Subchapter IV. Life Insurance
50 U.S.C. § 3977: Who Pays Life Premiums Under the SCRA (You Do)
Official heading: Premiums and interest guaranteed by United States
In one line
The United States guarantees the premiums and interest on a protected policy. Whatever the government pays becomes a debt you owe it, collectible by offset, and not dischargeable in bankruptcy.
- Unpaid guaranteed amounts are treated as a policy loan when protection ends; if cash value cannot cover them, the policy terminates and the U.S. pays the insurer the difference
- The resulting debt to the United States is not dischargeable in bankruptcy
Text checked October 9, 2026
What § 3977 does to your money
The government guarantee sounds like free insurance. It works like a loan. Premiums, and interest on them, that come due on a protected policy are guaranteed by the United States. If they are not paid to the insurer before protection ends, the insurer treats the amount as a policy loan.
If at the end of protection the policy’s cash surrender value is less than the premiums and interest due, the policy terminates and the United States pays the insurer the difference. That payment becomes your debt to the United States. It can be collected by offset from any federal payment owed to you, and it cannot be discharged in bankruptcy.
Run the numbers before you apply. On a term policy with no cash value, every guaranteed premium becomes a debt to the government; on a whole-life policy, the guaranteed premiums come out of the cash value as a loan. Interest runs at the policy-loan rate the policy sets (§ 3976). If you want to keep the policy after service, pay the guaranteed amount to the insurer before protection ends; anything still unpaid at that point becomes a policy loan that accrues interest.
The full text of 50 U.S.C. § 3977
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) Guarantee of premiums and interest by the United States
(1) Guarantee
Payment of premiums, and interest on premiums at the rate specified in section 3976 of this title, which become due on a policy under the protection of this subchapter is guaranteed by the United States. If the amount guaranteed is not paid to the insurer before the period of insurance protection under this subchapter expires, the amount due shall be treated by the insurer as a policy loan on the policy.
(2) Policy termination
If, at the expiration of insurance protection under this subchapter, the cash surrender value of a policy is less than the amount due to pay premiums and interest on premiums on the policy, the policy shall terminate. Upon such termination, the United States shall pay the insurer the difference between the amount due and the cash surrender value.
(b) Recovery from insured of amounts paid by the United States
(1) Debt payable to the United States
The amount paid by the United States to an insurer under this subchapter shall be a debt payable to the United States by the insured on whose policy payment was made.
(2) Collection
Such amount may be collected by the United States, either as an offset from any amount due the insured by the United States or as otherwise authorized by law.
(3) Debt not dischargeable in bankruptcy
Such debt payable to the United States is not dischargeable in bankruptcy proceedings.
(c) Crediting of amounts recovered
Any amounts received by the United States as repayment of debts incurred by an insured under this subchapter shall be credited to the appropriation for the payment of claims under this subchapter.
Enacted and amended by: (Oct. 17, 1940, ch. 888, title IV, §407, as added Pub. L. 108-189, §1, Dec. 19, 2003, 117 Stat. 2853.)
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.
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