02-21531. National Service Life Insurance

AGENCY:

Department of Veterans Affairs.

ACTION:

Final rule.

SUMMARY:

This document amends the Department of Veterans Affairs regulations regarding National Service Life Insurance (NSLI) by revising the texts of five sections of regulations into plain English. This amendment supports an Executive Memorandum that mandates plain language in written government communications.

DATES:

Effective Date: August 26, 2002.

FOR FURTHER INFORMATION CONTACT:

Gregory Hosmer, Senior Insurance Specialist, Department of Veterans Affairs Regional Office and Insurance Center, P.O. Box 8079, Philadelphia, Pennsylvania 19101, [phone] ext. 4280.

SUPPLEMENTARY INFORMATION:

The Insurance Service of the Veterans Benefits Administration (VBA) is rewriting regulatory provisions found in part 8 of title 38 of the Code of Federal Regulations in order to promote better communication with our readers.

Sections 8.0, 8.18, 8.25, and 8.33(a) provide explanations of the following subjects: The definition of and criteria for good health, total disability with regard to speech, the definition of disease or injury traceable to the extra hazards of the military or naval service, and a definition of a guardian for purposes of National Service Life Insurance. This final rule rewrites and consolidates these sections into one section, § 8.0. Language in existing § 8.0 that underwriting standards “will be developed and published” is dropped because we have established such standards. Section 8.1 provides information regarding the effective date for insurance issued under section 1922(a) of title 38 U.S.C. (Service-Disabled Veterans Insurance). Existing § 8.33(b) stipulates the actions that a guardian may undertake on behalf of either the insured or the beneficiary of an NSLI policy. The texts of §§ 8.1 and 8.33(b) have been revised for clarity and to promote better understanding.

This final rule consists of non-substantive changes and therefore it is not subject to the notice, comment and effective-date provisions of 5 U.S.C. 553.

Unfunded Mandates

The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before developing any rule that may result in an expenditure by State, local, or tribal governments, in the aggregate, or by the private section of $100 million or more in any given year. This rule would have no consequential effect on State, local, or tribal governments.

Paperwork Reduction Act

This document contains no provisions constituting a collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3520).

Regulatory Flexibility Act

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 (RFA), 5 U.S.C. 601-612. This final rule will not affect any entity since it does not contain any substantive provisions. 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 this regulation is 64.103.

List of Subjects in Part 8

• Disability benefits
• Life insurance
• Loan programs—veterans
• Military personnel
• Veterans

Approved: August 16, 2002.

Anthony J. Principi,

Secretary of Veterans Affairs.

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

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. Section 8.0 is revised to read as follows:

§ 8.0

Definitions of terms used in connection with title 38 CFR, part 8, National Service Life Insurance.

(a) What does the term “good health” mean? The term good health means that the applicant is, from clinical or other evidence, free from any condition that would tend to:

(1) Weaken normal physical or mental functions; or

(2) Shorten life.

Note to Paragraph (a):

Conditions that would affect “good health” are diseases or injuries or residuals of diseases or injuries. A “residual” is a disability that remains following the original disease or injury.

(b) What does the term “good health criteria” mean? The term good health criteria means the underwriting standards that determine whether a person is in good health. “Good health criteria” are based whenever possible, as far as practicable, on general insurance usage. “Underwriting” is the process that sets the terms, conditions, and prices for an insurance policy, by rating an applicant's mortality risk.

(c) What does the term “organic loss of speech” mean? The term organic loss of speech means the loss of the ability to express oneself, both by voice and whisper, through the normal organs of speech if the loss is caused by physical changes in such organs. The fact that some speech can be produced through the use of artificial appliance or other organs of the body will not impact this definition.

(d) What does the term “disease or injury traceable to the extra hazards of the military service” mean? The term disease or injury traceable to the extra hazards of the military service means a disease or injury that was either caused by or can be traced back to the performance of duty in the active military, naval, or air service.

(e) What does the term “guardian” mean? The term guardian means any representative certified by the appropriate Veterans Service Center Manager, under § 13.55 of this chapter, to receive benefits in a fiduciary capacity on behalf of the insured or the beneficiary, or to take the actions listed in § 8.32.

3. Section 8.1 is revised to read as follows:

§ 8.1

Effective date for an insurance policy issued under section 1922(a) of title 38 U.S.C. (Service-Disabled Veterans' Insurance).

(a) What is the effective date of the policy? The effective date is the date policy coverage begins. Benefits due under the policy are payable any time after the effective date.

(b) How is the effective date established? The effective date is the date you deliver both of the following to VA:

(1) A valid application.

(2) A premium payment.

Note 1 to Paragraph (b):

If your valid application and premium are mailed to VA, the postmark date will be the date of delivery.

Note 2 to Paragraph (b):

If a postmark date is not available, the date of delivery will be the date your valid application and premium are received by VA.

(c) Can you have a different effective date? Yes, if you would like an effective date other than the date of delivery as described in paragraph (b) of this section, you may choose one of the following three options as an effective date:

(1) The first day of the month in which you deliver your valid application and premium payment to VA. For example, if VA receives your application and premium payment on August 15, you may request an effective date of August 1.

(2) The first day of the month following the month in which you deliver your valid application and premium payment. For example, if VA receives your application and premium payment on August 15, you may request an effective date of September 1.

(3) The first day of any month up to six months prior to the month in which you deliver your valid application and premium payment. For example, if VA receives your application and premium payment on August 15, you may request an effective date of February 1 or the first day of any month following up to August 1. However, you must pay the following:

(i) The insurance reserve amount for the time period for each month starting with the requested effective date up to the first day of the month prior to the month in which you delivered your application to VA; and

(ii) The premium for the month in which you delivered your application to VA.

Note to Paragraph (c):

For example, if your postmark date is August 15 and you request an effective date of February 1, you must pay the insurance reserve amount for February 1 through July 31, and also pay the August premium.

4. Section 8.18 is revised to read as follows:

§ 8.18

Total disability—speech.

The organic loss of speech shall be deemed to be total disability under National Service Life Insurance.

§ 8.25

[Removed]

5. Section 8.25 and the undesignated center heading immediately preceding the section are removed.

§§ 8.26 through 8.33

[Redesignated as §§ 8.25 through 8.32]

6. Sections 8.26 through 8.33 are redesignated as §§ 8.25 through 8.32, respectively.

7. Newly redesignated § 8.32 is revised to read as follows:

§ 8.32

Authority of the Guardian.

What actions does a guardian have the authority to take for insurance purposes? The guardian of an insured or beneficiary has the authority to take the following actions:

(a) Apply for insurance or for conversion of a policy or change of plan;

(b) Reinstate a policy;

(c) Withdraw dividends held on deposit or credit;

(d) Select or change a dividend option;

(e) Obtain a policy loan;

(f) Cash surrender a policy;

(g) Authorize a deduction from benefits or allotment from military retired pay to pay premiums;

(h) Apply for and receive payment of proceeds on a matured policy;

(i) Select or change the premium payment option;

(j) Apply for waiver of premiums and total disability income benefits;

(k) Select or change settlement options for beneficiaries; and

(l) Assign a beneficiary's interest as provided under section 1918 of title 38 U.S.C.

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

§ 8.37

[Redesignated as § 8.33]

8. Section 8.37 is redesignated as new § 8.33.