Servicemen's and Veterans' Group Life Insurance

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 9

RIN 2900-AH50

Servicemen's and Veterans' Group Life Insurance

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs (VA)

regulations relating to Servicemen's and Veterans' Group Life Insurance

by eliminating provisions that merely restate statutory provisions or

that no longer apply to the insurance programs and by rewriting other

provisions for purposes of clarification.

EFFECTIVE DATE: May 6, 1996.

FOR FURTHER INFORMATION CONTACT: George Poole, Chief, Insurance Program

Administration, Department of Veterans Affairs Regional Office and

Insurance Center, PO Box 8079, Philadelphia, Pennsylvania 19101, (215)

951-5718.

SUPPLEMENTARY INFORMATION: The Insurance Service of the Veterans

Benefits Administration has determined that it is no longer practicable

to publish in the Federal Register provisions that merely restate

statutory provisions. This is especially evident when one considers the

burden involved in keeping such regulatory provisions current with

statutory changes. As an illustrative example, consider the previous 38

CFR 9.4, which merely restated the provisions of 38 U.S.C. 1967(a) as

they pertain to the amount of life insurance coverage allowable under

the Servicemen's Group Life Insurance (SGLI) program. When Congress

established the SGLI program in 1965, it set the maximum coverage

available at $10,000. VA promulgated Sec. 9.4 to reflect this maximum

coverage. Section 9.4 was merely informational, but added no real value

to the operation of the SGLI program. Since then, Congress has

increased the maximum coverage six times, and each time VA has had to

amend Sec. 9.4 to reflect the statutory change. If VA had not initially

promulgated Sec. 9.4, VA would have avoided a total of seven regulatory

submissions and their resultant costs.

Accordingly, all or portions of Secs. 9.1, 9.4, 9.5, 9.6, 9.7, 9.8,

9.10, 9.12, 9.14, 9.16, 9.17, 9.18, 9.24, 9.32, 9.34 and 9.36 are

eliminated because they merely restate provisions in 38 U.S.C. Chapter

19.

Also, provisions set forth in Secs. 9.2(a), 9.2(d)(3), 9.3(a),

9.3(e), 9.5(d), 9.24(a)(1), 9.24(a)(2), and 9.30(a) concern ``sunset''

requirements that no longer apply to Servicemen's or Veterans' Group

Life Insurance. Consequently, these provisions are eliminated.

In addition, Secs. 9.2 and 9.3 are combined and rewritten to

eliminate redundant text, and amendments are made to other sections for

purposes of clarification.

This final rule consists of nonsubstantive changes and, therefore,

is not subject to the notice-and-comment and effective-date provisions

of 5 U.S.C. 553. Also, this final rule is not a significant revision as

defined in FAR 1.501-1.

The Secretary of Veterans Affairs hereby certifies that this final

rule will not have a significant economic impact on a substantial

number of small entities as they are defined in the Regulatory

Flexibility Act, 5 U.S.C. 601-612, since it does not contain any

substantive provisions. This final rule will not significantly affect

any entity. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is

exempt from the initial and final regulatory flexibility analysis

requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance Program number for

these regulations is 64.103.

List of Subjects in 38 CFR Part 9

Life insurance, Military personnel, Veterans.

Approved: April 29, 1996.

Jesse Brown,

Secretary of Veterans Affairs.

For the reasons set out in the preamble, 38 CFR part 9 is amended

as set forth below:

[[Page 20135]]

PART 9--SERVICEMEN'S GROUP LIFE INSURANCE AND VETERANS' GROUP LIFE

INSURANCE

1. The authority citation for part 9 is revised to read as follows:

Authority: 38 U.S.C. 501, 1965-1979, unless otherwise noted.

2. In Sec. 9.1, paragraphs (c), (f), (g), (h), (j), (k), (l), (o),

and (s) are removed; paragraphs (i), (m), (n), (p), (q), and (r) are

redesignated as paragraphs (c), (f), (g), (h), (i), and (j),

respectively; and introductory text is added, and paragraphs (a), (b),

(d), and (e) are revised to read as follows:

Sec. 9.1 Definitions.

The following definitions are in addition to those definitions in

38 U.S.C. 101 and 1965:

(a) The term policy means Group Policy No. G-32000, which was

effective September 29, 1965, purchased from the insurer pursuant to 38

U.S.C. 1966, executed and attested on December 30, 1965, and amended

thereafter.

(b) The term administrative office means the Office of

Servicemembers' Group Life Insurance located at 213 Washington Street,

Newark, NJ 07102.

* * * * *

(d) The term reinsurer means any life insurance company meeting all

the criteria set forth in Sec. 9.10 which reinsures a portion of the

total amount of insurance covered by the policy and issues individual

life insurance policies to members under the provisions of 38 U.S.C.

1968(b) and 1977(e).

(e) The term converter means any life insurance company meeting all

the criteria set forth in Sec. 9.10 which issues individual life

insurance policies to members under the provisions of 38 U.S.C. 1968(b)

and 1977(e).

* * * * *

3. Section 9.2 is revised to read as follows:

Sec. 9.2 Effective date; Applications.

(a) The effective date of Servicemen's Group Life Insurance will be

as follows:

(1) For members who qualify for continuation of coverage under 38

U.S.C. 1967(a)(3), the effective date shall be the 121st day after

termination of duty. An application and the initial premium must be

received by the administrative office within 120 days following

termination of duty.

(2) For members who qualify for coverage under 38 U.S.C. 1967(a)(3)

and whose coverage is extended because of total disability, the

effective date shall be the day following the end of the 1-year period

of extended coverage or the day following the end of the total

disability, whichever is the earlier date, but in no event before the

121st day following termination of duty. An application and the initial

premium must be received by the administrative office within 1 year

following termination of duty.

(b) The effective date of Veterans' Group Life Insurance will be as

follows:

(1) For members whose Servicemen's Group Life Insurance coverage

ceases under 38 U.S.C. 1968(a)(1)(A), the effective date shall be the

121st day after termination of duty. An application and the initial

premium must be received by the administrative office within 120 days

following termination of duty.

(2) For members whose Servicemen's Group Life Insurance coverage

was extended because of total disability, the effective date shall be

the day following the end of the 1-year period of extended coverage or

the day following the end of the total disability, whichever is the

earlier date, but in no event before the 121st day following

termination of duty. An application and the initial premium must be

received by the administrative office within 1 year following

termination of duty.

(3) For members who qualify for coverage under 38 U.S.C. 1967(b),

the effective date shall be the 121st day after termination of duty. An

application, the initial premium, and proof of disability must be

received by the administrative office within 120 days following

termination of duty.

(4) For members of the Individual Ready Reserve or the Inactive

National Guard, the effective date shall be the date an application and

the initial premium are received by the administrative office. The

application and initial premium must be received by the administrative

office within 120 days of becoming a member of either organization.

(Authority: 38 U.S.C. 1977(e))

(c) If either an application or the initial premium has not been

received by the administrative office within the time limits set forth

above, Servicemen's Group Life Insurance or Veterans' Group Life

Insurance coverage may still be granted if an application, the initial

premium, and evidence of insurability are received by the

administrative office within 1 year and 120 days following termination

of duty.

(d) The effective date for Servicemen's Group Life Insurance or

Veterans' Group Life Insurance in any case not otherwise covered under

this section or under 38 U.S.C. 1967(a) shall be the date an

application and the initial premium are received by the administrative

office.

(e) For purposes of this section, an application, an initial

premium, and any evidence necessary to effect Servicemen's Group Life

Insurance or Veterans' Group Life Insurance coverage will be considered

to have been received by the administrative office if:

(1) They are properly addressed to the administrative office, and

(2) The proper postage is affixed, and

(3) They are legibly postmarked within the time limit required for

receipt by the administrative office.

Sec. 9.3 [Removed]

4. Section 9.3 is removed.

Sec. 9.6 [Redesignated as Sec. 9.3]

5. Section 9.6 is redesignated as Sec. 9.3. In newly redesignated

Sec. 9.3, paragraph (b) is removed, and paragraph (c) is redesignated

as paragraph (b). Newly redesignated paragraph (b) is amended by

removing ``, Sec. 9.5(b)(1) or (2),'' wherever it appears; and

paragraph (b)(3), is amended by removing ``paragraph (c)(2)'' and

adding, in its place, ``paragraph (b)(2)'', and by removing ``under

Sec. 9.5(a)''; and paragraph (a) is revised to read as follows:

Sec. 9.3 Waiver or reduction of coverage.

(a) Full-time coverage which is in effect will terminate or be

reduced at midnight of the last day of the month a member's written

notice requesting such termination or reduction is received by his or

her uniformed service. In the case of a member paying premiums directly

to the administrative office, full-time coverage will terminate or be

reduced as of the last day of the month for which the last full premium

was paid. Termination or reduction of coverage is effective for the

entire remaining period of active duty unless the member reinstates his

or her coverage under the provisions of 38 U.S.C. 1967(c). If,

following termination of duty, a member reenters duty (in the same or

another uniformed service), a waiver or reduction for the previous

period of duty will not apply to the subsequent period of duty.

Secs. 9.4, 9.5, 9.7, 9.8, 9.10, 9.12, 9.14, 9.17, 9.34, and

9.36 [Removed];

Secs. 9.16, 9.18, 9.20, 9.22, 9.24, 9.26, 9.27, 9.28, 9.30 and

9.32 [Redesignated as Secs. 9.4 through 9.13]

6. Sections 9.4, 9.5, 9.7, 9.8, 9.10, 9.12, 9.14, 9.17, 9.34, and

9.36 are removed, and Secs. 9.16, 9.18, 9.20, 9.22, 9.24, 9.26, 9.27,

9.28, 9.30, and 9.32 are redesignated as Secs. 9.4, 9.5, 9.6, 9.7, 9.8,

9.9, 9.10, 9.11, 9.12, and 9.13, respectively.

[[Page 20136]]

7. In newly redesignated Sec. 9.4, paragraphs (a), (c), (d), (f),

(h), (i), and (j) are removed; paragraphs (b), (e), and (g) are

redesignated as paragraphs (a), (b), and (c), respectively; newly

redesignated paragraph (c) is amended by removing ``election of

optional settlement'' and adding, in its place, ``settlement option

election''; introductory text is added; and newly redesignated

paragraph (a) is revised to read as follows:

Sec. 9.4 Beneficiaries and options.

Any designation of beneficiary or election of settlement options is

subject to the provisions of 38 U.S.C. 1970 and 1977 and the following

provisions:

(a) Any designation of beneficiary or settlement option election

made by any member insured under Servicemen's Group Life Insurance for

full-time coverage or part-time coverage will remain in effect until

properly changed by the member or canceled automatically for any of the

following reasons:

(1) The insurance terminates following separation or release from

all duty in a uniformed service.

(2) The member enters on duty in another uniformed service.

(3) The member reenters on duty in the same uniformed service more

than 1 calendar day after separation or release from all duty in that

uniformed service.

* * * * *

8. In newly redesignated Sec. 9.5, paragraphs (a), (b), (c), and

(e) are removed; paragraphs (f), (g), and (h) are redesignated as

paragraphs (a), (b), and (c), respectively; introductory text is added,

and paragraph (d) is added to read as follows:

Sec. 9.5 Payment of proceeds.

Proceeds shall be paid in accordance with provisions set forth in

38 U.S.C. 1970 and the following provisions:

* * * * *

(d) If a member whose coverage is extended due to total disability

converts the group insurance to an individual policy which is effective

before he or she ceases to be totally disabled or before the end of 1

year following termination of duty, whichever is earlier, and dies

while group insurance would be in effect, except for such conversion,

the group insurance will be payable, provided the individual policy is

surrendered for a return of premiums and without further claim. When

there is no such surrender, any amount of group insurance in excess of

the amount of the individual policy will be payable.

(Authority: 38 U.S.C. 501)

Sec. 9.7 [Amended]

9. In newly redesignated Sec. 9.7, paragraph (a)(1) is amended by

removing ``under Sec. 9.5(b)(3)'' and adding, in its place, ``under 38

U.S.C. 1967(b)'', and by removing ``under Sec. 9.7(b)''. Paragraph

(a)(4) is amended by removing ``and Sec. 9.34''. Paragraph (a)(5) is

amended by removing ``under Sec. 9.7 (a) and (b)'' and adding, in its

place, ``under 38 U.S.C. 1968''. Paragraph (b) is amended by removing

``in Sec. 9.34 of this part'' and adding, in its place, ``under 38

U.S.C. 1973'', and by removing ``as required by Sec. 9.8(c) of this

part'' and adding, in its place, ``as required under 38 U.S.C.

1967(c)''. Paragraph (d) is amended by removing ``Chief Benefits

Director and/or'' and adding, in its place, ``Under Secretary for

Benefits and''.

10. In newly redesignated Sec. 9.8, paragraphs (a), (b), (c), (d),

and (e) are removed; paragraphs (f) and (g) are redesignated as

paragraphs (a) and (b), respectively; newly redesignated paragraph (a)

is amended by removing ``Sec. 9.34,''; and newly redesignated paragraph

(b) is amended by removing ``under Sec. 9.1(a)(3)'' and adding, in its

place, ``under 38 U.S.C. 1968(a)(4)(B)''; and introductory text is

added to read as follows:

Sec. 9.8 Termination of coverage.

Termination of coverage will be in accordance with the provisions

of 38 U.S.C. 1968 and Sec. 9.3 of this part and the following

provisions:

* * * * *

11. In newly redesignated Sec. 9.9, paragraphs (a), (a)(1), (a)(3),

(b)(1), (b)(2), (b)(3), and (d) are removed; paragraph (a)(2) is

redesignated as paragraph (a). Newly redesignated paragraph (a) is

amended by removing ``Sec. 9.7(b)'' and adding, in its place, ``38

U.S.C. 1967(b) or 1968(a)''; and by removing ``, in which event the

insurance may be converted effective the day after the end of such 120-

day period'' and adding ``.'' after ``duty''; and paragraph (b) is

revised to read as follows:

Sec. 9.9 Conversion privilege.

* * * * *

(b) The individual policy of life insurance to which an insured may

convert under 38 U.S.C. 1968(b) or 1977(e) shall not have disability or

other supplementary benefits and shall not be term insurance or any

policy which does not provide for cash values. Term riders providing

level or decreasing insurance for which an additional premium is

charged may be attached to an eligible basic conversion policy, but the

rider will be excluded from the conversion pool agreement under the

policy.

* * * * *

12. In newly redesignated Sec. 9.12, paragraph (a) is removed, and

paragraphs (b), (c), and (d) are redesignated as paragraphs (a), (b),

and (c), respectively. Newly redesignated paragraph (a), is amended by

removing ``of the remaining balance'', and by removing ``on December

31, 1964,''; newly redesignated paragraph (b) is amended by removing

``paragraph (b)''and adding, in its place, ``paragraph (a)''; newly

redesignated paragraph (c) is amended by removing ``Sec. 9.28'' and

adding, in its place, ``Sec. 9.11''; and the introductory text is

revised to read as follows:

Sec. 9.12 Reinsurance formula.

The allocation of insurance to the insurer and each reinsurer will

be based upon the following:

* * * * *

Sec. 9.13 [Amended]

12. In newly redesignated Sec. 9.13, the first sentence is removed.

[FR Doc. 96-11157 Filed 5-3-96; 8:45 am]

BILLING CODE 8320-01-P