Rule proposed by VA: National life insurance premium payment, loan modification

WASHINGTON, October 14 — The US Department of Veterans Affairs issued a proposed rule (38 CFR Part 8), published in the Federal Register to October 13, 2021, titled: “National Life Insurance Premium Payment and Loan Modification”.

The proposed rule was issued by Jeffrey M. Martin, Assistant Director, Office of Regulatory Policy and Management, Secretary’s office, Department of Veterans Affairs.

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

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.)

* * *

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 .

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), Reopened Veterans Insurance (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. Over 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 amend section 8.2 (c) to require policyholders receiving a future issue of S-DVI to submit their 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.) Additionally, we would add a paragraph in section 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 basis.

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. “Insurance industry standard practice allows policyholders to access the full cash value of their policies. To align with insurance industry standard 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 remove from Article 8.13 (a) the limit of 94% of the amount that veteran policyholders 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 amend section 8.13 (d) to require veterans policyholders with existing fixed rate loans who wish to apply for additional loans on their policies to refinance those existing fixed rate loans into new rate loans variable subject to a new loan rate equal to 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 Decree 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 Unfunded Mandates Reform Act 1995 requires, in Section 2 USC 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any 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 – Payments direct for insurance.

List of subjects in 38 CFR Part 8

* Disability benefits

* Life insurance

* Loan programs – veterans

* Military personnel

* Veterans

Jeffrey M. Martin,

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

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

BILLING CODE 8320-01-P

The document is published in the Federal Register: https://www.federalregister.gov/documents/2021/10/13/2021-22208/national-service-life-insurance-premium-payment-and-loan-amendment

TARGETED NEWS SERVICE (founded in 2004) provides non-partisan newsletters and information on “edited journalism” for news organizations, public policy groups and individuals; as well as “bundled” public policy information, including press releases, reports and speeches. For more information contact MYRON STRIKES, editor, [email protected], Springfield, Virginia; 703 / 304-1897; https://targetednews.com

Source link

About Raymond E. Hughes

Check Also

Explained by a loan officer (Podcast)

Learn how to get a mortgage Getting a mortgage is easier than many buyers think. …

Leave a Reply

Your email address will not be published. Required fields are marked *