Life Insurance for Veterans – Direct Payments for Insurance
Program Funding
Annual program obligations reported to SAM.gov.
Funded Projects
Examples of what this program has supported.
Program Objective
To provide direct insurance payments, including advance payments disbursed as loans, to Veterans and their beneficiaries for claims based on death or other qualifying circumstances. Payments may be authorized for United States Government Life Insurance (USGLI), National Service Life Insurance (NSLI), and Veterans Mortgage Life Insurance (VMLI). 38 U.S.C. 1901-1963; 38 U.S.C. 2106.
Eligibility
Eligible Applicants
- Veteran (including dependents)
Veterans currently insured under USGLI, NSLI, or VMLI. Payment cannot be made if it causes the insurance proceeds to revert back to a State (as in cases where there are no permissible heirs to pay). 38 U.S.C. 1950; 38 U.S.C. 1917(d).
Beneficiaries
- Veteran (including dependents)
- Active-Duty Service Person (including dependents)
- Reservist (including dependents)
Payment may be made on a claim to a designated beneficiary, a representative of the estate, a minor or incompetent, or another designee filing for benefits. 38 U.S.C. 1917. A beneficiary may assign all or a portion of his or her share of the insurance to a restricted class of the insured's relatives. 38 U.S.C. 1918(b). Payments may also be made to the policyholder for loan or dividend amounts. 38 CFR 8.11(b); 38 CFR 6.14; 38 CFR 8.10; 38 CFR 6.11.
How to Apply
Award Procedure
Direct Insurance payments can be directly deposited into a claimant's account. Claimants must provide their checking or savings deposit account number as well as their social security numbers. Claimants must also provide the name, address, phone number, and routing transit number for their financial institutions. If the award check is to be mailed to the claimant's bank account, the account number and type of account (checking or savings) must be shown on the claim in addition to the name and address of the bank. USGLI proceeds are paid from the USGLI fund. 38 U.S.C. 1955(a). Under 38 CFR part 8, four distinct life insurance programs exist, namely, NSLI, Veterans Special Life Insurance (VSLI, 38 U.S.C. 1923), Veterans Reopened Insurance (VRI, 38 U.S.C. 1925), and Service-Disabled Veterans Insurance (S-DVI, 38 U.S.C. 1922). NSLI proceeds are paid from the NSLI fund. 38 U.S.C. 1920(a). VSLI proceeds are paid from the VSLI fund. 38 U.S.C. 1923(a). VRI proceeds are paid from the VRI fund. 38 U.S.C. 1925(d)(1). S-DVI proceeds are paid from the fund established at 38 U.S.C. 1922(a)(4). VMLI proceeds are paid from the “Veterans Insurance and Indemnities” appropriations account. 38 U.S.C. 2106(d))(1).
Most death awards are authorized by the Insurance Center within 10 days of receipt of the documents needed for payment.
Program details & compliance
Description
Veterans’ Life Insurance (VALife) is the only currently open Life Insurance Program for Service-connected Disabled Veterans. Also offered is Veterans Mortgage Life Insurance for Veterans who have qualified for a Specially Adapted Housing Grant.
Mission Categories
Primary: Veterans Services
Use of Funds
Allowed Uses
The funds used to pay insurance proceeds will be discussed below in the “Award Procedure (093)” section. Life insurance settlement is payable upon death of the insured, or the insured may surrender a permanent plan policy for cash. 38 U.S.C. 1917; 38 U.S.C. 1951; 38 CFR 8.11(b); 38 CFR 6.14. The insured may also be granted a loan for up to 94 percent of the cash surrender value of a permanent plan policy. 38 CFR 8.13; 38 CFR 6.13. Interest on United States Government Life Insurance (WWI) policy loans is charged at the rate of 5 percent per annum. 38 U.S.C. 1944. Interest is charged at a variable annual rate for NSLI. 38 CFR 8.13. The variable rate equals the yield on the Ten-Year Constant Maturities Index for U.S. Treasury securities for the month of June of each year rounded down to the next whole percentage. 38 CFR 8.13(c). This loan rate is effective from the first day of October of each year and will not exceed 12 percent or be lower than 5 percent per annum. 38 CFR 8.13(d). The face amount of the policy, less any indebtedness on the policy, is payable to the designated beneficiary upon the insured's death under a regular life policy, and only to the mortgage holder under VMLI coverage. 38 U.S.C. 1917(a); 38 U.S.C. 2106(e). Other direct payments may include dividend cash option payments or other payments as authorized. 38 CFR 8.10; 38 CFR 6.11.
Required Documentation
The following documentation is generally required for payment of an insurance claim: (1) for a principal beneficiary, a photocopy of the death certificate showing date and cause of death of the insured, and a completed VA Form 29-4125; (2) for a contingent beneficiary, death certificates for the insured and principal beneficiary(ies), and a completed VA Form 29-4125; (3) for a representative of the Veteran's estate, the death certificate(s), copies of letters testamentary, letters of administration, or a court order of distribution along with claims from the entitled parties, and an appropriate claim form signed by the executor or administrator of the estate; (4) for a minor or incompetent, death certificate(s); a claim from the next of kin, personal representative (guardian, custodian, etc.) or logical person to receive payment for the minor or incompetent; letters of guardianship, conservatorship (if any); and the address of minor or incompetent. If filing for VMLI benefits, the following documentation is needed: insured's death certificate, and a payoff statement from the Veteran's or Servicemember's mortgage lender showing the outstanding mortgage balance owed as of the Veteran's or Servicemember 's death. An insured's will can be used as evidence that he or she intended a lump sum payment, regardless of when the will was executed. 38 CFR 8.25. A letter claiming the insurance proceeds and showing a mailing address for the check may be used instead of a VA claim form. The claimant should be sure to show the insurance file number and to sign the letter. An insured can surrender the policy for its cash value by submitting VA Form 29-1546, page 1. An insured can request a loan against the cash value of the policy by submitting VA Form 29-1546, page 2, or by applying online. This program is excluded from coverage under OMB Circular No. A-87. This program is excluded from coverage under 2 CFR 200, Subpart E - Cost Principles.
Reporting & Compliance
Formula
This program has no statutory formula.