The United States mobilized 4.3 million servicemen for World War I and lost more than 126,000 of them in places like the Argonne Forest. Those who came home were rewarded with parades and, among other things, offers of government life insurance policies at a reduced price.
This week, the Veterans Administration waived all future premium payments for the 83,978 surviving policy holders. The agency also observed, in a Federal Register notice, that the vets had been overcharged all along.
Ever since the insurance was offered under the United States Government Life Insurance Program, life expectancy rates for the World War I veterans were calculated on the American Experience Mortality Table, published in 1868. The calculations were never revised, and, as the VA's notice pointed out, "the table is no longer an accurate measure of mortality as life expectancy has greatly increased since its publication."
In addition to declaring the 114-year-old mortality tables invalid, the VA also scrapped the assumption that the premium money the veterans paid the government would earn interest at a 3 1/2 percent rate. Currently, the Treasury Department, which pays the VA interest on the premium funds, is paying almost 7 1/2 percent interest to those who lend it money for three months; earlier this year the rate was as high as 13 percent.
"The net effect of the mortality savings and excess interest earnings is that premiums are no longer required to safely run the USGLI program," the notice said.
Currently, the Treasury holds $356 million in a fund set aside to repay these policyholders and their heirs.
The VA has been aware of the imbalance; for years it has paid policy holders dividends of up to $500 annually, according to an official in the insurance program. Last year, the agency took in $4 million in premiums from veterans who served between 1917 and 1921; it paid out $24 million in dividends. Dividend payments will continue, an agency official said.
A separate life insurance fund, set up for World War II-era veterans who served between 1940 and 1951, has 2.5 million policyholders and assets of $8.311 billion