---
kind: "section"
citation: "50 U.S.C. § 3975"
title: "50"
title_heading: "War and National Defense"
number: "3975"
heading: "Policy restrictions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/50/3975"
units:
  - "Chapter 50 — Servicemembers Civil Relief"
  - "Subchapter IV — Life Insurance"
---

# §3975. Policy restrictions

- (a) **Dividends—** While a [policy](/usc/50/3971.md?p=1) is protected under this subchapter, a dividend or other monetary benefit under a [policy](/usc/50/3971.md?p=1) may not be paid to an [insured](/usc/50/3971.md?p=3) or used to purchase dividend additions without the approval of the Secretary of Veterans Affairs. If such approval is not obtained, the dividends or benefits shall be added to the value of the [policy](/usc/50/3971.md?p=1) to be used as a credit when final settlement is made with the [insurer](/usc/50/3971.md?p=4).
- (b) **Specific restrictions—** While a [policy](/usc/50/3971.md?p=1) is protected under this subchapter, cash value, loan value, withdrawal of dividend accumulation, unearned [premiums](/usc/50/3971.md?p=2), or other value of similar character may not be available to the [insured](/usc/50/3971.md?p=3) without the approval of the Secretary. The right of the [insured](/usc/50/3971.md?p=3) to change a beneficiary designation or select an optional settlement for a beneficiary shall not be affected by the provisions of this subchapter.

## Source credit

(Oct. 17, 1940, ch. 888, title IV, § 405, as added Pub. L. 108–189, § 1, Dec. 19, 2003, 117 Stat. 2853.)

## Notes

### Editorial Notes

### Codification

Section was formerly classified to section 545 of the former Appendix to this title prior to editorial reclassification and renumbering as this section.

### Prior Provisions

A prior section 405 of act Oct. 17, 1940, ch. 888, art. IV, 54 Stat. 1184; Oct. 6, 1942, ch. 581, § 13, 56 Stat. 775; Pub. L. 102–12, § 9(16), Mar. 18, 1991, 105 Stat. 40, related to deduction of unpaid premiums upon settlement of policies maturing during protection, prior to the general amendment of this Act by Pub. L. 108–189. See section 3976 of this title.

### Statutory Notes and Related Subsidiaries

### 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.