National Service Life Insurance

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 8

RIN 2900 AH55

National Service 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 captioned ``National Service Life Insurance'' which were

established under the National Service Life Insurance Act of 1940, as

amended (38 U.S.C. 1901-1929, 1981-1988). It deletes provisions that

have become obsolete. It also deletes provisions contained in insurance

policies that consist of restatements of statutes and other material

not required to be published in the Federal Register. Additionally, it

deletes other restatements of statute and makes changes for purposes of

clarity.

EFFECTIVE DATE: June 10, 1996.

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

Administration, Department of Veterans Affairs Regional Office and

Insurance Center, PO Box 8079, Philadelphia, PA 19101, (215) 951-5718.

SUPPLEMENTARY INFORMATION: Under the umbrella of 38 CFR part 8, four

distinct life insurance programs exist, namely, National Service Life

Insurance (NSLI), Veterans' Special Life Insurance (VSLI), Veterans'

Reopened Life Insurance (VRI) and Service Disabled Veterans Insurance

(SDVI). Most of the policyholders insured under NSLI served during

World War II, and their average age is now 72 years. The NSLI program

opened in October 1940, and over 22 million policies were issued, of

which about 2 million remain. The NSLI program remained open until

April 1951, when two new programs were established for Korean War

veterans. VSLI, opened in April 1951, was closed to new issues in

December 1956. SDVI, also opened in April 1951, is the only program

still available for new issues to veterans with service-connected

disabilities. The VRI program was a limited one-year reopening, from

May 1965 to May 1966, of the NSLI and VSLI programs to certain disabled

veterans. As a result of the closure of the NSLI, VSLI, and VRI

programs, provisions concerning issuance are deleted because they are

obsolete. Furthermore, while these three programs provide for certain

disability provisions, there are no insureds remaining who are age

eligible for issuance of such riders and, hence, these provisions are

further deleted as obsolete. Other provisions, such as those

implementing the Servicemen's Indemnity Act of 1940, and other

``sunset'' provisions, are also obsolete and deleted accordingly.

Also, provisions which list guaranteed payments are deleted since

such guaranteed payments reflect only a minimum payment and subsequent

legislation allows for higher payment schedules. Thus, publication of

minimum payments has no practical value. Provisions that are contained

in insurance polices are likewise deleted

[[Page 29290]]

as unnecessary. These policy provisions contain restatements of statute

and other material not required to be published in the Federal

Register. Additionally, other provisions that merely restate statutory

provisions are likewise deleted.

Lastly, some provisions are changed for purposes of clarity.

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.

The Secretary of Veterans Affairs thereby 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. This final rule will not affect any

entity since it does not contain any substantive provision. 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 8

Life insurance, Mortgage insurance, Veterans.

Approved: May 31, 1996.

Jesse Brown,

Secretary of Veterans Affairs.

For the reasons set out in the preamble 38 CFR part 8 is amended as

set forth below:

PART 8--NATIONAL SERVICE LIFE INSURANCE

1. The authority citation for part 8 continues to read as follows:

Authority: 38 U.S.C. 501, 1901-1929, 1981-1988, unless otherwise

noted.

2. The undesignated center heading preceding Secs. 8.16, 8.44,

8.49, 8.55, 8.59, 8.60, 8.61, 8.62, 8.70, 8.71, 8.80a, 8.100, 8.102,

8.103, 8.110, 8.113, 8.114, and 8.116 are removed.

Secs. 8.0, 8.3 through 8.5, 8.7, 8.10, 8.11, 8.15, 8.16 through 8.19,

8.26a, 8.32, 8.34 through 8.36, 8.40, 8.41, 8.44, 8.47 through 8.51,

8.54, 8.55, 8.59, 8.60, 8.61, 8.62, 8.63, 8.70, 8.71, 8.75 through

8.78, 8.80, 8.80a through 8.83, 8.88 through 8.93, 8.95 through 8.95b,

8.96a through 8.99c, 8.100, 8.102, 8.103 and 8.110 through 8.112b,

8.113, 8.114 and 8.116 [Removed]

3. Sections 8.0, 8.3 through 8.5, 8.7, 8.10, 8.11, 8.15 through

8.19, 8.26a, 8.32, 8.34 through 8.36, 8.40, 8.41, 8.44, 8.47 through

8.51, 8.54, 8.55, 8.59 through 8.63, 8.70, 8.71, 8.75 through 8.78,

8.80 through 8.83, 8.88 through 8.93, 8.95 through 8.95b, 8.96a through

8.103, and 8.110 through 8.116 are removed.

Sec. 8.1 [Redesignated as Sec. 8.0]

4. Section 8.1 is redesignated as Sec. 8.0.

Sec. 8.2 [Redesignated as Sec. 8.1]

5. Section 8.2 is redesignated as Sec. 8.1 following the

undesignated center heading EFFECTIVE DATE.

Secs. 8.7a, 8.7b, 8.7c, 8.8, 8.9 [Redesignated as Secs. 8.3 through

8.7, respectively]

6. Sections 8.7a through 8.7c, 8.8 and 8.9 are redesignated as

Secs. 8.3 through 8.7, respectively, following the undesignated center

heading ``PREMIUMS''.

Sec. 8.12 [Redesignated as Sec. 8.8]

7. Section 8.12 is redesignated as Sec. 8.8 following the

undesignated center heading ``CALCULATION OF TIME PERIOD''.

Sec. 8.14 [Redesignated as Sec. 8.9]

8. Secton 8.14 is redesignated as Sec. 8.9 following the

undesignated center heading ``GRACE PERIOD''.

Secs. 8.22, 8.23, 8.24 [Redesignated as Secs. 8.10 through 8.12,

respectively]

9. Sections 8.22 through 8.24 are redesignated as Secs. 8.10

through 8.12, respectively, following the undesignated center heading

``REINSTATEMENT''.

Sec. 8.26 [Redesignated as Sec. 8.13]

10. Section 8.26 is redesignated as Sec. 8.13 following the

undesignated center heading ``DIVIDENDS''.

Secs. 8.27, 8.27a, 8.28 [Redesignated as Secs. 8.114 through 8.16,

respectively]

11. Sections 8.27 and 8.28 are redesignated as Secs. 8.14 through

8.16, respectively, following the undesignated center heading ``CASH

VALUE AND POLICY LOAN''.

Secs. 8.29, 8.30 [Redesignated as Secs. 8.17 and 8.18, respectively]

12. Sections 8.29 and 8.30 are redesignated as Secs. 8.17 and 8.18,

respectively, following the undesignated center heading ``EXTENDED TERM

AND PAID-UP INSURANCE''.

Sec. 8.33 [Redesignated as Sec. 8.19]

13. Section 8.33 is redesignated Sec. 8.19 following the

undesignated center heading ``CHANGE IN PLAN''.

Secs. 8.42, 8.43 [Redesignated as Secs. 8.20 and 8.21, respectively]

14. Sections 8.42 and 8.43 are redesignated as Secs. 8.20 and 8.21,

respectively, following the undesignated center heading ``PREMIUM

WAIVERS AND TOTAL DISABILITY''.

Sec. 8.46 [Redesignated as Sec. 8.22]

15. Section 8.46 is redesignated as Sec. 8.22 following the

undesignated center heading ``BENEFICIARIES''.

Sec. 8.52 [Redesignated as Sec. 8.23]

16. Section 8.52 is redesignated as Sec. 8.23 following the

undesignated center heading ``PROOF OF DEATH, AGE, OR RELATIONSHIP''.

Sec. 8.56 [Redesignated as Sec. 8.24]

17. Section 8.56 is redesignated as Sec. 8.24 following the

undesignated center heading ``AGE''.

Secs. 8.64, 8.65, 8.66 [Redesignated as Secs. 8.25 through 8.27,

respectively]

18. Sections 8.64 through 8.66 are redesignated as 8.25 through

8.27, respectively, following the undesignated center heading

``EXAMINATIONS''.

Sec. 8.69 [Redesignated as Sec. 8.28]

19. Section 8.69 is redesignated as Sec. 8.28 following the

undesignated center heading ``EXTRA HAZARDS''.

Sec. 8.79 [Redesignated as Sec. 8.29]

20. Section 8.79 is redesignated as Sec. 8.29 following the

undesignated center heading ``OPTIONAL SETTLEMENTS''.

Sec. 8.85 [Redesignated as Sec. 8.30]

21. Section 8.85 is redesignated as Sec. 8.30 following the

undesignated center heading ``RENEWAL OF TERM INSURANCE''.

Secs. 8.94, 8.96 [Redesignated as Sec. 8.31 and 8.32, respectively]

22. Sections 8.94 and 8.96 are redesignated as Secs. 8.31 and 8.32,

respectively, following the undesignated center heading ``SETTLEMENT OF

INSURANCE MATURING ON OR AFTER AUGUST 1, 1946''.

Sec. 8.108 [Redesignated as Sec. 8.33]

23. Section 8.108 is redesignated as Sec. 8.33 following the

undesignated center heading ``NATIONAL SERVICE LIFE INSURANCE POLICY''.

Secs. 8.117, 8.118, 8.119 [Redesignated as Secs. 8.34 through 8.36]

24. Sections 8.117 through 8.119 are redesignated as Secs. 8.34

through 8.36, respectively, following the undesignated center heading

``APPEALS''.

25. In newly redesignated Sec. 8.0, paragraph (b) is amended by

removing ``by the Chief Benefits Director. The Chief Benefits Director

is responsible for readjusting such standards to reflect medical

advances and current experience affecting mortality and disability''.

26. The newly redesignated Sec. 8.1 is revised to read as follows:

[[Page 29291]]

Sec. 8.1 Effective date for insurance issued under section 1922(a) of

title 38 U.S.C.

The effective date may be established upon written request of the

applicant as follows:

(a) As of the date on which valid application and tender of premium

are made.

(b) As of the first day of the month in which valid application and

tender of premium are made.

(c) As of the first day of the month following the month in which

valid application and tender of premium are made.

(d) As of the first day of any month, but not more than 6 months

prior to the month in which valid application and tender of premium are

made: Provided, That there be paid an amount equal to the full reserve

on the insurance at the end of the month prior to the month in which

application is made, and the full premium on the amount of insurance

for the month in which application is made.

27. The newly redesignated Sec. 8.2 is revised to read as follows:

Sec. 8.2 Payment of premiums.

Premiums on National Service Life Insurance may be paid by direct

remittance to the Department of Veterans Affairs, or by allotment of

service pay or retirement pay.

(Authority: 38 U.S.C. 1908)

28. The newly redesignated Sec. 8.3 is revised to read as follows:

Sec. 8.3 Correction of errors.

Where timely tender of the required premium is made by check or

draft which is not paid on presentation for payment, but it is shown by

satisfactory evidence that such nonpayment was due to an error on the

part of the bank on which such check or draft was drawn, or was the

result of an error in the instrument or in the execution thereof, and

not for the lack of funds, the insured will be given an additional 31

days from the date of the letter that gives notice of such nonpayment

in which to tender an amount sufficient to pay all premiums through the

current month.

Sec. 8.5 [Amended]

29. In newly redesignated Sec. 8.5, paragraph (a)(5) is amended by

removing, ``(Secs. 8.14 and 8.15)'' and adding, in its place,

``(Sec. 8.9)''; and paragraphs (a)(7) and (b)(3), are amended by

removing ``(Sec. 8.29)'' and adding, in its place ``(Sec. 8.17)''.

Sec. 8.6 [Amended]

30. In newly redesignated Sec. 8.6, paragraph (a) is amended by

removing ``section 5502(f) of title 38 U.S.C., and Sec. 13.57'' and

adding, in its place, ``Part 13''.

31. The newly redesignated Sec. 8.7 is revised to read as follows:

Sec. 8.7 Authorization for deduction of premiums from compensation,

retirement pay, or pension.

Deductions from benefits for the payment of premiums shall be

effective on the month the authorization for such deduction is received

by the Department of Veterans Affairs or on any successive month

specified by the insured. Such deduction shall be applied to the

premium due in the succeeding calendar month and shall continue monthly

so long as the benefit payments are due and payable to the insured and

the amount is sufficient to pay the premium or until such authorization

is revoked by the veteran or otherwise terminated. When premium

deductions are authorized by the insured, the premium will be treated

as paid for purposes of preventing lapse of the insurance, so long as

there is due and payable to the insured a benefit amount sufficient to

provide the premium payment. If authorization was executed by the

Director of a VA hospital or domiciliary or chief officer of a State

hospital or other institution to make deductions from an institutional

award, the authorization will cease and terminate at the termination of

the institutional award and the insurance shall lapse unless another

authorization for deduction from monthly benefit payments is executed

by the insured. The insured will be notified by letter directed to the

last address of record of the termination of the authorization to

deduct premiums, but failure to give such notice shall not prevent

lapse.

Sec. 8.8 [Amended]

32. Newly redesignated Sec. 8.8 is amended by removing

``Secs. 8.7a, 8.7b, or 8.7c'' and adding, in its place, ``Secs. 8.3,

8.4 or 8.5''.

33. The newly redesignated Sec. 8.9 is revised to read as follows:

Sec. 8.9 Establishment of grace period.

For the payment of any premium under a National Service Life

Insurance policy, a grace period of 31 days from and after the date on

which the premium was due will be allowed without interest during which

time the policy will remain in force. When a payment of premium is

mailed, the postmark date will be accepted as the date on which the

payment was tendered. If a premium is not paid before the expiration of

the grace period, the effective date of lapse shall be the due date of

the unpaid premium. If the policy matures within the grace period, the

unpaid premium or premiums shall be deducted from the amount of

insurance payable.

34. The newly redesignated Sec. 8.10 is revised to read as follows:

Sec. 8.10 Reinstatement of National Service Life Insurance except

insurance issued pursuant to section 1925 of title 38 U.S.C.

(a) Any policy which lapses and which is not surrendered for a cash

value or for paid-up insurance, may be reinstated upon written

application signed by the applicant, payment of all premiums in

arrears, and evidence of good health as required under Sec. 8.11 (a) or

(b), whichever is applicable. If a policy is not reinstated within 6

months from the due date of the premium in default, interest must be

paid in addition to premiums for all months in arrears from their

respective due dates at the rate of 5 percent per annum, compounded

annually. The payment or reinstatement of any indebtedness against a

policy must be made upon application for reinstatement, and any excess

of indebtedness and interest over the reserve of the policy must be

paid at that time. A lapsed National Service Life Insurance policy

which is in force under extended term insurance may be reinstated

within 5 years from the date extended insurance would expire upon

application and payment of all premiums in arrears with the required

interest. In any case in which the extended insurance under an

endowment policy provides protection to the end of the endowment

period, the policy may be reinstated at any time before maturity upon

application and payment of the premiums with the required interest. A

policy on the level term premium plan may be reinstated within 5 years

of the date of lapse upon written application signed by the insured,

evidence of insurability and payment of two monthly premiums, one for

the month of the lapse, the other for the month of reinstatement.

(b) Reinstatement of insurance issued under section 1925, title 38

U.S.C. Any policy of insurance issued under 38 U.S.C. 1925 which has

been lapsed for not more than 5 years shall be reinstated under the

same provisions of paragraph (a) of this section.

(c) Effective date of reinstatements. Reinstatement is effected on

the date an acceptable application and the required monetary payments

are delivered to the Department of Veterans Affairs. If application for

reinstatement is submitted by mail, properly addressed to the

Department of Veterans Affairs, the postmark date shall be the date of

[[Page 29292]]

delivery. The effective date of reinstatement of the insurance shall be

the last monthly premium due date prior to the delivery or postmark

date of the application for reinstatement, except where reinstatement

is effected on the due date of a premium, then in such case that date

shall be the reinstatement date.

(d) Inquiry during the grace period. When the insured makes inquiry

prior to the expiration of the grace period disclosing a clear intent

to continue insurance protection, such as a request for information

concerning premium rates or conversion privileges, etc., an additional

reasonable period not exceeding 60 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.

Sec. 8.11 [Amended]

35. In newly redesignated Sec. 8.11, paragraph (b) is amended by

removing ``Sec. 8.1'' and adding, in its place, ``Sec. 8.0''; it is

further amended by removing ``Sec. 8.0 (b), (d)(2)(i), or (d)(2)(ii)''

and adding, in its place, ``38 U.S.C. 1922(a), 1925(b), or 1925(c)'';

and by removing ``Sec. 8.0(d)(2)(iii)'' and adding, in its place, ``38

U.S.C. 1925(a)''.

Sec. 8.12 [Amended]

36. Newly redesignated Sec. 8.12 is amended by removing

``Sec. 8.23'' and adding, in its place, ``Sec. 8.11''; and by removing

``Sec. 8.23(a)'' and adding, in its place, ``Sec. 8.11(a)''.

Sec. 8.13 [Amended]

37. In newly redesignated Sec. 8.13, paragraph (f) is amended by

removing ``in Sec. 8.60'' and adding, in its place, ``Sec. 5301 of

title 38 U.S.C.''; and paragraph (g) is amended by removing

``Secs. 8.29 and 8.30,'' and adding, in its place, ``Secs. 8.17 and

8.18''.

38. The newly redesignated Sec. 8.14 is revised to read as follows:

Sec. 8.14 Cash value and policy loan.

(a) Provisions for cash value, paid-up insurance, and extended term

insurance, except as provided in Sec. 8.17(b), shall become effective

at the completion of the first policy year on any plan of National

Service Life Insurance other than the 5-year level premium term plan.

The cash value at the end of the first policy year and at the end of

any policy year thereafter, for which premiums have been paid in full,

shall be the reserve with any dividend accumulations, where applicable.

(b) Upon written request and upon complete surrender of the

insurance and all claims thereunder, the United States will pay to the

insured the cash value of the policy less any indebtedness, provided

the policy has been in force by payment or waiver of the premiums for

at least 1 year. Paid-up additions do not have to be in force for 1

year before they have cash values. Unless otherwise requested by the

insured, a surrender will be deemed completed as of the end of the

premium month in which the application for cash surrender is delivered

to the Department of Veterans Affairs, or as of the date of the check

for the cash value, whichever is later. If the application is forwarded

by mail, properly addressed, the postmark date will be taken as the

date of delivery. If it is forwarded through military channels, the

date the application is placed in military channels will be taken as

the date of delivery.

(c) All values, reserves and net single premiums on participating

National Service Life Insurance, other than as provided in paragraph

(e) of this section, shall be based on the American Experience Table of

Mortality, with interest at the rate of 3 percent per annum. For each

month after the first policy year for which month a premium has been

paid or waived, the reserve at the end of the preceding policy year

shall be increased by one-twelfth of the increase in reserve for the

current policy year.

(Authority: 38 U.S.C. 1902, 1906)

(d) All values on insurance, reserves, and net single premiums

issued under the provisions of section 1922(a) of title 38 U.S.C., and

on modified life and ordinary life plans of insurance issued under

section 1904(c), (d), and (e), respectively, shall be based on the

Commissioners 1941 Standard Ordinary Table of Mortality with interest

at the rate of 2\1/4\ percent per annum. Values between policy years

shall be proportionally adjusted.

(Authority: 38 U.S.C. 1904, 1906)

(e) All values on insurance, reserves, and net single premiums

issued under the provisions of section 1923(b) of title 38 U.S.C., and

on modified life and ordinary life plans of such insurance issued under

section 1904 (c), (d), and (e), respectively, shall be based on table

X-18 (1950-54 Intercompany Table of Mortality) with interest at the

rate of 2\1/2\ percent per annum. Values between policy years shall be

proportionally adjusted.

(Authority: 38 U.S.C. 1904, 1923)

(f) All values, reserves, and net single premiums on

nonparticipating insurance on which the requirements of good health

were waived under the provisions of section 602(c)(2) of the National

Service Life Insurance Act, as amended (``H'' Insurance), and on the

modified life and ordinary life plans of such ``H'' insurance issued

under section 1904 (c), (d), and (e), respectively, of title 38 U.S.C.

shall be based on the American Experience Table of Mortality, with

interest at the rate of 3 percent per annum. Values between policy

years shall be proportionally adjusted. The provisions of the ``Net

Cash Value'' clause in National Service Life Insurance policies are

hereby amended accordingly.

(g) All values, reserves, and net single premiums on participating

modified life and ordinary life plan insurance issued under section

1904 (b), (d), and (e), respectively, of title 38 U.S.C. shall be based

on the 1958 Commissioners Standard Ordinary Basic Table of Mortality

and interest at the rate of 3 percent per annum. Values between policy

years shall be proportionally adjusted.

(h) All values, reserves, and net single premiums on insurance

issued under the provisions of section 1925(b) of title 38 U.S.C, and

on modified life and ordinary life plans of such insurance issued under

section 1904 (c), (d), and (e), respectively, shall be based on the

1958 Commissioners Standard Ordinary Basic Mortality Table and interest

at the rate of 3\1/2\ percent per annum. Values between policy years

shall be proportionally adjusted.

(i) All values, reserves, and net single premiums on insurance

issued under the provisions of section 1925(c) of title 38 U.S.C., and

on modified life, ordinary life, 20-payment life and 30-payment life

plans, where appropriate, of such insurance issued under section 1904

(c), (d), and (e), respectively, shall be based on the American

Experience Table of Mortality and interest at the rate of 3\1/2\

percent per annum. Values between policy years shall be proportionally

adjusted.

(Authority: 38 U.S.C. 1906)

(ii) [Reserved]

Sec. 8.15 [Amended]

39. In newly redesignated Sec. 8.15, paragraph (a) is amended by

removing ``under the provisions of Sec. 8.27 (a) through (g) the

insured may elect to receive payment in monthly installments under

option 2 (Secs. 8.79, 8.80, 8.80c, and 8.81, as applicable) or as a

refund life income option in accordance with the applicable provisions

of Secs. 8.80, 8.80c, 8.81, and 8.92a.'' and adding, in its place,

``the insured may elect to receive payment in monthly installments

under option 2 or as a refund life income.''; by removing ``Sec. 8.89''

and adding, in its place, ``title

[[Page 29293]]

38 U.S.C. 1917''; by removing paragraphs (b) and (c).

Sec. 8.18 [Amended]

40. Newly redesignated Sec. 8.18 is amended by removing ``as set

forth in Sec. 8.26(a)''.

41. The newly redesignated Sec. 8.19 is revised to read as follows:

Sec. 8.19 Conversion of a 5-year level premium term policy as provided

for under Sec. 1904 of title 38 U.S.C.

National Service Life Insurance on the level premium term plan

which is in force may be exchanged for a permanent plan policy upon

written application by the insured and the payment of the current

monthly premium at the attained age for the plan of insurance selected

(except where premium waiver under 38 U.S.C. 1912 is effective). The

reserve (if any) on the policy will be allowed as a credit on the

current monthly premium except where premium waiver is effective.

Conversion to an endowment plan may not be made while the insured is

totally disabled. The conversion will be made without medical

examination, except when deemed necessary to determine whether an

applicant for conversion to an endowment plan is totally disabled, and

upon complete surrender of the term insurance while in force by payment

or waiver of premium.

(Authority: 38 U.S.C. 1904)

42. The newly redesignated Sec. 8.21 is revised to read as follows:

Sec. 8.21 Total disability-speech.

The organic loss of speech shall be deemed to be total disability

under National Service Life Insurance. Organic loss of speech will mean

the loss of the ability to express oneself, both by voice and whisper,

through the normal organs of speech if such loss is caused by organic

changes in such organs. Where such loss exists, the fact that some

speech can be produced through the use of an artificial appliance or

other organs of the body will be disregarded.

43. The newly redesignated Sec. 8.22 is revised to read as follows:

Sec. 8.22 Beneficiary and optional settlement changes.

The insured shall have the right at any time, and from time to

time, and without the knowledge or consent of the beneficiary to cancel

or change a beneficiary and/or optional settlement designation. A

change of beneficiary or optional settlement to be effective must be

made by notice in writing signed by the insured and forwarded to the

Department of Veterans Affairs by the insured or designated agent, and

must contain sufficient information to identify the insured. A

beneficiary designation and an optional settlement selection, but not a

change of beneficiary, may be made by last will and testament duly

probated. Upon receipt by the Department of Veterans Affairs, a valid

designation or change of beneficiary or option shall be deemed to be

effective as of the date of execution. Any payment made before proper

notice of designation or change of beneficiary has been received in the

Department of Veterans Affairs shall be deemed to have been properly

made and to satisfy fully the obligations of the United States under

such insurance policy to the extent of such payments.

Sec. 8.23 [Amended]

44. Newly redesignated Sec. 8.23 is amended by removing ``of

Secs. 3.1(j), 3.204, 3.205 (a) and (b), 3.209, 3.211, and 3.212'' and

adding, in its place, ``found in Part 3''.

Sec. 8.25 [Amended]

45. In newly redesignated Sec. 8.25, paragraph (b) is removed; and

paragraph (a) is amended by removing ``(a) Except as provided in

paragraph (b) of this section where'' and adding, in its place,

``Where''.

Sec. 8.27 [Amended]

46. Newly redesignated Sec. 8.27 is amended by removing

``Sec. 8.64(b)'' and adding, in its place, ``Sec. 8.25''.

47. The newly redesignated Sec. 8.29 is revised to read as follows:

Sec. 8.29 Options.

Insurance will be paid in a lump sum only when selected by the

insured during his or her lifetime or by his or her last will and

testament.

Sec. 8.30 [Amended]

48. In newly redesignated Sec. 8.30, in the heading, ``and limited

convertible 5-year level premium plan'' is removed; in paragraph (a),

in the first sentence, ``except as provided in paragraph (c) of this

section,'' is removed; and ``or limited convertible 5-year level

premium term plan'' is removed; in paragraph (b)(3)(ii), ``(Sec. 8.1)''

is removed and ``(8.0)'' is added in its place; paragraph (c) is

removed

49. Newly redesignated Sec. 8.32 is revised to read as follows:

Sec. 8.32 Application for reinstatement of total disability income

provision.

A total disability income provision which is lapsed may be

reinstated if the insured meets the same requirements as those for

reinstatement of the policy to which the total disability income

provision is attached; except that in no event shall the requirement of

a health statement or other medical evidence be waived in connection

with the reinstatement of the total disability income provision.

50. Newly redesignated Sec. 8.33 is revised to read as follows:

Sec. 8.33 Policy provisions.

Contracts of insurance authorized to be made in accordance with the

terms and conditions set forth in the forms and policy plans are

subject in all respects to the applicable provisions of title 38

U.S.C., amendments and supplements thereto, and applicable Department

of Veterans Affairs regulations promulgated pursuant thereto, all of

which together with the insured's application, required evidence of

health, including physical examination, if required, and tender of

premium shall constitute the contract.

[FR Doc. 96-14365 Filed 6-7-96; 8:45 am]

BILLING CODE 8320-01-P