, § 3957 bars the assignee from exercising any right or option under it during service or for one year after without a court order. The insurer itself, acting on a policy loan, is the exception.
Three situations let the lender act without a court: your written consent given during that period, premiums that are due and unpaid, or your death. Premiums the United States guarantees under the Act’s life insurance subchapter (§§ 3971 to 3977) do not count as unpaid, so a protected policy cannot be taken on that ground.
A court asked for the order may refuse it if service materially affects your ability to meet the loan terms. Knowingly acting against this section is punishable by a fine and up to one year in prison. Check old loan files: a policy assigned years ago to secure a business loan or a bank line of credit is the kind of collateral this section reaches.
The full text of 50 U.S.C. § 3957
From the United States Code, 2024 Edition, current through January 6, 2025, as published by the U.S. Government Publishing Office on GovInfo (retrieved October 10, 2026). No amendment enacted after the edition cutoff was found on Cornell LII or in GovInfo’s compiled SCRA (amended through Pub. L. 118-159, Dec. 23, 2024). House style: the Code’s em dashes before a list are shown as colons, and en dashes as hyphens or “to”; no word of the text is changed.
(a) Assignment of policy protected
If a life insurance policy on the life of a servicemember is assigned before military service to secure the payment of an obligation, the assignee of the policy (except the insurer in connection with a policy loan) may not exercise, during a period of military service of the servicemember or within one year thereafter, any right or option obtained under the assignment without a court order.
(b) Exception
The prohibition in subsection (a) shall not apply:
(1) if the assignee has the written consent of the insured made during the period described in subsection (a);
(2) when the premiums on the policy are due and unpaid; or
(3) upon the death of the insured.
(c) Order refused because of material affect
A court which receives an application for an order required under subsection (a) may refuse to grant such order if the court determines the ability of the servicemember to comply with the terms of the obligation is materially affected by military service.
(d) Treatment of guaranteed premiums
For purposes of this subsection, premiums guaranteed under the provisions of subchapter IV of this chapter shall not be considered due and unpaid.
(e) Misdemeanor
A person who knowingly takes an action contrary to this section, or attempts to do so, shall be fined as provided in title 18, or imprisoned for not more than one year, or both.
Enacted and amended by: (Oct. 17, 1940, ch. 888, title III, §306, as added Pub. L. 108-189, §1, Dec. 19, 2003, 117 Stat. 2850; amended Pub. L. 111-275, title III, §303(b)(6), Oct. 13, 2010, 124 Stat. 2878.)
What changed, and when
The Office of the Law Revision Counsel’s amendment notes for § 3957, newest first.
- 2010: Subsec. (e). Pub. L. 111-275 amended subsec. (e) generally. Prior to amendment, subsec. (e) related to penalties.
Effective date: Section applicable to any case not final before Dec. 19, 2003, see section 3 of Pub. L. 108-189, set out as a note under section 3901 of this title.
Every section of the Act, including the short administrative ones without their own page, is on the section-by-section index.
Heads up: SCRA Saver publishes general information, not legal or financial advice. Laws change and every situation differs. Confirm details with your installation legal assistance office (free for service members) or a licensed professional.