National military life insurance premium payment and loan modification


Proposed rule.

Part CFR: “38 CFR Part 8”

RIN number: “RIN 2900-AR29”

Reference: “86 FR 56846”

Page number: “56846”

“Proposed rules”

Agency: “Department of Veterans Affairs. “

SUMMARY: The Department of Veterans Affairs (VA) proposes to modify its National military life insurance payment to offer Insurance for disabled veterans in service policyholders the option of paying government life insurance premiums only on a monthly or annual basis. Virginia also proposes to increase the amount that veterans policyholders are eligible to borrow against the value of their life insurance policies and to adjust the interest rates charged for fixed rate loans in certain circumstances .

DATES: Comments must be received no later than December 13, 2021.

ADDRESSES: Comments can be submitted via www.Regulations.gov. Comments should indicate that they are submitted in response to “RIN 2900-AR29 – National Life Insurance Premium Payment and Loan Modification”. Comments received will be made available on Regulations.gov for public viewing, inspection or copies.

FOR MORE INFORMATION, CONTACT: Paul Tisserand, Insurance specialist, Department of Veterans Affairs Insurance Service (310 / 290B), 5000 Wissahickon Avenue, Philadelphia, Pennsylvania 19144, (215) 842-2000, ext. 4263. (This is not a toll free number.)

ADDITIONAL INFORMATION: Under the authority of 38 USC 1901-1929, Virginia currently administers four separate life insurance programs: National military life insurance (NSLI), Special life insurance for veterans (VSLI), Insurance reopened for veterans (VRI), and Insurance for disabled veterans in service (S-DVI). From January 31, 2021, these life insurance programs provide insurance coverage under 458,424 policies held by veterans.

1. Payment of premiums for programs issuing new policies

Section 1908 of Title 38, USC, requires Virginia to “prescribe the time and manner of payment of insurance premiums” for these programs by making regulations. Virginia implemented this authority in 38 CFR 8.2 (c). Section 8.2 (c) requires veteran policyholders to pay premiums on a monthly basis, with the option of paying premiums on a quarterly, semi-annual or annual basis if premiums are paid in advance. NSLI, VSLI and VRI are closed to new issues, and Virginia does not propose to change the premium payment requirements for these life insurance programs. However, S-DVI remains open to new issues and currently offers coverage for veterans with a service-related disability. More than 275,000 veteran policyholders are insured under S-DVI, and less than 3,000 pay premiums on a quarterly or semi-annual basis. Since very few S-DVI policyholders pay premiums on a quarterly or semi-annual basis and these payment options add administrative complexity and program costs associated with calculating premiums due for policyholders who choose these payment options. payment, Virginia proposes to eliminate these two payment options for policyholders receiving a future broadcast from S-DVI. Additionally, research shows that lapse rates tend to increase with the number of premium payments made each year, with the notable exception of monthly payment methods. See, for example, Cathy Ho & Nancy Muise, we Persistence of Individual Life: Guaranteed and Simplified Issue – A Joint Study Sponsored by Soc’y of Actuaries & LIMRA 16 (2013), https://www.soa.org/globalassets/assets/Files/Research/Exp-Study/ research -2013-gisi-study.pdf (last visit August 5, 2021). Thus, we propose to modify SECOND 8.2 (c) to require policyholders receiving a future issue of S-DVI to submit premiums on the monthly policy maturity date or in advance on an annual basis. Veterans who were previously insured under S-DVI will retain the option of paying premiums on a monthly basis or in advance on a quarterly, semi-annual or annual basis. The proposed amendment is consistent with 38 CFR 8.4, which allows veterans policyholders to pay premiums through a monthly deduction from Disability Award or certain other payments due from Virginia. The proposed rule would also apply to veteran insureds who become insured under 38 USC 1922B (a) (1). (At January 1, 2023, Virginia begin issuing policies under a new insurance program for disabled veterans, authorized by section 2004 (a) (1) of the Johnny Isakson and David P. Roe, MD Veterans Health Care and Benefits Improvement Act of 2020, Pub. L. 116-315, and codified at 38 USC 1922B.) In addition, we would add a paragraph in SECOND 8.2 (c) to clarify that NSLI, VSLI and VRI policyholders, as well as current S-DVI policyholders, may continue to pay premiums on a monthly basis or in advance on an annual, semi-annual or quarterly.

2. Adjust policy loan amounts and interest rates

Section 1906 of Title 38, USC, provides Virginia discretion to make reasonable and practicable provisions regarding the value of cash and loans by issuing regulations. In 38 CFR 8.13 (a), Virginia stipulate that “United States will lend to the insured. . . any amount that does not exceed 94 percent of the [policy’s] reserve. “Standard insurance industry practice allows policyholders to access the total cash value of their policies. To align with standard insurance industry practice, Virginia proposes to provide veteran policyholders with access to the full cash value that the policies accumulate during the period in which veteran policyholders pay life insurance premiums. Thereby, Virginia proposes to withdraw from SECOND 8.13 (a) the 94 percent limit on the amount that Veteran Insureds can borrow.

In addition, managing multiple loans for a single policyholder is administratively complex and costly. In addition, it would be prohibitively expensive to modify current technology to support multiple loans for a single policyholder. Thereby, Virginia proposes to modify SECOND 8.13 (d) require veteran policyholders with existing fixed rate loans who wish to request additional loans on their policies to refinance those existing fixed rate loans into new variable rate loans subject to a new lending rate equal to the variable loan rates available from Virginia at the time of the loan application. This practice is acceptable in the insurance industry and would allow Virginia provide loans against the remaining available cash value of veterans life insurance coverage and reduce the administrative complexity and costs associated with managing multiple loans for a single policyholder.

Executive decrees 12866 and 13563

Decrees 12866 and 13563 require agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is needed, to select regulatory approaches that maximize the net benefits (including potential effects on the economy, environment, public health and safety, and other benefits; impacts and equity). Executive Decree 13563 (Better Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules and promoting flexibility. The Office of Information and Regulatory Affairs determined that this rule is not a significant regulatory action under Executive Order 12866. The Regulatory Impact Assessment associated with this regulation can be viewed as a supporting document at www.regulations.gov.

Regulatory Flexibility Act

The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as defined in the Regulatory Flexibility Act, 5 USC 601-612. This proposed rule would directly affect only individuals and would not directly affect small entities. Therefore, in accordance with 5 USC 605 (b), the initial and final regulatory flexibility analysis requirements of 5 USC 603 and 604 do not apply.

Unfunded mandates

The 1995 Unfunded Mandates Reform Act, 2 USC 1532, requires agencies to prepare an assessment of anticipated costs and benefits before issuing a rule that may result in spending by state, local, and government governments. tribals, as a whole, or by the private sector, $ 100 million or more (adjusted annually for inflation) over the course of a year. This proposed rule would not have such an effect on state, local and tribal governments, or on the private sector.

PAPER REDUCTION Act

This proposed rule does not contain any provision constituting information gathering under the Paperwork Reduction Act of 1995 (44 USC 3501-3521).

Federal domestic help catalog

The Federal Homemaker Catalog numbers and titles for the programs affected by this document are 64.030, Veterans Life Insurance – Face Amount of New Life Insurance Policies Issued, and 64.031-Veterans Life Insurance- -Direct payments for insurance.

List of topics in 38 CFR Part 8 Disability benefits, life insurance, loan programs – veterans, military personnel, veterans.

Authorized signatory

Denis mcdonough, Secretary of Veterans Affairs, approved this document on September 14, 2021, and authorized the undersigned to sign and submit the document to the Federal Register Office for electronic publication as an official document of the Department of Veterans Affairs.

Jeffrey M. Martin,

Assistant Director, Office of Regulatory Policy and Management, Secretary’s office, Department of Veterans Affairs.

For the reasons stated in the preamble, the Department of Veterans Affairs proposes to modify 38 CFR part 8 as indicated below:

PART 8 – NATIONAL ACTIVE LIFE INSURANCE

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

Authority: 38 USC 501, 1901-1929, 1981-1988.

2. Edit SECOND 8.2 by revising paragraph (c) (2) and adding paragraph (c) (3) as follows:

SECOND 8.2 Payment of premiums.

*****

(vs) * * *

*****

(2) Policyholders can pay premiums in advance on an annual basis.

(3) Policyholders insured from [EFFECTIVE DATE OF THE FINAL RULE] may pay premiums in advance on an annual, semi-annual or quarterly basis.

*****

3. Edit SECOND 8.13:

a. In paragraph (a), by deleting “which will not exceed 94%” and adding “policy” before “reserve” in the first sentence; and

b. By revising paragraph (d).

The revision reads as follows:

SECOND 8.13 Policy loans.

*****

(d) Notwithstanding anything else in this section, the variable loan rate shall not exceed 12 percent or be less than 5 percent per annum. For policyholders with an existing fixed rate loan who subsequently request an additional loan on the same contract, the existing fixed rate loan will be refinanced into a new variable rate loan at the variable rate in force at the time of the new request. loan.

[FR Doc. 2021-22208 Filed 10-12-21; 8:45 am]

BILLING CODE 8320-01-P

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