§ 8.33 38 CFR Ch. I (7–1–13 Edition)

(j) Apply for waiver of premiums and surance. If a term-capped policy is kept total disability income benefits; in force, cash values will continue to (k) Select or change settlement op- grow. tions for beneficiaries; and (f) How much paid-up can be (l) Assign a beneficiary’s interest as obtained for the cash value? The amount provided under section 1918 of title 38 of paid-up insurance that can be pur- U.S.C. chased will depend on the amount of (Authority: 38 U.S.C. 1906) cash value that the policy has accrued and will be calculated in accordance [67 FR 54739, Aug. 26, 2002] with accepted actuarial practices. For § 8.33 Cash value for term-capped poli- illustrative purposes, below are some cies. examples of paid-up insurance that could be purchased by the cash value of (a) What is a term-capped policy? A a ‘‘V’’ and an ‘‘RS’’ $10,000 policy at term-capped policy is a National Serv- various attained ages: ice policy prefixed with ‘‘V’’ or Veterans Special Life Insurance Paid-up Paid-up policy prefixed with ‘‘RS,’’ issued on a Age ‘‘V’’ ‘‘RS’’ insurance insurance 5-year level premium term plan in which premiums have been capped (fro- 75 ...... $2,284 $2,625 zen) at the renewal age 70 rate. 80 ...... 4,452 4,654 (b) How can a term-capped policy ac- 85 ...... 6,109 6,149 90 ...... 7,421 7,115 crue cash value? Normally, a policy 95 ...... 9,331 7,650 issued on a 5-year level premium term plan does not accrue cash value (see (g) If the policy lapses due to non-pay- section 8.14). However, notwithstanding ment of the premium, does the policy- any other provisions of this part, re- holder nonetheless have a choice of re- serves have been established to provide ceiving the cash value or paid-up insur- for cash value for term-capped policies. ance? Yes, the policyholder will have (c) On what basis have the reserve val- that choice, along with the option to ues been established? Reserve values reinstate the policy (see section 8.10 for have been established based upon the reinstatement of a policy). However, if 1980 Commissioners Standard Ordinary a policyholder does not make a selec- Basic Table and interest at five per tion, VA will apply the cash value to centum per annum in accordance with purchase paid-up insurance. Paid-up in- accepted actuarial practices. surance may be surrendered for cash at (d) How much cash value does a term- any time. capped policy have? The cash value for (h) If a policyholder elects to receive ei- each policy will depend on the age of ther the cash surrender or paid-up insur- the insured, the type of policy, and the ance due to lapse or voluntary cancella- amount of coverage in force and will be tion of a term-capped policy, may the calculated in accordance with accepted original term-capped policy be reinstated? actuarial practices. For illustrative Yes, the term-capped policy may be re- purposes, below are some examples of instated but the policyholder, in addi- cash values based upon a $10,000 policy tion to meeting the reinstatement re- at various attained ages for an NSLI quirements of term policies, must also ‘‘V’’ policy and a VSLI ‘‘RS’’ policy: pay the current reserve value of the re- Cash value Cash value instated policy. Age ‘‘V’’ ‘‘RS’’ [65 FR 54799, Sept. 11, 2000. Redesignated at 75 ...... $1,494 $1,716 67 FR 54739, Aug. 26, 2002] 80 ...... 3,212 3,358 85 ...... 4,786 4,818 90 ...... 6,249 6,217 PART 8a—VETERANS MORTGAGE 95 ...... 8,887 7,286 LIFE INSURANCE

(e) What can be done with this cash Sec. value? Upon or lapse of the 8a.1 Definitions. policy, a policyholder may receive the 8a.2 Maximum amount of insurance. cash value in a lump sum or may use 8a.3 Effective date. the cash value to purchase paid-up in- 8a.4 Coverage.

530

VerDate Mar<15>2010 11:03 Jul 25, 2013 Jkt 229144 PO 00000 Frm 00540 Fmt 8010 Sfmt 8010 Y:\SGML\229144.XXX 229144 ehiers on DSK2VPTVN1PROD with CFR Department of Veterans Affairs § 8a.2

AUTHORITY: 38 U.S.C. 501, and 2101 through the option of the lessee, is not less 2106, unless otherwise noted. than 50 years, or SOURCE: 37 FR 282, Jan. 8, 1972, unless oth- (3) An interest in a residential unit in erwise noted. a or a condominium type development which in the judgment of § 8a.1 Definitions. the Under Secretary for Benefits or the (a) The term housing unit means a Director, Loan Guaranty Service, pro- family dwelling or unit, together with vides a right of occupancy for a period the necessary land therefor, that has of not less than 50 years: Provided, The been or will be purchased, constructed, title to such estate or interest is or or remodeled with a grant to meet the shall be such as is acceptable to pru- needs of an eligible veteran and of his dent lending institutions, informed or her family, and is or will be owned buyers, title companies, and attorneys, and occupied by the eligible veteran as generally, in the community. his or her home, or a family dwelling or unit, including the necessary land [37 FR 282, Jan. 8, 1972, as amended at 42 FR therefor, acquired by an eligible vet- 43835, Aug. 31, 1977; 61 FR 29027, June 7, 1996] eran to be used as his or her residence after selling or otherwise disposing of § 8a.2 Maximum amount of insurance. title to the housing unit for which his (a) Each eligible veteran is author- or her grant was made. ized up to a maximum of $90,000 in (b) The term Veterans Mortgage Life VMLI to insure his or her life during Insurance (VMLI) means the mortgage periods he or she is obligated under a protection life insurance authorized for , except that, as to an in- veterans under 38 U.S.C. 2106. dividual housing unit, whenever there (c) The term initial amount of insur- is a reduction in the actual amount of ance means the amount of insurance insurance in force as provided for in corresponding in amount to the unpaid § 8a.4(a) the amount of VMLI thereafter principal of a mortgage loan out- available to insure the life of the same standing on a housing unit owned or to veteran on the same housing unit is be acquired by an eligible veteran on permanently reduced by a like amount. August 11, 1971, or on the date of ap- (b) The maximum amount of insur- proval of his or her grant made under ance in force on any one life at one chapter 21 of title 38 U.S.C., whichever time shall not exceed the lesser of the is the later date. following amounts: (d) The term mortgage loan means any (1) $90,000. loan, lien, or other indebtedness in- curred by an eligible veteran to buy, (2) For insurance issued prior to De- build, remodel, or enlarge a housing cember 24, 1987, the reduced maximum unit, the payment of which loan, lien, amount of insurance then available to or indebtedness is secured by a mort- an eligible veteran. gage lien, or other equivalent security (3) The amount of the unpaid prin- of record, on the housing unit in the cipal of the mortgage loan outstanding usual legal form employed in the com- on the date of approval of the grant on munity in which the property is situ- a housing unit then owned and occu- ated. The term also includes refi- pied by the eligible veteran, or on a nancing of such an indebtedness to housing unit being or to be constructed avoid a default, to consolidate liens, to or remodeled for the eligible veteran, renew or extend the time for payment and such initial amount of insurance of the indebtedness, and in cases where may be adjusted upward, subject to the the housing unit is being bought, built, maximum insurance available to the remodeled, or enlarged by increasing eligible veteran, or downward, depend- the amount of such an indebtedness. ing upon the amount of the mortgage (e) The term owned means the eligi- loans outstanding on the date of full ble veteran has or will acquire an in- disbursement of the grant, or on the terest in the housing unit which is: date of final settlement of the pur- (1) A fee simple estate, or chase, construction, or remodeling (2) A leasehold estate, the unexpired agreement, whichever date is the later term of which, including renewals at date.

531

VerDate Mar<15>2010 11:03 Jul 25, 2013 Jkt 229144 PO 00000 Frm 00541 Fmt 8010 Sfmt 8010 Y:\SGML\229144.XXX 229144 ehiers on DSK2VPTVN1PROD with CFR