[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20134-20136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11157]



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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