79TH CONG., 2D SESS.-CH. 728-AUG. 1 , 1946 national service life-insurance appropriation and any disability pay- ments made to such insured shall be made directly from the national service life-insurance appropriation: Provided further, That policies containing additional provisions for the payment of disability benefits may be separately classified for the purpose of dividend distribution from otherwise similar policies not containing such benefit. "(2) Whenever benefits under the total-disability provision author- ized by section 602 (v) (1) hereof become, or have become, payable because of total disability of the insured as a result of disease or injury traceable to the extra hazard of the military or naval service, as such hazard may be determined by the Administrator of Veterans' Affairs, the liability shall be borne by the United States, and the Administrator is hereby authorized and directed to transfer from the national service life-insurance appropriation to the national service life-insurance fund from time to time any amounts which become, or have become, payable to the insured on account of such total disability, and to transfer from the national service life-insurance fund to the national service life- insurance appropriation the amount of the reserve held on account of the total-disability benefit. When a person receiving such payments on account of total disability recovers from such disability, and is then entitled to continue protection under the total-disability provi- sion, the Administrator is hereby authorized and directed to transfer to the national service life-insurance fund a sum sufficient to set up the then required reserve on such total-disability benefit. "(w) Subject to the provisions of section 612 of the National Service Life Insurance Act of 1940, as amended, all contracts or policies of insurance heretofore or hereafter issued, reinstated, or converted shall be incontestable from the date of issue, reinstatement, or conversion except for fraud, nonpayment of premium, or on the ground that the applicant was not a member of the military or naval forces of the United States. "(x) When an optional mode of settlement of insurance hereto- fore or hereafter matured is available to a beneficiary who is a minor or incompetent, such option may be exercised by his fiduciary, person qualified under Public Law 373, Seventy-second Congress, February 25, 1933 (47 Stat. 907; 25 U. S. C. 14), or person recognized by the Administrator as having custody of the person or the estate of such beneficiary, and the obligation of the United States under the insur- ance contract shall be fully satisfied by payment of benefits in accord- ance with the mode of settlement so selected. "(y) (1) Any level premium term insurance which has lapsed may be reinstated within the term upon written application, payment of two monthly premiums, and evidence satisfactory to the Adminis- trator that the applicant, subject to the provisions of the second sentence of section 602 (c) (2), supra, is in good health. "(2) Any level premium term insurance which has lapsed may be reinstated within the term upon written application, made within six months after the date of such lapse or within six months after the date of enactment of the Insurance Act of 1946, whichever is the later, and payment of two monthly premiums, provided such applicant is in as good health on the date of application and tender of premiums as he was on the due date of the premium in default and furnishes evidence thereof satisfactory to the Administrator: Provided, That when the insured makes inquiry prior to the expiration of the grace period disclosing a clear intent to continue insurance protection, an additional reasonable period not exceeding sixty days may be granted for payment of premiums due, but the premiums in any such case must be paid during the lifetime of the insured." 787 Separate classifica- tion of policies. Transfer of funds. Incontestability of policies. 64Stat. 1013. 38 U. S.C. §812. Minor or incompe- tent beneficiary. Reinstatement of insurance. Ante, p. 78L Additional grace period. 60 STAT.]
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