[Program Evaluation of Benefits for Survivors of Veterans with
Service-Connected Disabilities]{.smallcaps}

**[Final Report]{.smallcaps}**

**[Volume IV]{.smallcaps}**

# Evaluation of Service Disabled Veterans Insurance (SDVI) and Veterans' Mortgage Life Insurance (VMLI) Programs

**[System Flow, Inc.]{.smallcaps}**

**[Economic Systems, Inc.]{.smallcaps}**

**[Macro International, Inc.]{.smallcaps}**

**[Hay Group]{.smallcaps}**

![](media/image1.png){width="1.3541666666666667in"
height="1.3541666666666667in"}

**Volume IV**

**Evaluation of\
Service Disabled Veterans Insurance (SDVI) and\
Veterans' Mortgage Life Insurance (VMLI) Programs**

**SDVI - Table of Contents**

[1. Introduction 1](#introduction)

[Overall Study Objectives 1](#overall-study-objectives)

[Program Description 1](#program-description)

[History 2](#history)

[Current Program Information on SDVI
3](#current-program-information-on-sdvi)

[Study Approach 3](#study-approach)

[Data Management Challenges 6](#data-management-challenges)

[Definition of Severely or Catastrophically Disabled Veterans
8](#definition-of-severely-or-catastrophically-disabled-veterans)

[2. SDVI Program Outcomes, Goals, and Measures
11](#sdvi-program-outcomes-goals-and-measures)

[3. Profile of SDVI Participants and Non-Participants
15](#profile-of-sdvi-participants-and-non-participants)

[4. Availability and Affordability of Insurance
29](#availability-and-affordability-of-insurance)

[Comparison of SDVI Coverage to the Private Sector
29](#comparison-of-sdvi-coverage-to-the-private-sector)

[Comparison of SDVI Premium to the Private Sector
37](#comparison-of-sdvi-premium-to-the-private-sector)

[Other Insurance Purchased by SDVI Participants and Non-Participants
39](#other-insurance-purchased-by-sdvi-participants-and-non-participants)

[Future Life Insurance Needs of SDVI Participants and Non-Participants
44](#future-life-insurance-needs-of-sdvi-participants-and-non-participants)

[5. Factors Relating to Participation and Non-Participation
47](#factors-relating-to-participation-and-non-participation)

[Reasons for Participation in the SDVI Program
47](#reasons-for-participation-in-the-sdvi-program)

[Reasons for Non-Participation in the SDVI Program
48](#reasons-for-non-participation-in-the-sdvi-program)

[Characteristics Relating to Participation and Non-participation
50](#characteristics-relating-to-participation-and-non-participation)

[6. Satisfaction of Participants in the SDVI Program
53](#satisfaction-of-participants-in-the-sdvi-program)

[Average Satisfaction Scores 54](#average-satisfaction-scores)

[Importance of Program Attributes 58](#importance-of-program-attributes)

[7. Profile of SDVI Surviving Spouses
61](#profile-of-sdvi-surviving-spouses)

[8. Finances of SDVI Surviving Spouses
65](#finances-of-sdvi-surviving-spouses)

[Survivor Income -- After Death of Veteran
65](#survivor-income-after-death-of-veteran)

[Expenditures 69](#expenditures)

[Assets and Debts 77](#assets-and-debts)

[9. Need Analysis of SDVI Surviving Spouses
89](#need-analysis-of-sdvi-surviving-spouses)

[Income Replacement 89](#income-replacement)

[Income Maintenance 97](#income-maintenance)

[Other Needs 99](#other-needs)

[10. Satisfaction of SDVI Surviving Spouses
105](#satisfaction-of-sdvi-surviving-spouses)

[Average Satisfaction Scores 106](#average-satisfaction-scores-1)

[Importance of Program Attributes
111](#importance-of-program-attributes-1)

[11. Cost of Insuring Veterans with Service-Connected Disabilities
113](#cost-of-insuring-veterans-with-service-connected-disabilities)

[Sources of Funding of Program Subsidies
114](#sources-of-funding-of-program-subsidies)

[Analysis of Program Subsidies 115](#analysis-of-program-subsidies)

[Cost of Additional SDVI Coverage
119](#cost-of-additional-sdvi-coverage)

[12. Findings 121](#findings)

[Meeting Program Intent 121](#meeting-program-intent)

[Coverage 123](#coverage)

[Premium Cost 124](#premium-cost)

[Factors Affecting Participation and Non-Participation
124](#factors-affecting-participation-and-non-participation)

[Satisfaction of SDVI Participants
124](#satisfaction-of-sdvi-participants)

[Financial Outcomes for Survivors
125](#financial-outcomes-for-survivors)

[Satisfaction of Beneficiaries 125](#satisfaction-of-beneficiaries)

[13. Recommendations 127](#recommendations)

**Volume IV: L**ist of Figures for SDVI

[Figure 1. Combined Degree of Disability of SDVI Takers and Non-takers
15](#__RefHeading___Toc515774704)

[Figure 2. Marital Status of SDVI Takers and Non-takers by Veteran's
Disability Status 17](#__RefHeading___Toc515774705)

[Figure 3. Highest Level of Education of SDVI Takers and Non-takers by
Veteran's Disability Status 17](#__RefHeading___Toc515774706)

[Figure 4. Living Situation (Financial Dependence) of SDVI Takers and
Non-takers by Veteran's Disability Status
18](#__RefHeading___Toc515774707)

[Figure 5. Living Quarters of SDVI Takers and Non-takers by Veteran's
Disability Status 19](#__RefHeading___Toc515774708)

[Figure 6. Total Annual Household Income of SDVI Takers and Non-takers
by Veteran's Disability Status 20](#__RefHeading___Toc515774709)

[Figure 7. Respondents with Dependents -- SDVI Takers and Non-takers by
Veteran's Disability\
Status 21](#__RefHeading___Toc515774710)

[Figure 8. Relationship of Dependents to Respondents -- SDVI Takers and
Non-takers by Veteran's Disability Status
21](#__RefHeading___Toc515774711)

[Figure 9. "Does your dependent have health problems?" SDVI Takers and
Non-takers by Veteran's Disability Status
22](#__RefHeading___Toc515774712)

[Figure 10. "Which dependents have health problems?" SDVI Takers and
Non-takers by Veteran's Disability Status
23](#__RefHeading___Toc515774713)

[Figure 11. Need Assistance with the Following Activities SDVI Takers
and Non-takers by Veteran's Disability Status
24](#__RefHeading___Toc515774714)

[Figure 12. Physical Limitations -- SDVI Takers and Non-takers by
Veteran's Disability Status 25](#__RefHeading___Toc515774715)

[Figure 13. Age Groups -- SDVI Takers and Non-takers by Veteran's
Disability Status 25](#__RefHeading___Toc515774716)

[Figure 14. Number of Years with Disability -- SDVI Takers and
Non-takers by Veteran's Disability Status
26](#__RefHeading___Toc515774717)

[Figure 15. Race -- SDVI Takers and Non-takers by Veteran's Disability
Status 27](#__RefHeading___Toc515774718)

[Figure 16. Amount of Insurance Coverage to be Taken if Given a Chance
to Increase Policy Amount (Among those who indicated they would increase
their policy amount) 36](#__RefHeading___Toc515774719)

[Figure 17. Responses to "If you had the chance to take SDVI now, would
you take it?" by Top\
Reasons for Not Applying for SDVI 50](#__RefHeading___Toc515774720)

[Figure 18. Distribution of Satisfaction Scores by Attributes
55](#__RefHeading___Toc515774721)

[Figure 19. Distribution of Satisfaction Scores by Attributes
56](#__RefHeading___Toc515774722)

[Figure 20. Rankings of Importance Weights and Mean Satisfaction Scores
for SDVI Takers 60](#__RefHeading___Toc515774723)

[Figure 21. SDVI Surviving Spouses by Veteran's Disability Status
61](#__RefHeading___Toc515774724)

[Figure 22. Distribution of Annual Expenditures for all SDVI Surviving
Spouses 71](#__RefHeading___Toc515774725)

[Figure 23. Distribution of Expenditures for SDVI Surviving Spouses with
no Dependent Children 74](#__RefHeading___Toc515774726)

[Figure 24. Distribution of Expenditures for SDVI Surviving Spouses with
at Least One Dependent\
Child 75](#__RefHeading___Toc515774727)

[Figure 25. Distribution of Total Debts and Total Assets for SDVI
Surviving Spouses Who Reported More than \$1,000 in Debts or Assets
79](#__RefHeading___Toc515774728)

[Figure 26. Distribution of Total Debts for SDVI Surviving Spouses Who
Reported More than \$1,000\
in Total Debts by Whether Spouse Has Dependent Children
81](#__RefHeading___Toc515774729)

[Figure 27. Distribution of Total Assets for SDVI Surviving Spouses Who
Reported More than \$1,000\
in Total Assets by Whether Spouse Has Dependent Children
82](#__RefHeading___Toc515774730)

[Figure 28. Distribution of Total Debts for SDVI Surviving Spouses Who
Reported More than \$1,000\
in Total Debts by Source of Life Insurance Benefits
84](#__RefHeading___Toc515774731)

[Figure 29. Distribution of Total Assets for SDVI Surviving Spouses Who
Reported More than \$1,000\
in Total Assets by Source of Life Insurance Benefits
85](#__RefHeading___Toc515774732)

[Figure 30. Distribution of Satisfaction Scores by Attributes (For all
SDVI Surviving Spouses) 108](#__RefHeading___Toc515774733)

[Figure 31. Distribution of "Easiness" Scores (For all SDVI Surviving
Spouses) 108](#__RefHeading___Toc515774734)

[Figure 32. Distribution of Satisfaction Scores by Attributes (For SDVI
Surviving Spouses Who\
Provided Satisfaction Score) 109](#__RefHeading___Toc515774735)

[Figure 33. Distribution of "Easiness" Scores by Attributes (For SDVI
Surviving Spouses Who\
Provided Easiness Score) 109](#__RefHeading___Toc515774736)

[Figure 34. Rankings of Importance Weights and Mean Satisfaction Scores
for SDVI Surviving\
Spouses 112](#__RefHeading___Toc515774737)

Volume IV: List of Tables for SDVI

[Table 1. VA Administrative Costs for SDVI Program
3](#__RefHeading___Toc515774956)

[Table 2. SDVI Program Outcomes, Goal, and Measure -- VA Draft
11](#__RefHeading___Toc515774957)

[Table 3. Restated SDVI Program Outcome, Goal, and Measure
13](#__RefHeading___Toc515774958)

[Table 4. Summary of Profile of SDVI Takers and Non-takers
16](#__RefHeading___Toc515774959)

[Table 5. Multiples for Basic FEGLI Coverage
32](#__RefHeading___Toc515774960)

[Table 6. Prevalence of Life Insurance Benefits
33](#__RefHeading___Toc515774961)

[Table 7. Life Insurance Benefits When Disabled
34](#__RefHeading___Toc515774962)

[Table 8. Basis on How Much SDVI Coverage to Take
35](#__RefHeading___Toc515774963)

[Table 9. Percent Responses to "If you could have taken more SDVI, what
is the total policy value\
that you would take?" by Total Disability Status
35](#__RefHeading___Toc515774964)

[Table 10. Percent Responses to "Do you think that the amount you pay or
paid for premiums is a reasonable amount or is it more or less than you
thought you would have to pay?" 36](#__RefHeading___Toc515774965)

[Table 11. Percent Responses to "If you were to get the same type and
amount of insurance from\
a private insurance company, do you think you would have to pay more,
pay less, or pay\
about the same amount?" 37](#__RefHeading___Toc515774966)

[Table 12. Annual Premiums for SDVI vs. Commercial Insurance -- 5-Year
Term-Plan 38](#__RefHeading___Toc515774967)

[Table 13. Annual Premiums for SDVI vs. Commercial Insurance -- Ordinary
Life Plan 38](#__RefHeading___Toc515774968)

[Table 14. Percent Responses to "Do you have any (non-VA) life
insurance?" 39](#__RefHeading___Toc515774969)

[Table 15. Percent Responses to "Given your current situation, do you
think you need (non-VA) life insurance?" (Among those who do not have
any (non-VA) life insurance) 39](#__RefHeading___Toc515774970)

[Table 16. Percent Responses to "How much (non-VA) life insurance do you
think would be the\
right amount for your situation?" (Among those who do not have any
(non-VA) life insurance\
and who think they need (non-VA) life insurance)
40](#__RefHeading___Toc515774971)

[Table 17. Percent Responses to "Why haven't you taken out life
insurance?" (Among those who\
do not have any (non-VA) life insurance)
40](#__RefHeading___Toc515774972)

[Table 18. Percent Responses to "Why were you turned down for life
insurance?" (Among those who were turned down when applied)
41](#__RefHeading___Toc515774973)

[Table 19. Percent Responses to "Do you have any mortgage insurance?"
41](#__RefHeading___Toc515774974)

[Table 20. Percent Responses to "What kind of insurance is that?"
42](#__RefHeading___Toc515774975)

[Table 21. Mean and Median Amount of Non-VA Insurance Coverage
42](#__RefHeading___Toc515774976)

[Table 22. Other VA Insurance Participants
43](#__RefHeading___Toc515774977)

[Table 23. Percent with VA (including SDVI) and Non-VA Insurance
43](#__RefHeading___Toc515774978)

[Table 24. Amount of Total VA and Non-VA Life Insurance Coverage (All
respondents -- Including\
those with no insurance) 44](#__RefHeading___Toc515774979)

[Table 25. Percent Responses to "Looking ahead 10 years from now, do you
think you will need more, less, or about the same amount of life
insurance?" 44](#__RefHeading___Toc515774980)

[Table 26. Percent Responses to "How much life insurance do you think
you will need 10 years from now?" (Among those who indicated they need
more life insurance) 45](#__RefHeading___Toc515774981)

[Table 27. Percent Responses to "Do you think you will buy more
insurance 10 years from now?" (Among those who indicated they would need
more insurance) 45](#__RefHeading___Toc515774982)

[Table 28. Main Reasons for Taking SDVI by Disability Status
48](#__RefHeading___Toc515774983)

[Table 29. Main Reasons for Not Applying for SDVI by Disability Status
49](#__RefHeading___Toc515774984)

[Table 30. Veteran Characteristics Predicting Participation in the SDVI
Program 51](#__RefHeading___Toc515774985)

[Table 31. Mean Satisfaction Scores for SDVI Takers
54](#__RefHeading___Toc515774986)

[Table 32. Mean "Overall" Satisfaction Scores for SDVI Takers by
Veteran's Characteristics 57](#__RefHeading___Toc515774987)

[Table 33. Satisfaction of SDVI Takers with SDVI Program
57](#__RefHeading___Toc515774988)

[Table 34. Importance of Program Attributes for SDVI Takers
58](#__RefHeading___Toc515774989)

[Table 35. Relationship of SDVI Beneficiaries to the Deceased Veteran
61](#__RefHeading___Toc515774990)

[Table 36. Characteristics of SDVI Surviving Spouses Based on Survey
Responses 62](#__RefHeading___Toc515774991)

[Table 37. Mean and Median Age of SDVI Survey Respondents by Dependency
Status 64](#__RefHeading___Toc515774992)

[Table 38. Annual 1999 Individual Total Income for SDVI Surviving
Spouses 66](#__RefHeading___Toc515774993)

[Table 39. Annual 1999 Individual Taxable Income Sources for SDVI
Surviving Spouses 66](#__RefHeading___Toc515774994)

[Table 40. Annual 1999 Individual Total Income for SDVI Surviving
Spouses by Veterans' Disability Status 67](#__RefHeading___Toc515774995)

[Table 41. Annual 1999 Individual Total Income for SDVI Surviving
Spouses by Whether Spouse has Dependent Children
67](#__RefHeading___Toc515774996)

[Table 42. Average Annual Household Income Before and After Veteran's
Death by Veteran's\
Disability Status 68](#__RefHeading___Toc515774997)

[Table 43. Average Annual Household Income Before and After Veteran's
Death, Surviving Spouses With and Without Dependents
69](#__RefHeading___Toc515774998)

[Table 44. Types of Expenditure for SDVI Surviving Spouses
69](#__RefHeading___Toc515774999)

[Table 45. Types of Utility Expenditure for SDVI Surviving Spouses
70](#__RefHeading___Toc515775000)

[Table 46. Types of Transportation Expenditure for SDVI Surviving
Spouses 70](#__RefHeading___Toc515775001)

[Table 47. Types of Health Expenditure for SDVI Surviving Spouses
71](#__RefHeading___Toc515775002)

[Table 48. Annual Expenditures for SDVI Surviving Spouses By Expenditure
Item 73](#__RefHeading___Toc515775003)

[Table 49. Annual Expenditures for SDVI Surviving Spouses By Veteran's
Disability Status 73](#__RefHeading___Toc515775004)

[Table 50. Annual Expenditures for SDVI Surviving Spouses By Whether
Spouse has Dependent Children 74](#__RefHeading___Toc515775005)

[Table 51. Annual Expenditures for SDVI Surviving Spouses --Transitional
Period Before and After Veteran's Death, By Source of Income
76](#__RefHeading___Toc515775006)

[Table 52. Annual Expenditures for SDVI Surviving Spouses in the
Transitional Period -- Before and After Veteran's Death By Veteran's
Disability Status 76](#__RefHeading___Toc515775007)

[Table 53. Annual Expenditures for SDVI Surviving Spouses in the
Transitional Period -- Before and After Veteran's Death, By Whether
Spouse has Dependents 77](#__RefHeading___Toc515775008)

[Table 54. SDVI Surviving Spouses with Assets and Debts
77](#__RefHeading___Toc515775009)

[Table 55. Debts and Assets for SDVI Surviving Spouses Who Reported More
than \$1,000 in Debts or Assets By Veteran's Disability Status
78](#__RefHeading___Toc515775010)

[Table 56. Debts and Assets for SDVI Surviving Spouses Who Reported More
than \$1,000 in Total Assets or Total Debts by Whether Spouse Has
Dependent Children 80](#__RefHeading___Toc515775011)

[Table 57. Debts and Assets for SDVI Surviving Spouses Who Reported More
than \$1,000 in Debts\
or Assets, by Sources of Life Insurance Benefits
83](#__RefHeading___Toc515775012)

[Table 58. Debts and Assets for SDVI Surviving Spouses Who Reported More
than \$1,000 in Debts\
or Assets in the Transitional Period -- Before and After Veteran's Death
By Veteran's Disability\
Status 86](#__RefHeading___Toc515775013)

[Table 59. Debts and Assets for SDVI Surviving Spouses Who Reported More
than \$1,000 in Debts\
or Assets in the Transitional Period -- Before and After Veteran's Death
By Whether Spouse has Dependent Children
87](#__RefHeading___Toc515775014)

[Table 60. Debts and Assets for SDVI Surviving Spouses Who Reported More
than \$1,000 in Debts\
or Assets in the Transitional Period -- Before and After Death by Source
of Life Insurance\
Benefits 88](#__RefHeading___Toc515775015)

[Table 61. SDVI Surviving Spouses Receiving Other VA and/or Non-VA Life
Insurance Benefits 90](#__RefHeading___Toc515775016)

[Table 62. Life Insurance Payments Received by SDVI Surviving Spouses
from VA and Non-VA\
Sources (Includes all surviving spouses surveyed)
91](#__RefHeading___Toc515775017)

[Table 63. Perception of SDVI Surviving Spouses on Whether Veteran Had
Enough Life Insurance 91](#__RefHeading___Toc515775018)

[Table 64. Reasons Given by SDVI Surviving Spouses for Veterans Not
Having Enough Insurance 92](#__RefHeading___Toc515775019)

[Table 65. Assessment of Current Financial Situation, by Veteran's
Disability Status 93](#__RefHeading___Toc515775020)

[Table 66. Assessment of Current Financial Situation, by Dependency
Status 93](#__RefHeading___Toc515775021)

[Table 67. Expenditure Cutbacks for SDVI Surviving Spouses Who Rated
Their Financial Situation\
as "Getting By" or "Poor" 94](#__RefHeading___Toc515775022)

[Table 68. Additional Annual Income Needed by SDVI Surviving Spouses
(Among those who\
indicated they cut back at least one expenditure item)
95](#__RefHeading___Toc515775023)

[Table 69. Additional Annual Income Needed by SDVI Surviving Spouses
(Including those who do\
not need any additional income) 96](#__RefHeading___Toc515775024)

[Table 70. Results of Regression Analysis on "Additional Money Needed"
by SDVI Surviving\
Spouses 96](#__RefHeading___Toc515775025)

[Table 71. SDVI Surviving Spouses Below Poverty and Below 150% of
Poverty (Not Including\
Insurance Payments) 97](#__RefHeading___Toc515775026)

[Table 72. Annual Average Income of Survivors After Spouse's Death (Over
35 Years Old)\
1996 SIPP Data (adjusted to 1999) 99](#__RefHeading___Toc515775027)

[Table 73. Bereavement Counseling of SDVI Surviving Spouses
100](#__RefHeading___Toc515775028)

[Table 74. Bereavement Counseling Providers (for those Surviving Spouses
Who Received\
Counseling) 100](#__RefHeading___Toc515775029)

[Table 75. Educational, Financial, and Employment Counseling of SDVI
Surviving Spouses 101](#__RefHeading___Toc515775030)

[Table 76. Effect of Military Life on SDVI Surviving Spouses' Career
Development 101](#__RefHeading___Toc515775031)

[Table 77. Surviving Spouses' Employment Status in the First Year
Following Veteran's Death 102](#__RefHeading___Toc515775032)

[Table 78. Age and Educational Attainment of SDVI Surviving Spouses
102](#__RefHeading___Toc515775033)

[Table 79. Impacts of Caring for Disabled Veteran on Changes in
Employment for SDVI Survivors\
of Veterans Who Died within the Past Five Years
103](#__RefHeading___Toc515775034)

[Table 80. Impacts of Caring for Disabled Veteran on Changes in
Educational or Employment\
Training for SDVI Survivors of Veterans Who Died within the Past Five
Years 104](#__RefHeading___Toc515775035)

[Table 81. Spouse's Education Level Prior to and After Veteran's
Disability 104](#__RefHeading___Toc515775036)

[Table 82. Mean Satisfaction Scores for SDVI Spouses
107](#__RefHeading___Toc515775037)

[Table 83. Mean Overall Satisfaction Scores by Characteristics
110](#__RefHeading___Toc515775038)

[Table 84. Overall Satisfaction with the SDVI Program Regression Results
110](#__RefHeading___Toc515775039)

[Table 85. Importance of Program Attributes for SDVI Surviving Spouses
111](#__RefHeading___Toc515775040)

[Table 86. History of Subsidization of VA Insurance Programs Actual
Through 1999;\
Projected 2000-2020
116](#table-86.-history-of-subsidization-of-va-insurance-programs-actual-through-1999-projected-2000-2020)

[Table 87. History of Subsidization of VA Insurance Programs as a
Percent of Premiums Paid Actual Through 1999; Projected 2000-2020
117](#__RefHeading___Toc515775042)

[Table 88. SDVI Cost to Offer \$40,000 of Additional Coverage
120](#__RefHeading___Toc515775043)

[Table 89. Proposed Program Outcomes, Goals, and Results
122](#__RefHeading___Toc515775044)

[Table 90. Cost Estimates for Recommendations
129](#__RefHeading___Toc515775045)

## 1. Introduction

### Overall Study Objectives

The purpose of this study is to conduct an objective, third-party
determination of the extent to which the VA Dependency and Indemnity
Compensation (DIC) program and four VA-administered insurance programs
meet their statutory intent as well as the expectations of surviving
family members, legislators, program officials, and other stakeholders.
This part of Volume IV presents findings and recommendations on the
Service-Disabled Veterans Insurance (SDVI) program. The other three
VA-administered insurance programs are: Servicemembers' Group Life
Insurance (SGLI), Veterans' Group Life Insurance (VGLI), and Veterans'
Mortgage Life Insurance (VMLI).

The evaluation was performed pursuant to Contract V101(93)P-1501, Task
Order 22. Economic Systems, Inc. performed the technical lead for this
study. ORC Macro was responsible for survey design and implementation.
The Hay Group provided comparative analysis to the private sector and
other non-VA resources. Systems Flow, Inc. was the prime contractor for
the task order.

### Program Description

SDVI was enacted by the Insurance Act of 1951 on April 25, 1951. The
Insurance Act was one of the components of Public Law 82-23 and provided
up to \$10,000 of life insurance at standard premium rates for veterans
with service-connected disabilities.

SDVI policies are available either as a permanent plan or term insurance
plan. Since the program insures veterans with service-connected
disabilities at "standard" premium rates, it is not intended to be
self-supporting and requires an annual subsidy of around \$30 million
from the Veterans Insurance and Indemnities (VI&I) fund. Since 1951,
over 369,000 policies were issued under this program, with an average
coverage amount of \$9,290 per policy. The face value of policies issued
is about \$3.4 billion.

To be eligible, a veteran must:

-   Have a service-connected disability of 0% or greater

-   Be in good health except for any service-connected conditions

-   Be separated from the service on or after April 25, 1951

-   Apply for the insurance within two years from the date of being
    notified that service-connection has been established.

The program was expanded in 1992 with the Veterans' Benefits Act of
1992, permitting those policyholders eligible for waiver of premiums due
to total disability (not necessarily due solely to service-connected
conditions) to purchase up to an additional \$20,000 in supplemental
coverage. The SDVI holder has to apply for supplemental SDVI within one
year of being notified of his/her SDVI premium waiver. Unlike SDVI,
there is no waiver of premiums for total disability for supplemental
SDVI.

Congress also enacted legislation in 1959 for "gratuitous" SDVI for
those veterans who were eligible for SDVI but did not apply for SDVI
because of a continued mental incompetence due to a service-connected
disability and who died before the appointment of a guardian or within
two years of such appointment. Gratuitous SDVI is granted in an amount
which, together with any other U.S. Government Life Insurance (USGLI)
and National Service Life Insurance (NSLI) in force, totals \$10,000.

### History

The Insurance Act of 1951 authorized the SDVI program, providing
coverage for veterans with service-connected disabilities who would be
otherwise insurable under standards established by VA Administrator.
Coverage was limited to the \$10,000 NSLI maximum, be on a
non-participating basis and premiums based on the 1941 Standard Ordinary
Table of Mortality. Waiver of premiums was authorized in cases of total
disability. Application was required within one year[^1] of the date
that VA determined there was a service connection.

Public Law 102-568 added supplemental SDVI in the amount of \$20,000
effective December 1, 1992. Coverage was limited to totally disabled
veterans under age 65 who were totally disabled and for whom premium
waivers were not authorized. Premiums were based on those used for the
basic SDVI program.

As originally passed by the House in H.R. 5008, the supplemental SDVI
coverage amount was \$10,000. The Senate raised the coverage to
\$20,000. The Conferees adopted the Senate provision but delayed the
effective date from October 1, 1992 to December 1, 1992.

In the House report on H.R. 5008, the Veterans' Affairs Committee
indicated its support for the supplemental SDVI as follows:

"The Committee believes that this deserving group of severely disabled
veterans with service-connected disabilities should be afforded this
opportunity to further enhance their estates. This provision will permit
these veterans to purchase, at reasonable rates, coverage that otherwise
could not be obtained due to the nature of their disabilities and the
prohibitive costs that would otherwise be incurred."[^2]

The Supplemental SDVI provision was a minor part of Public Law 102-568.
This legislation also included a major revision to the Dependency and
Indemnity Compensation (DIC) program, increased SGLI/VGLI maximum
coverage to \$200,000, and increased VMLI coverage to \$90,000. Although
most of the hearing testimony was focused on those issues, VA and
several Veterans Service Organizations (VSOs) including the Paralyzed
Veterans of America and The Retired Officers Association, indicated
support for the supplemental SDVI program.

With enactment of supplemental SDVI, totally disabled veterans with
service-connected disabilities could obtain a total of \$30,000 of
coverage, \$10,000 without premiums and \$20,000 at standard
(non-disabled) rates. Current totally disabled SDVI participants who
were under age 65 at the time of enactment were allowed to apply for the
supplemental program during an enrollment window through October 31,
1993.

### Current Program Information on SDVI

There are over 154,000 policies in force under this program with 90,190
being permanent plan policies and the rest being 5-year term policies.
The total face value of policies in force is about \$1.4 billion with an
average amount of \$9,328 per policy. Average attained age for the SDVI
policyholders is 54.7 and the average annual death rate is 27.5 per
1,000. The participation rate for the SDVI program among all who are
eligible for SDVI is 3.5% for basic SDVI coverage. Thirty percent of the
totally disabled SDVI takers participate in Supplemental SDVI coverage.

As shown in Table 1 VA administrative cost for the SDVI program was
\$2.6 million in 1999. The cost estimate, based on the ABC costing
method, includes apportionment of all costs such as management, IT, and
space.

[]{#__RefHeading___Toc515774956 .anchor}Table 1. VA Administrative Costs
for SDVI Program

  ------------------------ ----------------------------------------------
  Year                     Administrative Cost

  1995                     \$2,509,351

  1996                     \$2,020,105

  1997                     \$2,086,833

  1998                     \$2,514,171

  1999                     \$2,628,377
  ------------------------ ----------------------------------------------

Source: VA Philadelphia Insurance Center

### Study Approach

Much of the information needed to assess program outcomes was collected
through a telephone survey of representative samples of study
populations -- SDVI participants, non-participants and survivors of SDVI
participants. The sample sizes were determined with 90% confidence level
so that the results are representative of the study universe population
within +/- 4% points.[^3] The survey was designed to provide an
approximation of a longitudinal assessment of the impact of the programs
on several factors and level of satisfaction with adjustment following
the death of the veteran.

Secondary data sources, such as VA administrative electronic files, IRS
individual taxable income data, Statistical Abstract of the United
States, Current Population Survey, Survey of Income and Program
Participation, and Federal Financial Institutions Examination Council
were compiled and analyzed. The study team also interviewed key
stakeholders to learn about their experiences and assessments of the DIC
and insurance programs, including representatives of the Department of
Defense, Veterans Service Organizations, and House and Senate Veterans
Affairs Committee staffs.

Our approach to this study has been grounded in a thorough understanding
of the legislative intent of the programs being evaluated and
interrelated Federal programs, the operational goals, and the
constraints and processes of organizations responsible for service
delivery; the collection of appropriate and valid data; and rigorous
application of sound evaluation methodologies. We have applied a range
of empirical methodologies from basic tabulation and simple statistical
methods to more advanced methods appropriate to estimating complex
relationships.

Parts of the report make a comparison of statistics between two groups
of survey respondents. Unless noted otherwise, all the differences found
are statistically significant at least at a 95% level. For example, when
we say "a significantly larger percentage of survivors of veterans who
were severely or catastrophically disabled at time of death (49%) have
health problems than those of veterans who were not severely or
catastrophically disabled (35%)," this means the difference is
statistically significant at the 95% level.

#### Data Collection Procedures

The survey instruments for this evaluation were devised in consultation
with VA, the Department of Defense (DoD), and Veterans Service
Organizations representing survivors, veterans, and servicemembers. A
paper-based pretest with a small set of respondents was carried out to
assure that the instruments were effective in obtaining the needed
information, that the flow of questions was appropriate, that the
questions were clear and understandable, and to determine the burden
level. Initial surveys for beneficiaries were reduced in size and
coverage. These instruments were programmed using computer-assisted
telephone interviewing (CATI) software. Additional testing of the CATI
versions of the survey instruments was conducted. This resulted in minor
changes to the survey instruments. The SDVI taker and non-taker surveys
and the SDVI survivor survey used in this study are located in Appendix
A which includes the tabulations of the survey results**.**

In order to locate potential respondents, current addresses and phone
numbers were obtained by using the National Change of Address database,
market research databases, the Internet, credit bureau searches, and a
private investigator.

ORC Macro conducted telephone interviews from its facility in
Plattsburgh, New York. Prior to receiving the first telephone contact,
potential participants received an introductory letter on VA letterhead
regarding the study. The letter informed members of the sample group of
their selection for the survey, briefly described the purpose, and
confirmed the legitimacy of the survey. By carrying signatures of the
Under Secretary for Benefits and the Assistant Secretary for Planning
and Analysis, the letter also conveyed the importance of the study. The
letter provided a toll-free telephone number that the intended
participants could call to schedule an interview or ask questions
regarding the study. Copies of the letters sent to intended participants
are included in Appendix B.

#### VA Administrative Electronic Files on SDVI

The SDVI universe population included veterans who elected to take SDVI
(that is, takers) and their beneficiaries who received SDVI proceeds and
those veterans who did not elect to take SDVI (that is, non-takers).

The data for the current SDVI takers as of September 1, 1999, were
received from the Philadelphia Insurance Center. The file had 137,557
veteran SDVI holders excluding file-sensitive VIPs. The SDVI non-takers
were identified by merging the SDVI current holders file with an extract
of the 1999 VA Compensation and Pension (C&P) electronic data file,
which includes service-connected disabled veterans in receipt of special
monthly compensation. Any record in the 1999 C&P file that did not have
a match in the SDVI current holder file was identified as an SDVI
non-taker. Further, the C&P file extract was restricted to those
veterans who left the military service on or after April 25, 1951 and
were receiving disability payments as of June 1999. There were 1,463,899
veterans as of June 1999 who were eligible for SDVI. Of those 1,463,899
veterans, 137,557 are SDVI takers.

The data on the SDVI beneficiaries were also received from the
Philadelphia Insurance Center. The data we received included 24,831
beneficiaries of 15,497 veterans who died within the past five years.

Sample files were drawn from the SDVI current takers, SDVI non-takers,
and SDVI beneficiary files. To assure representation, the files were
ordered by key variables and every n^th^ record selected on the basis of
the appropriate sampling fraction. In the SDVI beneficiary file the
sample was organized by the year of death of the veteran, to assure
adequate representation of those who were recent beneficiaries as well
as those who were longer-term survivors.

### Data Management Challenges

VA administrative electronic data files that we received did not include
any information on the deceased veteran's disability rating or
disability condition. Therefore, it was not possible for the study team
to identify a complete list of survivors of veterans with severe or
catastrophic service-connected disabilities at the time of death.
Instead, we used a combination of self-reporting from the survivor
survey and VA administrative electronic files.

The research questions could have been addressed more readily if there
had been an unduplicated population of veterans and their survivors that
included data about the veteran and survivor and all VA benefits
received. However, these programs are administered separately, and their
electronic administrative records are not readily linkable.

Separate VA records are typically maintained physically and conceptually
by each program area (for example, C&P, Insurance, and Education) and by
beneficiary within each program area. The records on DIC, for instance,
do not include the insurance or educational benefits received. Likewise,
insurance does not include DIC information. VA electronic files provide
limited descriptive and demographic information about the beneficiary
(veteran, survivor, or dependent); they do not systematically provide
information on VA or military benefits received from other programs.

Throughout the study, we had difficulties obtaining key data as well as
matching records in one VA data system with another. We discovered that
VA\'s record keeping systems have not used common identifiers that
permit electronic linking of insurance and disability compensation
records. While the Social Security Number is becoming a common
identifier for survivors, it was not always obtained in the past.
Consequently, it was not possible to determine the entire benefit
package provided to veterans by VA or what insurance packages survivors
received. The lack of common linkages also prevented us from directly
determining other information critical to the study. The pre-death
disability status for deceased veterans is not included in the survivor
record nor is the veteran's identifier which would permit access to
disability status data from the veteran's record. Instead, other more
costly and less precise methods had to be employed. These included using
assumptions and sometimes substituting self-reported survey information
to compensate for the lack of disability status, benefit, and insurance
information from administrative records.

Substantial work was required to synthesize the information into a
unified report that addresses issues in a fashion that is meaningful to
policymakers. The study is limited to a certain extent by the lack of
accessible administrative data. Key variables had to be estimated
through survey responses. Survey respondents were not always familiar
with the names of VA\'s programs and may not have distinguished one from
the other. In some cases administrative information (for example,
benefits provided) was linked to responses from the survey; this,
however, was not always possible. That resulted in challenges to the
analysis and interpretation of the findings.

Self-reported survey responses on benefit amounts and types of benefits
are less precise than administrative records. Many beneficiaries are
elderly, which further threatens reporting accuracy of income and other
key variables. Validity of self-reported data is a concern in any survey
similar to ours. Examples include:

-   Service-connected disabilities. A veteran or a survivor may consider
    some disabilities that are not service-connected for VA benefit
    purposes to be service-connected. The term "service-connected" was
    most likely used by many respondents in a looser way than it is
    understood by VA, Congress, and the professional veteran community.
    However, we expect that need-for-care reporting in the survey have
    high validity. We reason that the effects on the caregiving will be
    similar whether the conditions necessitating care were
    service-connected or non-service-connected. We should point out,
    though, that there might be some cases where care was necessary
    because of a non-service-connected disability, but for purposes of
    the study and for policymaking, the effects of caregiving will be
    the same.

-   Sources of income and expenditures. Some respondents may not
    remember the name of an income source or a benefit plan. Although
    the survivor survey covers income and expenditures item by item and
    has a separate question about "other" income and expenditures, some
    infrequent items may not have been included.

-   Other VA insurance. Respondents may not remember or know the name of
    a VA insurance program and report incorrectly. Although programs
    were described, survivors may not distinguish whether other
    insurance was received from VGLI or SGLI.

Although we have relied heavily on self-reported data, we have expended
significant effort in crosschecking the self-reported data for accuracy
and integrity. Throughout the report, we indicate limitations.

We encountered the following specific problems with the SDVI beneficiary
administrative electronic data files:

-   Social Security Numbers (SSN) for beneficiaries were not available
    in the SDVI beneficiary file. Beneficiary SSNs were identified by VA
    from other data sources manually for a sample of SDVI beneficiary
    records. This prevented us from conducting a complete data match of
    SDVI beneficiary files with the other VA insurance or survivor files
    before a sample was drawn for the survey. We had to rely on a
    combination of self-reported data and VA administrative data for
    information on other VA insurance benefits.

-   SDVI beneficiary files do not identify the name or SSN of the
    deceased veteran or the relationship of the deceased veteran to the
    beneficiary. Therefore, it was not possible to match the SDVI
    beneficiary records of deceased veterans directly to the other
    insurance files to identify the overlapping between insurance
    programs.

-   SDVI beneficiary files did not include any information on the
    veteran's combined degree of disability rating. This prevented us
    from identifying the deceased veterans' disability status.

-   SDVI beneficiary files that we received did not include any
    information on the number of years veterans had service-connected
    disabilities.

-   Demographic information such as educational attainment, race, and
    gender is not included in the SDVI beneficiary file. Consistent
    demographic data across VA insurance programs would greatly enhance
    the quality of analysis. Although the study called for the data to
    be sorted by such characteristics as gender and race for data
    stratification, VA files do not contain some of this demographic
    information.

### Definition of Severely or Catastrophically Disabled Veterans

For the purposes of the study, disabled veterans refer to veterans with
service-connected disabilities unless otherwise specified in the text.
The contract defines severely disabled veterans as those with a VA C&P
Service disability rating of 70-100%, whereas catastrophically disabled
veterans are defined as those in receipt of special monthly compensation
under the provisions of 38 USC 1114 (l) through (s) at the time of
death. Minimum disability by this definition may be summarized as
follows:

1.  Loss or loss of use of any two extremities (feet or hands), or

2.  Blindness with sight of 5/200 or less in both eyes or field of
    vision less than 5 degrees in both eyes, or

3.  In need of aid and attendance, or

4.  Permanently housebound, or

5.  Rated 100% disabled and having additional disability rated at least
    60%.

Severely or catastrophically disabled veterans for the SDVI taker and
non-taker survey respondents are defined as follows:

##### Severely or catastrophically disabled SDVI takers

-   Are indicated as totally disabled in the SDVI administrative
    electronic file, or

-   Have a combined degree of disability of 70-100. This is a rating
    given from VA's Compensation and Pension Service, or

-   Have insurance above \$10,000

##### Severely or catastrophically disabled SDVI non-takers

-   Have a combined degree of disability of 70-100.

SDVI beneficiary files that we received did not include any information
on the deceased veteran's disability rating or disability condition and
therefore it was not possible for the study team to identify survivors
of veterans with severe or catastrophic service-connected disabilities
at the time of death from VA administrative electronic files. We had to
rely on a combination of the self-response from the SDVI survivor
survey, SDVI beneficiary records that we were able match with other
insurance program takers and non-takers, and some indicator variables
available in VA files. Survey respondents were identified as survivors
of veterans who were severely or catastrophically disabled at the time
of death if any of the following conditions held:

-   SDVI insurance amount in the SDVI administrative electronic file was
    over \$10,000, which is an indicator that the veteran was totally
    disabled.

-   The beneficiary was also identified as a DIC recipient of a veteran
    who was continuously rated totally disabled for a period of 10 or
    more years immediately preceding death. This identification was made
    from the VA administrative electronic files by merging SDVI
    beneficiary files with the DIC files.

-   The survey response to the question 68, "At the time of
    \_\_\_\_\_\_\_\_'s death, did \_\_\_\_\_\_\_ have service-connected
    disabilities so severe that he/she needed someone to care for some
    of his/her needs?" is "Yes" and the response to question 71, "These
    next questions are about the care that \_\_\_\_\_\_\_\_ required for
    service-connected disabilities. First, did \_\_\_\_\_\_\_\_\_ need
    assistance with any of the following?" is "Yes" to either "Getting
    dressed" or "Getting in and out of bed" or " Bathing."

## 2. SDVI Program Outcomes, Goals, and Measures

In Section 2, we examine the outcomes, goals, and measures for SDVI. The
Department of Veterans Affairs developed these in draft form and
requested that the study team provide comments and suggestions. We began
by comparing the stated outcomes with the programs' objectives reflected
in the legislative history. Where we believe there is a divergence, we
suggest revisions and propose appropriate changes in goals and measures.
Current VA draft outcomes, goal, and measure for SDVI are summarized in
Table 2 below.

[]{#__RefHeading___Toc515774957 .anchor}Table 2. SDVI Program Outcomes,
Goal, and Measure -- VA Draft

  ------------------- --------------------- ----------------- ------------------
  Group Served        Outcomes              Goal              Measure

  Veterans with       Provide veterans with Parity with the   Compare life
  service-connected   service-connected     average           insurance
  disabilities        disabilities the      American's        available under
                      ability to obtain     ability to        the SDVI program
                      life insurance at     purchase          with the average
                      standard premium      reasonable        American's ability
                      rates without regard  amounts of life   to purchase
                      to their              insurance at      insurance in
                      service-connected     competitive rates reasonable amounts
                      impairments for a     and with          at competitive
                      reasonable time       comparable policy rates and with
                      period following      features.         comparable policy
                      establishment of a                      features.
                      service-connected                       
                      disability.                             
  ------------------- --------------------- ----------------- ------------------

Source: Department of Veterans Affairs

When it was enacted in 1951, SDVI was seen as an insurance remedy for
veterans with service-connected disabilities. The legislative history
for SDVI and Supplemental SDVI indicates that Congress' intent was that
veterans should not be penalized for obtaining life insurance coverage
on the basis of disabilities incurred during uniformed service. The
original solution with SDVI was to put the disabled and non-disabled
veterans on the same footing regarding coverage levels and premiums.[^4]
The supplemental SDVI added another \$20,000 in coverage at a time when
the SGLI/VGLI programs reached a maximum coverage level of \$200,000.

The SDVI program guarantees the opportunity to purchase insurance
coverage in cases where a veteran, perhaps long following separation
from service, has a disability that is determined to be
service-connected. Within a two-year window following this
determination, the veteran may purchase SDVI coverage.

With enactment of VGLI in 1974, Congress provided a second insurance
option for disabled veterans, whether the disabilities are
service-connected or not. However, to take advantage of this coverage,
the veteran must have been enrolled in SGLI on active duty and then have
converted to VGLI or commercial insurance within the enrollment window
following separation.

In practice, SDVI is an insurance option of last resort for three types
of veterans: 1) veterans with service-connected disabilities who did not
participate in SGLI while on active duty and were thus ineligible for
VGLI; 2) service-disabled veterans who participated in SGLI but did not
convert to VGLI; and 3) service-disabled veterans who converted SGLI to
VGLI but were unable to renew their VGLI and whose coverage has since
expired. For these individuals, SDVI is the only VA insurance program
available.

The SGLI/VGLI programs provide the opportunity, if exercised, for life
insurance coverage following military service that is applied
consistently to both disabled and non-disabled veterans. The SDVI and
Supplemental SDVI programs provide an opportunity for veterans with
service-connected disabilities to purchase life insurance at
non-disabled rates just as non-disabled veterans can purchase individual
private insurance to supplement VGLI.

Our reading of the legislative history is that by requiring premiums for
both the new SDVI and post-service insurance programs enacted by the
1951 statute to be based on the Commissioners 1941 Standard Ordinary
Table of Mortality, Congress intended to equalize premiums for
post-service insurance for both disabled and non-disabled veterans. This
concept was continued with VGLI since it guarantees the option for
coverage at the same premium regardless of health status.

VGLI has modified SDVI's place within the VA life insurance program.
When enacted, SDVI was the only source of coverage for service-disabled
veterans. Following enactment of VGLI, SDVI continued to be the sole
source of life insurance for service-disabled veterans not covered by
VGLI. SDVI also became an additional coverage option for
service-disabled veterans who are covered by VGLI.

However, in reading the legislative history, we did not note any
indication that Congress intended for VGLI to alter the purposes for
SDVI. Consequently, we believe that the SDVI program should be evaluated
in terms of its role as the primary source of VA life insurance coverage
for service-disabled veterans, regardless of VGLI eligibility. SDVI
coverage amounts and premium comparability should be established on the
basis of insurance purchases in the individual market by healthy
individuals.

We recommend the outcomes, goal, and measure statements summarized in
Table 3 below.

[]{#__RefHeading___Toc515774958 .anchor}Table 3. Restated SDVI Program
Outcome, Goal, and Measure

  ------------------- ---------------------- ------------------- -----------------
  Group Served        Outcome                Goal                Measure

  SDVI Program:       Veterans with          For veterans with   Comparability of
  Veterans with       service-connected      service-connected   life insurance
  service-connected   disabilities are       disabilities,       coverage amounts
  disabilities        provided with the      parity with the     and premium
                      opportunity to obtain  options available   levels available
                      life insurance at      to healthy          under the SDVI
                      standard premium rates individuals of      program with the
                      without regard to      similar ages to     average insurance
                      their                  purchase reasonable amounts and
                      service-connected      amounts of life     premiums paid by
                      impairments for a      insurance in the    healthy
                      reasonable time period individual market,  individuals in
                      following              within a reasonable the individual
                      establishment of a     time following the  insurance market.
                      service-connected      disability being    
                      disability.            established, and    
                                             with comparable     
                                             policy features.    
  ------------------- ---------------------- ------------------- -----------------

Source: Study Team Analysis

## 3. Profile of SDVI Participants and Non-Participants

This section reports on the characteristics of the survey respondents of
the SDVI insurance takers and non-takers. All of the survey data
presented throughout the report are current as of the survey date,
Spring 2000. The "universe" profile of all of the program participants,
non-participants and the survivors of SDVI participants is included in
Appendix C.

A total of 421 SDVI takers and 423 SDVI non-takers were surveyed. Out of
the entire survey population, 21 SDVI takers responded that they never
had SDVI or that they do not remember taking the insurance, while one
SDVI non-taker responded that he did have SDVI. These respondents are
excluded throughout the study and therefore the study population
includes 400 SDVI takers and 422 SDVI non-takers.

The characteristics of the SDVI takers and non-takers survey respondents
are presented in this section with a special emphasis on whether the
veteran is severely or catastrophically disabled. By definition, all of
the veterans eligible for SDVI have service-connected disabilities. We
compare the characteristics of SDVI takers and non-takers by veteran's
disability status.

Using the identification process presented in Section 1, approximately
42% of the SDVI takers and 12% of the SDVI non-takers surveyed are
severely or catastrophically disabled, as shown in Figure 1. Further,
22% of SDVI takers and 7% of SDVI non-takers are totally disabled, that
is, have a disability rating of 100.

[]{#__RefHeading___Toc515774704 .anchor}Figure 1. Combined Degree of
Disability of SDVI Takers and Non-takers

![](media/image2.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: VA Administrative Electronic Files

Table 4 below summarizes the profile of the SDVI takers and non-takers
by disability status. It presents characteristics of a typical SDVI
taker and non-taker. For example, a typical taker and non-taker have the
following characteristics: homeowner, white, married, with dependents,
some college, 51-60 years old, and have had a service-connected
disability for 21-30 years. SDVI takers and non-takers differ in the
following characteristics: a higher percentage of SDVI takers stay home
or in bed due to disabilities than do SDVI non-takers, and SDVI
non-takers have a higher median household income than that of SDVI
takers.

[]{#__RefHeading___Toc515774959 .anchor}Table 4. Summary of Profile of
SDVI Takers and Non-takers

  ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- -------------------
  SDVI Takers                                                 Respondent           SDVI Non-takers                         
                                                              Characteristics                                              

  Severely or                             All Takers                               Severely or                             All Non-takers
  Catastrophically                                                                 Catastrophically                        
  Disabled Veterans                                                                Disabled Veterans                       

  No                  Yes                                                          No                  Yes                 

  91%                 90%                 91%                 \% Homeowner         89%                 76%                 87%

  82%                 82%                 82%                 \% White             84%                 74%                 83%

  86%                 78%                 83%                 \% Married           80%                 70%                 79%

  61%                 65%                 62%                 \% With dependents   60%                 54%                 59%

  26%                 24%                 25%                 \% With dependent    26%                 26%                 26%
                                                              child(ren)                                                   

  59%                 60%                 60%                 \% Living with       57%                 46%                 55%
                                                              dependents                                                   

  11%                 34%                 20%                 \% Staying at home   8%                  44%                 12%
                                                              due to disabilities                                          

  38%                 22%                 31%                 At least bachelor's  26%                 18%                 25%
                                                              degree                                                       

  \$40,001-\$50,000   \$50,001-\$60,000   \$40,001-\$50,000   Median household     \$50,001-\$60,000   \$50,001-\$60,000   \$50,001-\$60,000
                                                              income range                                                 

  60                  57                  58                  Median age           57                  58                  57

  58                  58                  58                  Mean age             58                  60                  58

  30                  27                  28                  Median number of     27                  27                  27
                                                              years with                                                   
                                                              service-connected                                            
                                                              disability                                                   

  30                  25                  28                  Mean number of years 26                  25                  26
                                                              with                                                         
                                                              service-connected                                            
                                                              disability                                                   

  234                 166                 400                 Number of Survey     372                 50                  422
                                                              Respondents                                                  
  ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- -------------------

Source: Q75, Q76(a-b), Q82a, Q83, Q84, Q87, Q88, Q90NE, Q91, Q92,
Q92Inc, Q92Ver2 of SDVI Survey

#### Marital Status

A majority of SDVI takers and non-takers are married, as shown in Figure
2. A higher percentage of veterans who are not severely or
catastrophically disabled are married than of severely or
catastrophically disabled veterans for both SDVI takers and non-takers.
The results differ slightly for SDVI takers and non-takers. For example,
78% of SDVI takers who are severely or catastrophically disabled are
married compared to 70% of SDVI non-takers who are severely or
catastrophically disabled.

[]{#__RefHeading___Toc515774705 .anchor}Figure 2. Marital Status of SDVI
Takers and Non-takers by Veteran's Disability Status

![](media/image3.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q75 of SDVI Survey

#### Educational Attainment

In general, severely or catastrophically disabled veterans are less
educated than their not severely or catastrophically disabled
counterparts, as shown in Figure 3. Moreover, severely or
catastrophically disabled SDVI non-takers have the lowest level of
education, on average. SDVI non-takers as a group have lower education
than SDVI takers.

[]{#__RefHeading___Toc515774706 .anchor}Figure 3. Highest Level of
Education of SDVI Takers and Non-takers\
by Veteran's Disability Status

![](media/image4.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q86 of SDVI Survey

#### Living Situation

Figure 4 compares the living situation of SDVI takers and non-takers.
The term living situation refers to whether the respondent lives alone,
lives with people who are financially dependent on him/her, or depends
financially on people who live with him/her. Further, the term "group
setting" refers to whether the respondent lives in a nursing home,
assisted living facility, and the like. As the figure reveals, more than
half of the SDVI takers and non-takers live with their dependents, as
shown in Figure 4.

For veterans who are not severely or catastrophically disabled, the
percentage who indicated that they live with dependents is the same for
SDVI takers and non-takers (59% and 57%, respectively), whereas it is
significantly different for severely or catastrophically disabled
veterans. A higher percentage of severely or catastrophically disabled
SDVI takers (60%) live with their dependents than that of SDVI
non-takers (46%). Alternatively, a significantly higher percentage of
severely or catastrophically disabled SDVI non-takers (28%) live alone
or in a group setting such as nursing home and assisted living than that
of severely or catastrophically disabled SDVI takers (16%).

[]{#__RefHeading___Toc515774707 .anchor}Figure 4. Living Situation
(Financial Dependence) of SDVI Takers and Non-takers\
by Veteran's Disability Status

![](media/image5.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q76a of SDVI Survey

#### Living Quarters

Most of the SDVI takers and non-takers are homeowners, as shown Figure
5. The percentage who own homes do not differ by taker vs. non-taker
status among veterans who are not severely or catastrophically disabled,
but it does differ for the severely or catastrophically disabled. For
example, only 76% of severely or catastrophically disabled SDVI
non-takers own their home, as compared with 90% of the severely or
catastrophically disabled SDVI takers.

[]{#__RefHeading___Toc515774708 .anchor}Figure 5. Living Quarters of
SDVI Takers and Non-takers\
by Veteran's Disability Status

![](media/image6.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q85 of SDVI Survey

#### Total Annual Household Income

Veterans were asked two consecutive questions their income: first on the
disability compensation payments received from VA and second on the
total household income (excluding payments received from VA). To
increase the response rate to the income questions, respondents were
also given a choice of providing their income in ranges. A substantial
proportion of SDVI takers (19%) and non-takers (26%) did not provide
their household income (amount or range). Also, a substantial proportion
of SDVI takers (27%) and non-takers (22%) did not report the payments
received from VA. Given the substantial nonreporting of household
income, it is not straightforward to provide an answer to whether income
differs significantly between SDVI takers and non-takers or to conclude
on what the income range is for SDVI takers and non-takers. We will
present our findings on the total household income levels with some
reservations on making general conclusions.

A significantly larger percentage of the SDVI takers (21%) and
non-takers (20%) who are not severely or catastrophically disabled
reported 1999 annual household income between \$70,001 and \$80,000
compared to severely or catastrophically disabled takers (17%) and
non-takers (14%), as shown in Figure 6. The median income range for
respondents who provided household income range reveals that the 1999
household income range is higher for SDVI non-takers (\$50,001-\$60,000)
compared to that of for SDVI takers (\$30,001-\$40,000).

Severely or catastrophically disabled SDVI eligible veterans receive a
significant amount of disability compensation from VA. According to our
survey tabulation, the mean and median annual disability compensation
received from VA is \$26,709 and \$25,200, respectively for severely or
catastrophically disabled SDVI takers and non-takers compared to
l\$4,656 and \$2,256 for takers and non-takers combined who are not
severely or catastrophically disabled.

The study team also received taxable income data for the SDVI taker and
non-taker survey respondents from the Internal Revenue Service (IRS).
The survey respondent records were matched against IRS *individual*
income tax files,[^5] and the IRS provided "average" taxable income
tables for aggregated variables. While the U.S. Tax Code allows IRS to
conduct studies for other government agencies, it prohibits release of
individually identifiable information. According to the IRS individual
tax files, 1999 average taxable income for SDVI taker survey respondents
was \$40,391 compared to \$38,973 for SDVI non-taker survey-respondents.

[]{#__RefHeading___Toc515774709 .anchor}Figure 6. Total Annual Household
Income of SDVI Takers and Non-takers\
by Veteran's Disability Status

![](media/image7.wmf){width="5.333333333333333in"
height="5.4631944444444445in"}

Source: Q91, Q92, Q92Inc, and Q92Ver2 of SDVI Survey

#### Dependents

Survey responses indicate that most of the veteran population, SDVI
takers and non-takers alike, have dependents, as shown in Figure 7. A
larger percentage of severely or catastrophically disabled SDVI takers
(65%) have dependents compared to 54% of severely or catastrophically
disabled SDVI non-takers.

[]{#__RefHeading___Toc515774710 .anchor}Figure 7. Respondents with
Dependents -- SDVI Takers and Non-takers\
by Veteran's Disability Status

![](media/image8.wmf){width="5.333333333333333in"
height="2.4902777777777776in"}

Source: Q76(a-b) of SDVI Survey

Out of the entire SDVI survey population, 25% of SDVI takers and 26% of
SDVI non-takers have dependent child(ren). Among those respondents with
dependents, a significantly larger percentage of severely or
catastrophically disabled SDVI non-takers (48%) indicated they have a
dependent child compared to severely or catastrophically disabled SDVI
takers (37%).

[]{#__RefHeading___Toc515774711 .anchor}Figure 8. Relationship of
Dependents to Respondents -- SDVI Takers and Non-takers\
by Veteran's Disability Status

(Among those who indicated they have dependents)

![](media/image9.wmf){width="5.333333333333333in"
height="2.4902777777777776in"}

Source: Q77 of SDVI Survey

#### Health Problems of Dependents

The majority of respondents, both SDVI takers and non-takers, indicated
that their dependents do not have any health problems, as shown in
Figure 9. However, the severely or catastrophically disabled respondents
indicated a larger percentage of dependents with health problems (31%
for SDVI takers and 37% for non-takers) than did respondents who are not
severely or catastrophically disabled (14% for SDVI takers and 22% for
non-takers).

[]{#__RefHeading___Toc515774712 .anchor}Figure 9. "Does your dependent
have health problems?"\
SDVI Takers and Non-takers by Veteran's Disability Status

(Among those who indicated they have dependents)

![](media/image10.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q78 of SDVI Survey

SDVI takers and non-takers who indicated that their dependent has health
problems, overwhelmingly indicated that their spouses have health
problems, as shown in Figure 10. Of these respondents, a larger
percentage of non-takers who are not severely or catastrophically
disabled indicated a disabled spouse than did the severely or
catastrophically disabled non-takers (80% vs. 60%). Further, a
significantly larger percentage of severely or catastrophically disabled
non-takers (40%) indicated that their dependent child(ren) has health
problems compared to 18% of severely or catastrophically disabled SDVI
takers.

[]{#__RefHeading___Toc515774713 .anchor}Figure 10. "Which dependents
have health problems?"\
SDVI Takers and Non-takers by Veteran's Disability Status

(Among those who reported health problems for their dependents)

![](media/image11.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q78wh of SDVI Survey

#### Need Assistance

In general, the severely or catastrophically disabled SDVI eligibles
(takers and non-takers combined) need assistance performing many basic
activities, as shown in Figure 11. Not surprisingly, takers and
non-takers who are not severely or catastrophically disabled did not
indicate a significant need for assistance in performing any activities.
A significantly larger percentage of severely or catastrophically
disabled SDVI takers compared to severely or catastrophically disabled
non-takers indicated needing assistance with the following activities:
shopping (22% vs. 12%), cooking (17% vs. 12%), bathing (17% vs. 6%),
paying bills (17% vs. 4%), getting dressed (16% vs. 6%), and getting in
and out of bed (15% vs. 8%).

[]{#__RefHeading___Toc515774714 .anchor}Figure 11. Need Assistance with
the Following Activities\
SDVI Takers and Non-takers by Veteran's Disability Status

![](media/image12.wmf){width="5.333333333333333in" height="5.46875in"}

Note: Totals may add up to more than 100% because of multiple responses.

Source: Q83 of SDVI Survey

Most of the severely or catastrophically disabled respondents stay at
home as a result of their disabilities, as shown in Figure 12.
Respondents who are not severely or catastrophically disabled do not
appear to be limited in their activities because of a lack of mobility,
as reflected in the relatively low percentage of respondents who
indicated the need to use crutches, a wheelchair, or to stay in bed or
at home.

[]{#__RefHeading___Toc515774715 .anchor}Figure 12. Physical Limitations
-- SDVI Takers and Non-takers\
by Veteran's Disability Status

![](media/image13.wmf){width="5.333333333333333in"
height="2.4902777777777776in"}

Source: Q84 of SDVI Survey

#### Age Groups

As shown in Figure 13, the age distribution is very similar among the
four study groups. On average, the SDVI takers and SDVI non-takers are
58 years old, respectively. The median age for SDVI takers who are not
severely or catastrophically disabled is 60 years old compared to a
median age of 57 years old for severely or catastrophically disabled
SDVI takers. In contrast, the median age for SDVI non-takers who are not
severely or catastrophically disabled is 57 years old compared to a
median age of 58 years old for severely or catastrophically disabled
SDVI non-takers. The differences among age groups are minimal for the
four segments examined.

[]{#__RefHeading___Toc515774716 .anchor}Figure 13. Age Groups -- SDVI
Takers and Non-takers by\
Veteran's Disability Status

![](media/image14.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q88 of SDVI Survey

#### Number of Years with Service-Connected Disability

There are no immediate conclusions regarding differences in the number
of years with service-connected disability among the SDVI groups, as
shown in Figure 14. Therefore, we examine the mean and median number of
years with service-connected disabilities for each of the four groups.
The average number of years with service-connected disability, overall
across all SDVI eligibles is 27 years, with a median value of 28. The
median number of years with service-connected disabilities is the same
for all SDVI non-takers and severely or catastrophically disabled SDVI
takers (27), whereas it is the highest for SDVI takers who are not
severely or catastrophically disabled (30).

[]{#__RefHeading___Toc515774717 .anchor}Figure 14. Number of Years with
Disability -- SDVI Takers and Non-takers\
by Veteran's Disability Status

![](media/image15.wmf){width="5.333333333333333in" height="2.46875in"}

Source: Q82a of SDVI Survey

#### Race

The majority of survey respondents are white, as shown in Figure 15. The
only significant result is that a larger percentage of SDVI non-takers
who are not severely or catastrophically disabled (84%) are white
compared to 74% of severely or catastrophically disabled SDVI
non-takers.

[]{#__RefHeading___Toc515774718 .anchor}Figure 15. Race -- SDVI Takers
and Non-takers\
by Veteran's Disability Status

![](media/image16.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q90NE of SDVI Survey

## 4. Availability and Affordability of Insurance

The major expectation of Congress and stakeholders for the VA insurance
programs is that the life insurance is readily available and affordable
to servicemembers and veterans, regardless of whether they are healthy
or disabled. The insurance programs are intended to make insurance
available at premium levels that are competitive with rates offered by
commercial insurers to healthy individuals. For disabled veterans, these
premiums do not cover the full cost of insurance and the programs are
not self-supporting from premium income alone. In this section we assess
how well the goal of available and affordable insurance is being met.

The study's assessment of the availability and affordability for members
and veterans is based on comparison to the private sector and non-VA
public organizations. The basic measure is to compare the available
insurance coverage and benefit amounts received by survivors under the
VA programs to average amounts and premiums or cost purchased by
non-disabled individuals in the private insurance market.

### Comparison of SDVI Coverage to the Private Sector

#### Background

In comparing SDVI to the private sector, we address the following
issues:

-   Identification of the type, face amount, premium rate, policy
    features, beneficiary, and source of all life insurance coverage for
    servicemembers and veterans included in the study population.

-   Comparison of the types, face amount, premiums, and policy features
    with insurance coverage held by comparable groups in the general
    public.

The primary purpose of this task is to develop comparisons between
insurance coverages available to and held by disabled veterans and
non-veterans.

#### Approach

We first provide an overview of the SDVI program and comparator
organization life insurance programs. Comparator groups include private
sector employers, the Federal government, and State governments. Next,
VA and comparator programs are compared on the basis of prevalence and
how disability affects coverage. Mortgage insurance and other features
of the life insurance programs not related to disability are addressed
in other sections of Volume III and Volume IV.

Following these comparisons, we summarize demographic and other
information about takers and non-takers of SDVI. More complete
descriptions of these populations are provided in Section 3 of this
report. We then provide key results from the insurance survey describing
why servicemembers and veterans did or did not participate in VA
insurance programs and their sources and amounts of non-VA coverages.

We were unable to make comparisons between the actual insurance
coverages held by disabled veterans with the insurance held by disabled
non-veterans because data on life insurance coverage by disability
status of veterans and non-veterans is not available from external data
sources such as Current Population Survey, Survey of Income and Program
Participation, the Panel Study of Income Dynamics, and the Survey of
Consumer Finances. However, we believe the comparison of insurance
programs provided by VA and private sector employers will provide an
approximation because most private sector employees obtain life
insurance through their employers.

#### Life Insurance

##### Background

###### VA Programs

Upon separation or retirement from active duty or the reserves, SGLI
participants have a guaranteed option to convert their coverage to VGLI,
regardless of health status. VGLI is term insurance that may be elected
in any face amount equal to or below the veteran's SGLI coverage.
Although veterans may elect VGLI coverage during the one-year period
following separation from active duty or the reserves, coverage is
guaranteed regardless of health status if the election is made during
the first 120 days after separation. After 120 days, evidence of good
health is required. Consequently, disabled veterans may enroll in VGLI
within 120 days following separation, provided they were SGLI
participants during active service. Once enrolled in VGLI, disabled
veterans have all the options available to any participant regarding
renewal every five years.

Servicemembers with SGLI coverage in force on their date of separation
or retirement may also convert their coverage to an individual policy of
life insurance coverage with a commercial company that participates in
the SGLI program. Similarly, VGLI participants may at any time convert
their VGLI term coverage to an individual policy with a commercial
company participating in the program.

Veterans separating or retiring from active service with a
service-connected disability (but in good health otherwise) may also
purchase SDVI in addition to VGLI. SDVI can also be purchased by
veterans who are notified that their disability is service-connected,
regardless of when following separation the determination is made. Basic
SDVI is available in coverage amounts up to \$10,000 and can be
purchased in numerous formats such as ordinary life, 20-year payable
life, five-year term insurance, and the like. The enabling legislation
specified that SDVI premiums should be based on the Commissioners 1941
Standard Ordinary Table of Mortality to keep premium rates at a level
equivalent to those for commercial insurance for non-disabled
individuals. However, mortality improvements in the intervening years
have resulted in SDVI costs now exceeding the averages for an equivalent
amount of commercial coverage.

Veterans whose disability is total and permanent may be eligible for a
waiver of premium. If the waiver is approved, the veteran may purchase
Supplemental SDVI of up to an additional \$20,000 for a total SDVI
coverage of \$30,000. Waivers of premium on the Supplemental SDVI are
not permitted.

Benefits payable under VGLI and SDVI are not integrated with or offset
by benefits payable from any other source of life insurance.

###### Private Sector[^6]

Employer-provided life insurance is nearly universal in the private and
public sectors. In the private sector, typical basic group life
insurance benefit amounts are one or two times annual salary -- and the
amount of coverage is determined by the employer. This differs from SGLI
where the participant determines the coverage amount, subject to the
maximum limit (which was \$200,000 at the time of this study and later
raised to \$250,000, effective April 1, 2001) and the requirement for
coverage in increments of \$10,000. Most employer-provided private
sector plans have maximum coverage amounts but, in over 75% of cases,
the maximum for basic coverage is \$200,000 or higher. Over 90% of
employers provide basic life insurance free of charge to employees.
Health status does not affect coverage under the basic plan if the
employee enrolled when first hired. However, employers may require
evidence of good health if employees do not enroll in the basic life
insurance program when first eligible.

Most (87%) private sector employers continue employees under the basic
group life coverage during periods of disability until the employee
either recovers or separates or retires.

###### Federal Government

The Federal government provides life insurance to its employees through
the Federal Employees' Group Life Insurance (FEGLI) program. The basic
coverage is a multiple of annual salary rounded to the next higher
thousand plus \$2,000, with the multiple based on the employee's age as
seen in Table 5. The employing agency pays one-third of the premium and
the employee pays two-thirds of the premium.

Federal employees eligible for disability benefits may continue basic
FEGLI coverage for 12 months at which time the employee may convert to
individual coverage.

[]{#__RefHeading___Toc515774960 .anchor}Table 5. Multiples for Basic
FEGLI Coverage

+------------------------------------+---------------------------------+
| # **Employee's Age** {#e           | # **Multiple** {                |
| mployees-age .Table-Cell-Heading1} | #multiple .Table-Cell-Heading1} |
+------------------------------------+---------------------------------+
| 35 or under                        | 2.0                             |
+------------------------------------+---------------------------------+
| 36                                 | 1.9                             |
+------------------------------------+---------------------------------+
| 37                                 | 1.8                             |
+------------------------------------+---------------------------------+
| 38                                 | 1.7                             |
+------------------------------------+---------------------------------+
| 39                                 | 1.6                             |
+------------------------------------+---------------------------------+
| 40                                 | 1.5                             |
+------------------------------------+---------------------------------+
| 41                                 | 1.4                             |
+------------------------------------+---------------------------------+
| 42                                 | 1.3                             |
+------------------------------------+---------------------------------+
| 43                                 | 1.2                             |
+------------------------------------+---------------------------------+
| 44                                 | 1.1                             |
+------------------------------------+---------------------------------+
| 45 or over                         | 1.0                             |
+------------------------------------+---------------------------------+

Source: U.S. Office of Personnel Management, Federal Employees' Group
Life Insurance Program (FEGLI),\
A Handbook for Employees, Annuitants, Compensationers, and Employing
Offices.

###### State Governments

State governments also provide life insurance benefits for their
employees. Three of the five states we examined[^7] base the benefit on
a multiple of pay, from one to five times earnings. The remaining two
provide a flat insurance amount, ranging from \$5,000 to \$20,000. All
employers offer immediate eligibility upon date of hire for life
insurance coverage. Most employers provide basic group life insurance
coverage at no cost to the employee. Of those that do require employee
cost sharing, premium rates are based on the employee's age and the plan
experience.

All but one of the States we examined continues basic life insurance
during periods of disability and also waives any premium payments.

##### Comparison of Features

This section evaluates VA life insurance benefits against comparator
group practices regarding prevalence and effects of disability on
coverage. Other features of the insurance are provided in Volume III of
this report.

[Prevalence]{.underline}: Table 6 summarizes the availability of basic
and other forms of life insurance coverage among the comparators.

[]{#__RefHeading___Toc515774961 .anchor}Table 6. Prevalence of Life
Insurance Benefits

  ----------------------------------------------------------------------------
  Type               VA             Private Sector Federal      State
                                                   Government   Governments
  ------------------ -------------- -------------- ------------ --------------
  Basic life         Provides       99% provide    Provides     Five of five
                     (SGLI/VGLI/                   (FEGLI)      provide
                     SDVI)                                      

  Accidental Death & None           86% provide    Provides     Five of five
  Dismemberment                                    (FEGLI)      provide
  (AD&D)                                                        

  Supplemental       Supplemental   81% offer      Offers       Two of five
  Employee Coverage  SDVI Coverage  supplemental   (FEGLI       offer
                     for Totally    coverage for   Options A    supplemental
                     Disabled       employees      and B)       coverage for
                                                                employees

  Supplemental       None           72% offer      Offers       Three of five
  Dependent Coverage                supplemental   (FEGLI       offer
                                    coverage for   Option C)    supplemental
                                    dependents                  coverage for
                                                                dependents
  ----------------------------------------------------------------------------

Sources: Department of Veterans Affairs, Hay Benefits Report, U.S.
Office of Personnel Management,\
State Governments in Georgia, New York, Oklahoma, Washington, Wisconsin.

The key finding is that the Federal and State governments and private
sector employers offer a wider range of life insurance coverages for
their employees and for dependents than does VA.

[Effects of Disability on Coverage]{.underline}: Table 7 summarizes
changes in coverage when active employees become disabled.
Servicemembers who become permanently disabled are either separated or
retired if they have sufficient service. Temporarily disabled
servicemembers may either be retained on active duty until they are able
to return to duty status, or they may be transferred to the Temporary
Disability Retired List (TDRL). Individuals on the TDRL may eventually
be returned to active duty or permanently retired. In the private
sector, disabled employees are normally terminated but they may retain
their basic life insurance benefit.

VA, private sector, and Federal and State government practices are
similar with regard to continuation of basic life insurance benefits
during disability. In VA, coverage following a disability can actually
increase if the veteran purchases SDVI. However, disabled employees in
the private sector retain the advantage of having an employer-paid
benefit.

#### Adequacy of SDVI Insurance -- Amount of Coverage and Premiums

From the survey on SDVI participants, we tabulated results for the
adequacy of the insurance, what basis they use to decide how much
coverage to take, and reasonableness of premiums.

[]{#__RefHeading___Toc515774962 .anchor}Table 7. Life Insurance Benefits
When Disabled

+-----------+----------------+------------+-------------+-------------+
| Type      | VA             | Private    | Federal     | State       |
|           |                | Sector     | Government  | Governments |
+-----------+----------------+------------+-------------+-------------+
| Basic     | SGLI continues | 87%        | Federal     | Four of     |
| Life      | if member is   | continue   | employees   | five        |
| Insurance | retained on    | coverage   | eligible    | continue    |
|           | active duty.   | until      | for         | coverage in |
|           |                | disability | disability  | instance of |
|           | Can convert to | is removed | benefits    | disability  |
|           | commercial     | or         | may         | and waive   |
|           | policy or VGLI | employee   | continue    | premium     |
|           | if terminated  | retires.   | FEGLI basic | payments;   |
|           | or retired.    |            | coverage    |             |
|           |                |            | for 12      | Of these    |
|           | Can purchase   |            | months.     | 50% reduce  |
|           | SDVI if rated  |            |             | coverage at |
|           | with a         |            | After 12    | age 60      |
|           | ser            |            | months,     |             |
|           | vice-connected |            | employee    |             |
|           | disability     |            | may convert |             |
|           | (SDVI has      |            | basic FEGLI |             |
|           | waiver of      |            | coverage to |             |
|           | premium for    |            | individual  |             |
|           | totally        |            | insurance.  |             |
|           | disabled).     |            |             |             |
+-----------+----------------+------------+-------------+-------------+
| A         | No coverage    | AD&D       | AD&D can be | Four of     |
| ccidental |                | generally  | continued   | five        |
| Death &   |                | follows    | for up to   | continue    |
| Dism      |                | practices  | 12 months   | coverage in |
| emberment |                | for Basic  | during      | instance of |
| (AD&D)    |                | Life       | which       | disability  |
|           |                | Insurance  | disability  | and waive   |
|           |                |            | benefits    | premium     |
|           |                |            | are         | payments;   |
|           |                |            | received.   |             |
|           |                |            | AD&D        | Of these,   |
|           |                |            | coverage    | two reduce  |
|           |                |            | terminates  | coverage at |
|           |                |            | after 12    | age 60      |
|           |                |            | months.     |             |
+-----------+----------------+------------+-------------+-------------+
| Employee  | Supplemental   | 85%        | Optional    | Optional    |
| Sup       | SDVI for       | continue   | coverages   | coverages   |
| plemental | totally        | coverage   | continue    | continues   |
| Coverages | disabled       | until      | provided    | including   |
|           |                | disability | certain     | waiver of   |
|           |                | is removed | eligibility | premiums    |
|           |                | or         | criteria    |             |
|           |                | employee   | are met     |             |
|           |                | retires.   |             |             |
+-----------+----------------+------------+-------------+-------------+
| Dependent | No coverage    | Generally  | Optional    | Optional    |
| Coverage  |                | follows    | coverages   | coverages   |
|           |                | practices  | continue    | continues   |
|           |                | for        | provided    | including   |
|           |                | Employee   | certain     | waiver of   |
|           |                | Su         | eligibility | premiums    |
|           |                | pplemental | criteria    |             |
|           |                | Coverages  | are met     |             |
+-----------+----------------+------------+-------------+-------------+

Sources: Department of Veterans Affairs, Hay Benefits Report, U.S.
Office of Personnel Management,\
State Governments in Georgia, New York, Oklahoma, Washington, Wisconsin.

Questions to be addressed here include: Is the maximum amount available
for SDVI adequate; do SDVI takers consider the premiums they are paying
as reasonably priced; what is the right amount of maximum insurance to
be offered to takers; and what are the future needs of SDVI takers?

Most of the SDVI takers take the maximum amount offered. As shown in
Table 8, 77% of the totally disabled and 65% of the not totally disabled
SDVI takers indicated that their decision on how much coverage to take
was based on the maximum amount offered. A sizable percentage (16%) of
respondents indicated that they took the maximum amount they could
afford.

[]{#__RefHeading___Toc515774963 .anchor}Table 8. Basis on How Much SDVI
Coverage to Take

  --------------------------------------------- ------------------ -------- --------
  Basis on How Much SDVI Coverage to Take       Severely or                 Total
                                                Catastrophically            (%)
                                                Disabled                    

                                                No (%)             Yes (%)  

  I took the maximum offered                    65%\*              77%\*    70%

  I took the maximum that I could afford        18%                13%      16%

  I took the amount needed to pay funeral       6%                 6%       6%
  expenses                                                                  

  I took the amount needed to provide for my    6%                 5%       5%
  family                                                                    

  Don't know/not sure/refused                   9%                 8%       9%

  Total Number of Respondents                   234                166      400

  ***Note: Totals may add up over 100% since                                
  respondents were allowed to choose\                                       
  more than one reason.***                                                  
  --------------------------------------------- ------------------ -------- --------

> \*Significant at 95% level

Source: Q22 of SDVI Survey

If they were given a chance to have more SDVI, a majority (59%)
responded that they would increase their policy amount, whereas 22%
indicated that their policy would stay the same, as shown in Table 9.
Another 19% indicated that they were not sure whether they would
increase it or leave it at the same level. The results do not
statistically differ by total disability status.

[]{#__RefHeading___Toc515774964 .anchor}Table 9. Percent Responses to
"If you could have taken more SDVI, what is the\
total policy value that you would take?" by Total Disability Status

  --------------------------------------- ------------------ ---------- ----------
  Reason                                  Severely or                   Total (%)
                                          Catastrophically              
                                          Disabled                      

                                          No (%)             Yes (%)    

  Policy would stay the same              24%                18%        22%

  Policy would increase                   58%\*              61%\*      59%

  Don't know/Not sure                     18%                21%        19%

  Total Number of Respondents             234                166        400
  --------------------------------------- ------------------ ---------- ----------

Source: Q23 of SDVI Survey

When asked about how much they would like to increase their policy if
they were given a choice, the answers did not differ significantly by
veteran's disability status. Figure 16 below shows that 34% of takers
who are not severely or catastrophically disabled would like to increase
the policy amount to a level higher than \$50,000 compared to 44% of
takers who are severely or catastrophically disabled. The median
increased amount is \$50,000 for both veteran groups.

[]{#__RefHeading___Toc515774719 .anchor}Figure 16. Amount of Insurance
Coverage to be Taken if Given a Chance to Increase\
Policy Amount (Among those who indicated they would increase\
their policy amount)

![](media/image17.wmf){width="5.135416666666667in"
height="2.2083333333333335in"}

Source: Q23 of SDVI Survey

About two-thirds of SDVI takers (65%) believe that the amount they pay
for premiums is reasonable as shown in Table 10. The percentage of
veterans who believe that the amount they pay for premiums is less than
they thought they would have to pay is 11%.

[]{#__RefHeading___Toc515774965 .anchor}Table 10. Percent Responses to
"Do you think that the amount you pay or paid for premiums\
is a reasonable amount or is it more or less than you thought you would
have to pay?"

  -------------------------------------- ------------------ ---------- ---------
  Response                               Severely or                   Total
                                         Catastrophically              
                                         Disabled                      

                                         No (%)             Yes (%)    

  More                                   15%                14%        15%

  Same                                   67%                65%        66%

  Less                                   9%                 14%        11%

  Don't know/Not sure                    9%                 8%         9%

  Total Number of Respondents            234                166        400
  -------------------------------------- ------------------ ---------- ---------

Source: Q24 of SDVI Survey

Consistent with the responses to the reasonableness of the SDVI premium,
about two-thirds (63%) of the respondents indicated that if they were to
get the same type and amount of insurance from a private insurance
company, they believe they would have to pay more than the amount they
pay for the SDVI premiums as shown in Table 11.

[]{#__RefHeading___Toc515774966 .anchor}Table 11. Percent Responses to
"If you were to get the same type and amount of insurance\
from a private insurance company, do you think you would have to pay
more, pay less,\
or pay about the same amount?"

  -------------------------------------- ------------------ ---------- ---------
  Response                               Severely or                   Total
                                         Catastrophically              
                                         Disabled                      

                                         No (%)             Yes (%)    

  More                                   59%                69%        63%

  Same                                   15%                10%        13%

  Less                                   10%                4%         8%

  Don't know/Not sure                    15%                16%        16%

  Total Number of Respondents            234                166        400
  -------------------------------------- ------------------ ---------- ---------

Source: Q25 of SDVI Survey

### Comparison of SDVI Premium to the Private Sector

It is problematical to compare SDVI premium rates to private sector
premiums in that the private insurance companies generally do not offer
coverage for only \$10,000, which is the basic amount provided by SDVI.
Obtaining quotes at higher levels of coverage at a rate expressed per
\$1,000 of coverage does not resolve this as private sector rates per
\$1,000 vary depending on the total amount of coverage for the
individual. With this caveat in mind, Table 12 shows commercial
quotes[^8] for a \$50,000 term life insurance policy and the SDVI
premium costs for a \$10,000. The table also expresses the costs on the
basis of per \$1,000 of coverage. The rates for SDVI include current
rates and what they would be if they were based on more recent (1980)
mortality tables. Current SDVI premium rates are based on 1941 mortality
tables. Note that SDVI does not charge different rates for smokers and
nonsmokers. []{.mark}

[]{#__RefHeading___Toc515774967 .anchor}Table 12. Annual Premiums for
SDVI vs. Commercial Insurance -- 5-Year Term-Plan

  ---------- ---------- ----------- ------------ -------- ---------- -------- ----------- -------- ---------- ---------
  Age        SDVI\                  Commercial                                                                
             \$10,000               Insurance                                                                 
             Coverage               Companies\                                                                
                                    \$50,000                                                                  
                                    Coverage                                                                  

             Current    1980        Non-Smoker                                Smoker                          
                        Mortality                                                                             
                        Tables                                                                                

                                    Best Class            Standard            Preferred            Standard   

                                    Male         Female   Male       Female   Male        Female   Male       Female

  Annual                                                                                                      
  Premium                                                                                                     

  50         \$143      \$60        \$161        \$132    \$190      \$154    \$352       \$273    \$417      \$315

  60         \$312      \$156       \$295        \$220    \$345      \$265    \$692       \$493    \$836      \$571

  Annual                                                                                                      
  Premium                                                                                                     
  per                                                                                                         
  \$1,000                                                                                                     
  Coverage                                                                                                    

  50         \$14.28    \$6.00      \$3.22       \$2.63   \$3.81     \$3.08   \$7.04      \$5.46   \$8.34     \$6.31

  60         \$31.20    \$15.60     \$5.91       \$4.41   \$6.89     \$5.29   \$13.84     \$9.86   \$16.72    \$11.42
  ---------- ---------- ----------- ------------ -------- ---------- -------- ----------- -------- ---------- ---------

Source: Survey of Commercial Insurance Companies and VA Philadelphia
Insurance Center

The comparative result for 5-year term coverage is that current SDVI
premium rates per \$1,000 are much higher than the commercial quotes.
For example, at the age of 50, the current SDVI premium rate of \$14.28
annually per \$1,000 is much higher than \$3.81 for male Standard
non-smoker. The respective SDVI annual premium based on the 1980
mortality tables of \$6.00 per \$1,000 is still much higher than the
respective average commercial rate of \$3.81 for non-smoker, but lower
than the \$8.34 for the comparable commercial smoker rate.

The comparative result for the ordinary life plan is that current SDVI
premium rates per \$1,000 are also much higher than the commercial
quotes as shown in Table 13. For example, at the age of 50, the current
SDVI premium rate of \$38.76 annually per \$1,000 is much higher than
either the \$25.50 for the male category or \$20.45 for the female
category. On the other hand, the respective SDVI annual premiums based
on the 1980 mortality tables per \$1,000 are lower than the commercial
rates for non-smoker males for all age categories.

[]{#__RefHeading___Toc515774968 .anchor}Table 13. Annual Premiums for
SDVI vs. Commercial Insurance -- Ordinary Life Plan

  ---------- ---------- ----------- ------------ ------------ ----------- ----------
  Age        SDVI\                  Commercial                            
             \$10,000               Insurance                             
             Coverage               Companies\                            
                                    \$50,000                              
                                    Coverage                              

             Current    1980        Non-Smoker                Smoker --   
                        Mortality   -- Preferred              Preferred   
                        Tables                                            

                                    Male         Female       Male        Female

  Annual                                                                  
  Premium                                                                 

  30         \$182      \$74        \$528        \$454        \$657       \$530

  40         \$259      \$125       \$798        \$670        \$991       \$773

  50         \$388      \$214       \$1,275      \$1,023      \$1,559     \$1,199

  60         \$612      \$376       \$2,174      \$1,731      \$2,610     \$1,913

  Annual                                                                  
  Premium                                                                 
  per                                                                     
  \$1,000                                                                 
  Coverage                                                                

  30         \$18.24    \$7.44      \$10.56      \$9.08       \$13.14     \$10.58

  40         \$25.92    \$12.48     \$15.97      \$13.41      \$19.82     \$15.46

  50         \$38.76    \$21.36     \$25.50      \$20.45      \$31.18     \$23.98

  60         \$61.20    \$37.56     \$43.49      \$34.62      \$52.21     \$38.26
  ---------- ---------- ----------- ------------ ------------ ----------- ----------

Source: Survey of Commercial Insurance Companies and VA Philadelphia
Insurance Center

Two-thirds of SDVI participants state that premiums were what they
expected and 63% believe their coverage would cost more if purchased in
the private sector. In expressing this sentiment, the survey respondents
may be considering their health status.

### Other Insurance Purchased by SDVI Participants and Non-Participants 

The importance of SDVI insurance can be judged in the context of how
much other insurance, both other VA and other non-VA insurance that
veterans eligible for SDVI possess. Other life insurance could be
available from a number of sources including individually purchased
insurance in the private market, employer-sponsored group life
insurance, or dependent life insurance obtained through a spouse's
employer.

#### Other Non-VA Insurance

The following tables provide survey responses to questions about other
life insurance. Table 14 shows that almost two-thirds of the respondents
(66% for both SDVI takers and non-takers) have other life insurance. Of
those respondents who do not have any non-VA life insurance, 52% of SDVI
takers believe they need life insurance, while only 33% of SDVI
non-takers believe they do, as indicated in Table 15.

[]{#__RefHeading___Toc515774969 .anchor}Table 14. Percent Responses to
"Do you have any (non-VA) life insurance?"

  ------------------- ------------------ -------- -------- ------------------ -------- ------------
  Response            SDVI Takers                          SDVI Non-takers             

                      Severely or                 All      Severely or                 All
                      Catastrophically            Takers   Catastrophically            Non-takers
                      Disabled                             Disabled                    

                      No                 Yes               No                 Yes      

  Yes                 71%                58%      66%      67%                54%      66%

  No                  27%                40%      32%      20%                34%      22%

  Don't know/Not      2%                 2%       2%       13%                12%      13%
  sure/ Refused                                                                        

  Total Number of     234                166      400      372                50       422
  Respondents                                                                          
  ------------------- ------------------ -------- -------- ------------------ -------- ------------

Source: Q52 of SDVI Survey

[]{.mark}

[]{#__RefHeading___Toc515774970 .anchor}Table 15. Percent Responses to
"Given your current situation,\
do you think you need (non-VA) life insurance?"\
(Among those who do not have any (non-VA) life insurance)

  ------------------- ------------------ -------- -------- ------------------ -------- ------------
  Response            SDVI Takers                          SDVI Non-takers             

                      Severely or                 All      Severely or                 All
                      Catastrophically            Takers   Catastrophically            Non-takers
                      Disabled                             Disabled                    

                      No                 Yes               No                 Yes      

  Yes                 51%                53%      52%      27%                59%      33%

  No                  37%                33%      35%      57%                35%      53%

  Don't know/Not      13%                14%      13%      16%                6%       14%
  sure/ Refused                                                                        

  Total Number of     63                 66       129      75                 17       92
  Respondents                                                                          
  ------------------- ------------------ -------- -------- ------------------ -------- ------------

Source: Q54 of SDVI Survey

Among those respondents who do not have any non-VA life insurance and
believe they need non-VA life insurance, SDVI takers indicated needing a
larger amount of insurance (median \$95,000) compared to SDVI non-takers
(median \$60,000). This is demonstrated in Table 16.

[]{#__RefHeading___Toc515774971 .anchor}[Table 16. Percent Responses to
"How much (non-VA) life insurance do you think would\
be the right amount for your situation?" (Among those who do not have
any\
(non-VA) life insurance *and* who think they need (non-VA) life
insurance)]{.mark}

  ------------------ ------------------ ----------- ----------- ------------------ ---------- ------------
  Statistic          SDVI Takers                                SDVI Non-takers               

                     Severely or                    All Takers  Severely or                   All
                     Catastrophically                           Catastrophically              Non-takers
                     Disabled                                   Disabled                      

                     No                 Yes                     No                 Yes        

  Mean               \$118,269          \$114,063   \$115,948   \$139,688          \$52,500   \$110,625

  Median             \$82,500           \$100,000   \$95,000    \$100,000          \$50,000   \$60,000

  Valid count        26                 32          58          16                 8          24

  Don't know/Not     6                  3           9           4                  2          6
  sure/ Refused                                                                               

  Total Number of    32                 35          67          20                 10         30
  Respondents                                                                                 
  ------------------ ------------------ ----------- ----------- ------------------ ---------- ------------

Source: Q55 of SDVI Survey

Table 17 provides survey responses indicating the reasons why the
veteran has not taken out life insurance. Among those who indicated a
particular insurance amount needed for their situation, around 41% of
both SDVI takers and non-takers have not taken insurance because they
think it is too expensive. The next most frequent reason cited is that
they were turned down when applied.

[]{#__RefHeading___Toc515774972 .anchor}Table 17. Percent Responses to
"Why haven't you taken out life insurance?"\
(Among those who do not have any (non-VA) life insurance)

  ------------------- ------------------ -------- -------- ------------------ -------- ------------
  Response            SDVI Takers                          SDVI Non-takers             

                      Severely or                 All      Severely or                 All
                      Catastrophically            Takers   Catastrophically            Non-takers
                      Disabled                             Disabled                    

                      No                 Yes               No                 Yes      

  Turned down when    27%                47%      38%      25%                38%      29%
  applied                                                                              

  Too expensive       42%                41%      41%      50%                25%      42%

  Other higher        4%                 3%       3%       19%                13%      17%
  priorities                                                                           

  Just haven't gotten 12%                3%       7%       6%                 63%      25%
  around to it                                                                         

  Other               4%                 9%       7%       6%                 13%      8%

  Don't know/Not      12%                3%       7%       0%                 0%       0%
  sure/ Refused                                                                        

  Total Number of     26                 32       58       16                 8        24
  Respondents                                                                          

  Note: Totals may                                                                     
  add up over 100%                                                                     
  since respondents                                                                    
  were allowed to                                                                      
  choose more than                                                                     
  one reason.                                                                          
  ------------------- ------------------ -------- -------- ------------------ -------- ------------

Source: Q56 of SDVI Survey

[]{.mark}

[Table 18]{.mark} presents that among those who indicated they were
turned down for life insurance when they applied, 86% of both VMLI
takers and non-takers indicated the reason for denial was their health
status.

[]{#__RefHeading___Toc515774973 .anchor}Table 18. Percent Responses to
"Why were you turned down for life insurance?"\
(Among those who were turned down when applied)

  ------------------- ------------------ -------- -------- ------------------ -------- ------------
  Response            SDVI Takers                          SDVI Non-takers             

                      Severely or                 All      Severely or                 All
                      Catastrophically            Takers   Catastrophically            Non-takers
                      Disabled                             Disabled                    

                      No                 Yes               No                 Yes      

  Health              86%                87%      86%      75%                100%     86%

  Age                 14%                0%       5%       25%                33%      29%

  Other               14%                7%       9%       25%                0%       14%

  Total Number of     7                  15       22       4                  3        7
  Respondents                                                                          

  Note: Totals may                                                                     
  add up over 100%                                                                     
  since respondents                                                                    
  were allowed to                                                                      
  choose more than                                                                     
  one reason.                                                                          
  ------------------- ------------------ -------- -------- ------------------ -------- ------------

Source: Q57 of SDVI Survey

[]{.mark}

[Table 19]{.mark} indicates that only 10% of SDVI takers and 19% of SDVI
non-takers have mortgage insurance.

[]{#__RefHeading___Toc515774974 .anchor}[Table 19. Percent Responses to
"Do you have any mortgage insurance?"]{.mark}

  ------------------- ------------------ -------- -------- ------------------ -------- ------------
  Response            SDVI Takers                          SDVI Non-takers             

                      Severely or                 All      Severely or                 All
                      Catastrophically            Takers   Catastrophically            Non-takers
                      Disabled                             Disabled                    

                      No                 Yes               No                 Yes      

  Yes                 11%                7%       10%      20%                8%       19%

  No                  86%                92%      88%      65%                78%      67%

  Don't know/Not      3%                 1%       3%       15%                14%      15%
  sure/ Refused                                                                        

  Total Number of     234                166      400      372                50       422
  Respondents                                                                          
  ------------------- ------------------ -------- -------- ------------------ -------- ------------

Source: Q53 of SDVI Survey

[]{.mark}

[Table 20]{.mark} shows the type of insurance coverage held by the
respondents who indicated they have non-VA insurance. Note that the
total number of respondents is less than the sum of the total number of
respondents who indicated they have other life insurance. This
difference results from the survey allowing for multiple responses. The
majority of respondents with non-VA insurance have either whole
life/permanent/cash value insurance or term life insurance.

[]{#__RefHeading___Toc515774975 .anchor}Table 20. Percent Responses to
"What kind of insurance is that?"

[(Among those who indicated they have other life or mortgage
insurance)]{.mark}

  ------------------- ------------------ -------- -------- ------------------ -------- ------------
  Type of Other       SDVI Takers                          SDVI Non-takers             
  Insurance                                                                            

                      Severely or                 All      Severely or                 All
                      Catastrophically            Takers   Catastrophically            Non-takers
                      Disabled                             Disabled                    

                      No                 Yes               No                 Yes      

  Whole               49%                34%      43%      53%                36%      51%
  life/permanent/                                                                      
  cash value                                                                           
  insurance                                                                            

  Term life insurance 48%                56%      51%      41%                43%      42%

  Mortgage life       8%                 6%       7%       12%                11%      12%
  insurance                                                                            

  Other insurance     1%                 3%       2%       2%                 7%       3%

  Don't know/Not      12%                12%      12%      12%                18%      13%
  sure/ Refused                                                                        

  Total Number of     170                101      271      259                28       287
  Respondents who                                                                      
  have other                                                                           
  insurance                                                                            

  Note: Totals may                                                                     
  add up over 100%                                                                     
  since respondents                                                                    
  were allowed to                                                                      
  choose\                                                                              
  more than one type                                                                   
  of other insurance.                                                                  
  ------------------- ------------------ -------- -------- ------------------ -------- ------------

Source: Q58 of SDVI Survey

[]{.mark}

[Table 21]{.mark} below provides the mean and median non-VA insurance
coverage amounts. As the table indicates, SDVI non-takers, in general,
have larger non-VA insurance policy amounts than SDVI takers. For
example, the median term life insurance coverage amounts are \$100,000
for SDVI non-takers versus \$60,000 for SDVI takers.

[]{#__RefHeading___Toc515774976 .anchor}Table 21. Mean and Median Amount
of Non-VA Insurance Coverage

  ---------------- ----------- ---------- ----------- ------- ------------ ----------- ------- -------
                   SDVI Takers                                SDVI                             
                                                              Non-takers                       

                   Mean        Median     Valid       Total   Mean         Median      Valid   Total
                                          Count[^9]   Count                            Count   Count
                                          (N)         (N)                              (N)     (N)

  Term life        \$130,840   \$60,000   97          117     \$385,539    \$100,000   119     147
  insurance                                                                                    

  Whole life/      \$64,370    \$38,000   117         139     \$79,484     \$35,000    91      119
  permanent/cash                                                                               
  value insurance                                                                              

  Mortgage life    \$72,923    \$70,000   13          19      \$101,857    \$100,000   21      34
  insurance                                                                                    

  Other insurance  \$80,000    \$89,000   4           4       \$34,400     \$20,000    5       8

  Don't know/not                                      32                                       36
  sure/refused\                                                                                
  (those with                                                                                  
  other insurance)                                                                             

  Don't know/not                                      12                                       63
  sure/refused\                                                                                
  (those without                                                                               
  other insurance)                                                                             

  Total Number of                                     271                                      287
  Respondents                                                                                  

  Note: Totals                                                                                 
  counts may add                                                                               
  up to more than                                                                              
  the total number                                                                             
  of responses,                                                                                
  since                                                                                        
  respondents were                                                                             
  allowed to                                                                                   
  choose\                                                                                      
  more than one                                                                                
  type of other                                                                                
  insurance.                                                                                   
  ---------------- ----------- ---------- ----------- ------- ------------ ----------- ------- -------

Source: Q58 and Q59(a-d) of SDVI Survey

#### Other VA Insurance

From the survey, we also identified several other important facts about
coverage with VA life insurance. It is important to note here that the
survey sample was not stratified (that is, sorted into subgroups) by
other VA insurance; therefore, this section is reflective of the survey
respondents only and is not statistically reflective of the entire SDVI
population.

Table 22 shows that 21% of SDVI takers compared to 14% of SDVI
non-takers have VGLI, whereas 5% of SDVI takers compared to only 1% of
SDVI non-takers have VMLI.

[]{#__RefHeading___Toc515774977 .anchor}Table 22. Other VA Insurance
Participants

  ----------------- ------------------ --------- -------- ------------------ --------- ------------
  VA Insurance      SDVI Takers                           SDVI Non-takers              

                    Severely or                  All      Severely or                  All
                    Catastrophically             Takers   Catastrophically             Non-takers
                    Disabled                              Disabled                     

                    No                 Yes                No                 Yes       

  VGLI              24%                18%       21%      15%                8%        14%

  VMLI              0%                 10%       5%       1%                 0%        1%

  Total Number of   234                166       400      372                50        422
  Respondents                                                                          
  ----------------- ------------------ --------- -------- ------------------ --------- ------------

Source: Q2 and Q37 of SDVI Survey

#### VA and Non-VA Insurance -- Overall

In order to obtain a more complete view of life insurance coverage for
the veteran respondent, we analyzed the other VA and non-VA life
insurance that the respondents have. In Table 23 we see that two-thirds
(66%) of SDVI takers and non-takers have non-VA life insurance. In Table
24 we see that the total average amount of life insurance for SDVI
takers is lower (\$66,958) than that of for SDVI non-takers (\$77,692),
but the difference is not statistically significant. This average number
includes those without any VA or non-VA insurance.

[]{#__RefHeading___Toc515774978 .anchor}Table 23. Percent with VA
(including SDVI) and Non-VA Insurance

  -------------------------- ---------- ----------- ------------ ------------
  Respondent Has:            SDVI                   SDVI         
                             Takers                 Non-takers   

                             Count      Percent     Count        Percent

  VA insurance               400        100%        62           15%

  Non-VA insurance           263        66%         277          66%

  VA or Non-VA insurance     400        100%        305          72%

  Total Number of            400        100%        422          100%
  Respondents                                                    
  -------------------------- ---------- ----------- ------------ ------------

Source: Q2, Q37, Q52 of SDVI Survey

[]{.mark}

[]{.mark}

[]{#__RefHeading___Toc515774979 .anchor}[Table 24. Amount of Total VA
and Non-VA Life Insurance Coverage\
(All respondents -- Including those with no insurance)]{.mark}

  ---------------------- -------- ------------ -------- ----------- ------------ ----------- -------- ------------
  Insurance Source       SDVI                                       SDVI                              
                         Takers                                     Non-takers                        

                         Mean                  Median               Mean                     Median   

  SDVI                            \$10,546              \$10,000                 \$NA                 \$NA

  Other VA (VGLI, VMLI)           \$2,685               \$0\*                    \$5,725              \$0\*

  Non-VA                          \$53,727              \$140                    \$71,941             \$10,000

  Total Amount of                 \$66,958              \$20,000                 \$77,692             \$12,750
  Insurance                                                                                           

  Total Number of                 400                                            422                  
  Respondents                                                                                         

  \* Since less than 50%                                                                              
  of SDVI survey                                                                                      
  respondents indicated                                                                               
  receiving other VA                                                                                  
  insurance benefits,                                                                                 
  the median value is                                                                                 
  zero.                                                                                               
  ---------------------- -------- ------------ -------- ----------- ------------ ----------- -------- ------------

Source: Q2, Q37, and Q59 of SDVI Survey

[]{.mark}

### Future Life Insurance Needs of SDVI Participants and Non-Participants

Survey respondents were also asked about their future life insurance
needs. Table 25 shows that a larger percentage of SDVI takers (31%)
think they will need more life insurance 10 years from now than SDVI
non-takers (19%). Only a small proportion of survey respondents (11% for
SDVI takers and 17% for non-takers), believe that their life insurance
needs will decline 10 years from now.

[]{#__RefHeading___Toc515774980 .anchor}[Table 25. Percent Responses to
"Looking ahead 10 years from now, do you think\
you will *need* more, less, or about the same amount of life
insurance?"]{.mark}

  ------------------- ------------------ -------- -------- ------------------ -------- ------------
  Response            SDVI Takers                          SDVI Non-takers             

                      Severely or                 All      Severely or                 All
                      Catastrophically            Takers   Catastrophically            Non-takers
                      Disabled                             Disabled                    

                      No                 Yes               No                 Yes      

  More                26%                38%      31%      19%                24%      19%

  Same                51%                35%      44%      48%                48%      48%

  Less                12%                8%       11%      19%                6%       17%

  Don't know/not      12%                19%      15%      15%                22%      16%
  sure/refused                                                                         

  Total Number of     234                166      400      372                50       422
  Respondents                                                                          
  ------------------- ------------------ -------- -------- ------------------ -------- ------------

Source: Q69 of SDVI Survey

[]{.mark}

Of those respondents who indicated that they anticipated needing more
life insurance 10 years from now, the median amount of needed insurance
indicated for takers and non-takers is \$90,000 and \$100,000,
respectively as shown in Table 26. Of those who anticipated more life
insurance 10 years from now, about half (44% of SDVI takers and 54% of
SDVI non-takers) said they would purchase additional insurance 10 years
from now, as reported in Table 27.

[]{#__RefHeading___Toc515774981 .anchor}[Table 26. Percent Responses to
"How much life insurance do you think you will *need* 10 years from
now?" (Among those who indicated they need more life insurance)]{.mark}

  -------------- ------------------ ---------- ----------- ------------------ ---------- ------------
  Statistic      SDVI Takers                               SDVI Non-takers               

                 Severely or                   All Takers  Severely or                   All
                 Catastrophically                          Catastrophically              Non-takers
                 Disabled                                  Disabled                      

                 No                 Yes                    No                 Yes        

  Mean           \$161,988          \$90,265   \$127,113   \$182,131          \$78,500   \$167,535

  Median         \$100,000          \$50,000   \$90,000    \$100,000          \$15,000   \$100,000

  Valid count    56                 53         109         61                 10         71

  Don't know/not 4                  10         14          8                  2          10
  sure/refused                                                                           

  Total Number   60                 63         123         69                 12         81
  of Respondents                                                                         
  -------------- ------------------ ---------- ----------- ------------------ ---------- ------------

Source: Q70 of SDVI Survey

[]{.mark}

[]{#__RefHeading___Toc515774982 .anchor}[Table 27. Percent Responses to
"Do you think you will *buy* more insurance 10 years from now?"\
(Among those who indicated they would need more insurance)]{.mark}

  ------------------- ------------------ -------- -------- ------------------ -------- ------------
  Response            SDVI Takers                          SDVI Non-takers             

                      Severely or                 All      Severely or                 All
                      Catastrophically            Takers   Catastrophically            Non-takers
                      Disabled                             Disabled                    

                      No                 Yes               No                 Yes      

  Yes                 48%                40%      44%      54%                58%      54%

  No                  38%                44%      42%      25%                17%      24%

  Don't know/not      13%                16%      15%      22%                25%      22%
  sure/refused                                                                         

  Total Number of     60                 63       123      69                 12       81
  Respondents                                                                          
  ------------------- ------------------ -------- -------- ------------------ -------- ------------

Source: Q71 of SDVI Survey

#### Summary of Life Insurance Evaluation

For some disabled veterans, SDVI is the only VA life insurance program
available. For example, SDVI would be the only life insurance program
available to a disabled veteran who declined SGLI while in active
service, who did not convert to VGLI at the time they separated or
retired, or who converted to a non-renewable VGLI that has since
expired. Unfortunately, among all veterans, these individuals are most
in need of life insurance coverage because they often cannot purchase
other insurance even if they pay additional premiums.

Two thirds (69%) of SDVI participants and non-participants have non-VA
life insurance coverage. In the majority of cases (73% and 79% for
takers and non-takers, respectively), this insurance is purchased in the
individual market. Employer coverage is the source in about 30% of cases
for takers and 37% of cases for non-takers. The high percentage with
individual insurance is somewhat surprising since these veterans all
suffer from disabilities. One explanation could be that this insurance
was purchased many years previously, prior to the disability. Another is
the fact that although these veterans may suffer from disabilities, the
level of disabilities may be minimal, such as arthritis or a superficial
scar. These disabilities do not prevent the veterans from buying private
insurance.

Seventy-three percent of SDVI participants and non-participants who are
not severely or catastrophically disabled have private life insurance
coverage compared to 58% of severely or catastrophically disabled
veterans. Thirty-nine percent of the veterans who are not severely or
catastrophically disabled and 21% of the severely or catastrophically
disabled veterans have term insurance compared to 35% and 33%,
respectively, who have whole life insurance coverage. This insurance is
purchased primarily in the individual market (51% for veterans who are
not severely or catastrophically disabled and 46% for severely or
catastrophically disabled veterans), with only 26% of the not severely
or catastrophically disabled respondents and 10% of the severely or
catastrophically disabled veterans indicating that employer coverage is
the source of the insurance. In general, the veterans who are not
severely or catastrophically disabled have a higher median coverage
amount for both term and whole life insurance (\$100,000 vs. \$30,000
for term insurance and \$40,000 vs. \$27,000 for whole life insurance).

## 5. Factors Relating to Participation and Non-Participation 

This section presents the factors relating to participating and not
participating in the SDVI program. VA Philadelphia Insurance Center
reports a low participation rate of 3.5%. The choice of whether to
participate in VA programs may be influenced by the individual's
financial situation, having dependents, age, disability status, and
other specific individual characteristics. In addition, VA's own actions
can influence participation decisions. VA factors such as customer
service, clarity of information, and the ease of filing forms may be
factors. Also, some decisions may be based on the availability of
alternative private policies or the comparative cost of private
insurance. Our survey questions were designed to capture these factors.

We first tabulate results from the survey concerning the reasons for
participating and not participating in the SDVI program. Next, we
provide results of a more sophisticated statistical analysis, which
allows us to take into account the simultaneous influences of different
veteran characteristics on participation that the simple tabulations do
not.

### Reasons for Participation in the SDVI Program 

This section provides a discussion on the main reasons for taking SDVI.
As Table 28 reveals, a little over a quarter (29%) of the survey
respondents indicated that the reasonable price of the premium was the
main reason for participating in the SDVI program. About one out of six
survey respondents (16%) indicated that they could not qualify for
private sector alternatives due to disability. Other often-cited reasons
include: encouragement by VA/military, convenience, and responsibility
felt towards family. Most of the respondents who picked "Other" as one
of the reasons for taking SDVI indicated in their open-ended responses
that since they were disabled and this insurance was offered to them
they took it.

It is evident from the survey results that the SDVI takers feel that the
premiums are reasonable. Moreover, their reasoning has more to do with
the qualification for insurance due to disability, rather than price.
When we tabulate the results for SDVI takers according to whether the
veteran is severely or catastrophically disabled, the reasons are
somewhat different for the two groups. Some of the percentages shown in
Table 28 for severely or catastrophically disabled SDVI takers are
significantly different from those who are not severely or
catastrophically disabled. For example, 23% of the severely or
catastrophically disabled respondents chose the SDVI program because
they could not qualify for other insurance compared to 11% of the SDVI
takers who are not severely or catastrophically disabled. Also, a higher
percentage of SDVI takers who are not severely or catastrophically
disabled (35%) indicated the reasonableness of the SDVI premium as one
of the main reasons for taking SDVI compared to 21% of severely or
catastrophically disabled SDVI takers.

[]{#__RefHeading___Toc515774983 .anchor}Table 28. Main Reasons for
Taking SDVI by Disability Status

  --------------------------------- ------- ------------------ ------- ------------------ ----- --------
  Reason                                    Severely or                Veterans Who Are         All SDVI
                                            Catastrophically           Not Severely or          Takers
                                            Disabled Veterans          Catastrophically         
                                                                       Disabled                 

  Price of premium reasonable       35%\*                      21%\*                      29%   

  Unqualified for private sector    11%\*                      24%\*                      16%   
  alternatives due to disability                                                                

  Encouraged by VA/military         13%                        20%                        16%   

  Convenient, didn't have to shop   14%                        14%                        14%   
  around                                                                                        

  Responsibility to my family       13%                        14%                        14%   

  Want to cover funeral expenses    9%                         11%                        10%   

  Private sector alternatives too   3%                         1%                         2%    
  expensive                                                                                     

  Encouraged by friends/family      2%                         1%                         1%    

  Other                             8%                         6%                         7%    

  Don't know/Not sure               8%                         7%                         8%    

  Refused                           8%                         6%                         7%    

  Total Number of Respondents       234                        166                        400   

  Note: Totals may add up over 100%                                                             
  since respondents were allowed to                                                             
  choose more than one reason.                                                                  
  --------------------------------- ------- ------------------ ------- ------------------ ----- --------

> \*Statistically significant

Source: Q18 in SDVI Survey

### Reasons for Non-Participation in the SDVI Program 

A large percentage of veterans did not take SDVI although they were
eligible. Currently, the participation rate for the SDVI program is only
3.5%. What were the main reasons for not taking SDVI? Was the decision
based on the maximum coverage amount available or the price of the
premium or was there any reason that can be attributed to the
administration of the program? This section provides a discussion on the
results from the survey addressing these questions.

As Table 29 below reveals, more than half of the SDVI non-takers (61%)
indicated that they did not participate in the program because they were
not aware of the program. It is possible that respondents were informed
of this program and their eligibility a long time ago and they have
forgotten about it. Another explanation may be failure by VA to notify
individual of entitlement. Other reasons for not participating in SDVI
were not cited nearly as often. The second most often cited reason for
not participating was that the respondent already had insurance (11%).
Cost was the third most often-cited specific reason for not
participating, although only 4% gave this as a reason. Since a large
portion of the respondents were not aware of the program, we assume that
they were not able to comment on such reasons as premium being not
competitive, maximum face amount too low and too expensive. The reasons
for non-participation do not differ significantly by disability
(severely or catastrophically disabled veterans versus those who are
not).

About 9% of the respondents gave "other" reasons for not participating.
Most of the respondents with open-ended reasons indicated that they were
not disabled at the time the program was offered or that they did not
believe they would need this insurance at the time.

[]{#__RefHeading___Toc515774984 .anchor}Table 29. Main Reasons for Not
Applying for SDVI by Disability Status

  ------------------------------------ ------------------ ------------------ ------------
  Reason                               Severely or        Veterans Who Are   All SDVI
                                       Catastrophically   Not Severely or    Non-takers
                                       Disabled Veteran   Catastrophically   
                                                          Disabled           

  Administrative:                                                            

  Was not aware of the program         61%                60%                61%

  Didn't get forms in on time          1%                 0%                 1%

  Too much paperwork                   0%                 0%                 0%

  Didn't need because:                                                       

  Already had insurance/didn't need    11%                8%                 11%
  (more) insurance                                                           

  Had sufficient savings/investments   2%                 0%                 2%

  Single, no dependents                1%                 0%                 1%

  Need Insurance, but:                                                       

  Too expensive                        3%                 6%                 4%

  Do not want insurance from           2%                 4%                 2%
  VA/government                                                              

  Have dependents, but don't believe   1%                 0%                 1%
  in insurance                                                               

  Premiums not competitive             1%                 0%                 1%

  Maximum face amount too low          0%                 0%                 1%

  Other:                                                                     

  Don't know/Not sure                  8%                 8%                 8%

  Other                                8%                 10%                9%

  Refused                              1%                 0%                 1%

  Total Number of Respondents          372                50                 422

  Note: Totals may add up over 100%                                          
  since respondents were allowed to                                          
  choose more than one reason.                                               
  ------------------------------------ ------------------ ------------------ ------------

Source: Q33 in SDVI Survey

We also looked at the top three reasons for not taking SDVI and examined
the answers to the question of whether they would take SDVI if they had
a chance to take it now. The results indicate that of 422 respondents,
34% answered "Yes," 30% said "No," 32% said "Don't know/not sure" and 4%
did not provide any answer to that question.

Of 256 respondents who indicated that they were not aware of the SDVI
program and therefore did not take it, 42% said they would take it if
they had the chance to take it today, whereas 38% indicated that they
were not sure or did not know whether they would take SDVI if offered
today. Only 20% indicated that they would not take it. Figure 17
presents the results by top three reasons for not taking SDVI in the
past and whether they would take it today, if offered.

[]{#__RefHeading___Toc515774720 .anchor}Figure 17. Responses to "If you
had the chance to take SDVI now, would you take it?"\
by Top Reasons for Not Applying for SDVI

![](media/image18.wmf){width="5.333333333333333in"
height="2.2819444444444446in"}

Source: Q34 in SDVI Survey

Not surprisingly, over 60% of those who said they already had insurance
and/or that SDVI was too expensive indicated that they would not take
SDVI now, if they had the chance to take it.

Among those who said they would take SDVI if offered now, 71% indicated
that they would take the maximum amount of \$30,000, whereas 11%
indicated they would take \$10,000.

### Characteristics Relating to Participation and Non-participation

This section presents additional analyses pertaining to participation
and non-participation in the SDVI program. The survey tabulations
provide the reasons veterans gave for their decision to participate or
not participate in SDVI. Also, the descriptive statistics provided in
Section 3 (Profile of SDVI Participants and Non-Participants) compare
the characteristics of takers to those of non-takers, one characteristic
at a time. This section presents a more in-depth analysis of the factors
that predict the likelihood of being a taker, given a set of veteran's
characteristics. The statistical technique, logistic regression, along
with the estimated results is described in detail in Appendix D. Note
that the veteran characteristics are as of the survey date, not when a
decision was made by the veteran whether to participate in the SDVI
program.

The characteristics found to be significant are listed in Table 30 in
order of importance. The findings are consistent with the statistics
shown in Section 3. For example, in Figure 1, we showed that 42% of SDVI
takers compared to 12% of SDVI non-takers have a combined degree of
disability rating 70-100 (that is, definition of having severe or
catastrophic disability). This finding is consistent with Table 30
showing that an eligible veteran is more likely to be a taker if he/she
is severely or catastrophically disabled. In addition, veterans who have
health problems, have VGLI and/or VMLI, have at least a bachelor's
degree, are married, are homeowners, are African American, have
household income between \$30,000 and \$50,000, or are 61-70 or 41-40
years of age are more likely to be takers. Also, it is less likely that
veterans who also have non-VA mortgage insurance are takers.

Among the characteristics tested for likelihood of being a taker, but
found to be statistically insignificant are having debts over \$50,000,
having assets over \$125,000, having non-VA life insurance, and having
dependents.

[]{#__RefHeading___Toc515774985 .anchor}Table 30. Veteran
Characteristics Predicting Participation in the SDVI Program\
(in order of importance)

  --------------------------------- -------------------------------------
  It is *[MORE]{.underline}* likely Compared to an SDVI eligible Veteran
  that an SDVI eligible Veteran is  who:
  a Taker if he/she:                

  Is severely or catastrophically   Is not severely or catastrophically
  disabled                          disabled

  Has health problems               Does not have health problems

  Is 61-70 years old or\            Is under 41 years old or\
  41-50 years old                   51-60 years old or over 70 years old

  Has VMLI                          Does not have VMLI

  Has VGLI                          Does not have VGLI

  Has at least a bachelor's degree  Has educational training\
                                    less than bachelor's degree

  Is African American               Is not African American

  Is married                        Is not married

  Is homeowner                      Is not homeowner

  Has household income \$30,000 to  Has household income under \$30,000\
  \$50,000                          or above \$50,000

  It is *[LESS]{.underline}* likely Compared to an SDVI eligible Veteran
  that an SDVI eligible Veteran is  who:
  a Taker if he/she:                

  Has other (non-VA) mortgage       Does not have other (non-VA)\
  insurance                         mortgage insurance
  --------------------------------- -------------------------------------

Source: SDVI Taker and Non-taker Surveys and Study Team Statistical
Analysis

## 6. Satisfaction of Participants in the SDVI Program

VA customer satisfaction surveys are conducted on an ongoing basis for
the insurance programs. In the survey for this study customer
satisfaction questions were one component as well. The intent of this
study in this area is to provide an independent assessment of customer
satisfaction and to significantly expand the sample size to insure
accurate representation of the total population. We obtained results
from over 300 responses on overall satisfaction and somewhat fewer
numbers of responses on satisfaction on specific program features or
attributes.

The objectives of our analysis for the SDVI program were to:

-   Measure the overall satisfaction level of SDVI takers

-   Measure the satisfaction level of SDVI takers with specific program
    attributes such as benefit amount and timeliness to receive the
    benefit

-   Determine which program attributes are the most important in
    affecting overall customer satisfaction

-   Identify areas of improvement that will have the greatest impact on
    satisfaction.

The takers of SDVI were asked about satisfaction relating to the
following:

-   Forms for enrolling

-   Brochures/written material on coverage and benefits

-   VA staff counseling on how much insurance to buy

-   Amount of insurance he/she has

-   Maximum amount you can buy

-   Amount he/she pays for insurance coverage (that is, premium)

-   Helpfulness of VA staff

-   SDVI program overall.

Satisfaction ratings had five levels of gradation from "very satisfied"
(5) to "very dissatisfied" (1). Questions about satisfaction with SDVI
program were posed only to those who are participating in the programs.
They are classified as the takers of the insurance programs. Non-takers
logically were excluded from this part of the survey. For purposes of
analysis, those who answered "not aware of this feature," "don't know,"
or those who "refused to answer" the specific satisfaction question were
not included in computing mean satisfaction scores.

To analyze the survey responses on customer satisfaction, we relied
primarily on the calculation of average ratings and the frequency
distribution of the five satisfaction ratings. We also calculated the
relative importance of each program attribute to overall satisfaction.
Our approach was not to directly ask respondents which attributes
contribute most to their overall satisfaction, but to base it on the
strength of the statistical correlations between the satisfaction with a
given attribute and overall satisfaction. Those attributes with
satisfaction that correlate more strongly with overall satisfaction are
viewed as more important than attributes with little correlation with
overall satisfaction. An attribute can have a low satisfaction score but
still correlate highly with overall satisfaction, and vice versa. From a
program manager's point of view, attributes that have the most potential
for improving satisfaction are those with a low satisfaction score but
high correlation with overall satisfaction.

Results showed that most respondents (over 80% of those who provided a
satisfaction score) were either "satisfied" or "very satisfied"
*overall* with the program. We also found that the overall satisfaction
was more affected by some aspects of the program than others. In
particular, "brochures/written materials," "forms for enrolling," and
"premium" were more important in affecting overall satisfaction while
"VA staff counseling" and "helpfulness of VA staff" were less important.

### Average Satisfaction Scores

Average results are shown in Table 31. Note that not all of the survey
respondents provided a satisfaction score for each attribute shown in
the table as the count of respondents varies by attribute.

[]{#__RefHeading___Toc515774986 .anchor}Table 31. Mean Satisfaction
Scores for SDVI Takers

  ---------------------- ------------------ --------- ------- --------- -------- ---------
  Satisfaction with:     Severely or                                    All      
                         Catastrophically                               Takers   
                         Disabled                                                

                         No                           Yes                        

                         Count              Mean      Count   Mean      Count    Mean
                                            Score             Score              Score

  Forms for Enrolling -- 171                4.05      125     4.29      296      4.15
  Q73a                                                                           

  Brochures/Written      163                3.97      111     4.19      274      4.06
  Material on Coverage                                                           
  and Benefits -- Q73b                                                           

  Helpfulness of VA      168                4.05      122     4.06      290      4.05
  staff -- Q73g                                                                  

  Premium -- Q73f        189                3.73      135     4.07      324      3.87

  VA Staff Counseling on 123                3.58      93      3.68      216      3.62
  How Much Insurance to                                                          
  Buy -- Q73c                                                                    

  Amount of Current      195                3.42      138     3.38      333      3.40
  Insurance Policy --                                                            
  Q73d                                                                           

  Maximum Amount -- Q73e 176                3.24      115     3.18      291      3.22

  SDVI Overall           209                3.91      149     4.00      358      3.95
  Satisfaction -- Q73i                                                           

  Note: Counts shown are                                                         
  less than the total                                                            
  number surveyed                                                                
  because respondents                                                            
  did not provide                                                                
  responses to all of                                                            
  the satisfaction                                                               
  questions.                                                                     
  ---------------------- ------------------ --------- ------- --------- -------- ---------

Source: SDVI Taker Survey

The overall mean satisfaction score for the SDVI program was nearly 4
(3.95), indicating "satisfied," as opposed to "very satisfied" or
"neutral." Severely or catastrophically disabled respondents indicated
an overall score of nearly the same (4.00), and respondents who are not
severely or catastrophically disabled respondents indicated an overall
score of 3.91. Satisfaction ratings were relatively good for the program
attributes, "forms for enrolling" (4.15), "brochures/written materials"
(4.06), and "helpfulness of VA staff" (4.05).

For some attributes, though, respondents on the whole were not
"satisfied." The attribute scoring lowest was the "Maximum amount of
insurance you can buy" (3.22). This is not surprising given that SDVI
basic policy covers only \$10,000, and the supplemental policy covers an
additional \$20,000. About a quarter of the respondents were not
satisfied with this feature, indicating that more management or policy
attention should be given to this attribute.

Also comparatively low was satisfaction with the "Amount of current
insurance policy" (3.40) and "VA staff counseling" (3.62). Thirty-nine
percent of the respondents giving a rating were less than satisfied
(that is, "very dissatisfied," "dissatisfied," and "neutral") with the
"amount of current insurance policy," while 32% were less than satisfied
with "VA staff counseling." The distribution of SDVI satisfaction
responses of all respondents is reported in Figure 18. The distribution
of SDVI satisfaction responses for those who actually gave a
satisfaction rating is presented in Figure 19.

[]{#__RefHeading___Toc515774721 .anchor}Figure 18. Distribution of
Satisfaction Scores by Attributes

(For all SDVI Taker Survey Respondents)

![](media/image19.wmf){width="6.2in" height="4.602777777777778in"}

Source: Q73(a-i) of SDVI Taker Survey

[]{#__RefHeading___Toc515774722 .anchor}Figure 19. Distribution of
Satisfaction Scores by Attributes

(For SDVI Takers Who Provided Satisfaction Scores)
![](media/image20.wmf){width="6.2in" height="3.8541666666666665in"}

Source: Q(73a-i) of SDVI Taker Survey

#### Who is satisfied and who is not?

On the whole, we found that there was relatively little difference in
satisfaction across different veteran groups. In Table 32 we show
results for veteran characteristics that reflect differences in
satisfaction worth noting. In particular, overall satisfaction scores
are lower for veterans who have no mortgage insurance, who have less
total assets, who perceive future needs to increase, and are over the
age of 70.

A more sophisticated statistical technique, regression analysis, was
performed to corroborate the results in Table 32. The regression
analysis allows us to take into account the simultaneous influences of
different veteran characteristics on satisfaction that the simple mean
calculation does not. Table 33 indicates higher or lower overall
satisfaction compared to a given veteran group.

[]{#__RefHeading___Toc515774987 .anchor}Table 32. Mean "Overall"
Satisfaction Scores for SDVI Takers by Veteran's Characteristics

  ---------------------------- ------------- ----------------- -----------
  Veteran Characteristics                    Mean Score        Count

  Has Mortgage Insurance --    No            3.91              323
  Q53                                                          

                               Yes           4.31              35

  Has Total Assets \>          No            4.07              159
  \$125,000 -- Q50(a-d)                                        

                               Yes           3.81              161

  Perceive future life         No            4.03              201
  insurance needs to increase                                  
  -- Q69                                                       

                               Yes           3.88              112

  Age Group -- Q88ans          Under 41      4.00              13

                               41 -- 50      3.96              78

                               51 -- 60      3.96              113

                               61 -- 70      4.02              121

                               Over 70       3.64              33

  Severely or Catastrophically No            3.91              209
  Disabled                                                     

                               Yes           4.00              149

  Has Child(ren) Dependents -- No            3.94              262
  Q77b                                                         

                               Yes           3.97              96

  Don't Know/Not Sure/                                         42
  Refused/Not aware of this                                    
  feature                                                      

  Total Number of Respondents                                  400

  Note: Counts for each                                        
  veteran characteristic may                                   
  not add up to the total                                      
  number of respondents                                        
  because of missing                                           
  responses.                                                   
  ---------------------------- ------------- ----------------- -----------

Source: SDVI Taker Survey

The results are consistent with the previous table. For example, lower
satisfaction is associated with veterans who perceive their future needs
to increase compared to veterans who do not perceive their future needs
to increase. Technical results of the regression analysis are included
in Appendix E.

Other characteristics were included in the analysis but found not to
have any association with satisfaction. Among those include: SEVCAT
status, race, income, has VGLI, has SDVI, has dependent children,
education, has non-VA life insurance, and stays in bed or home due to
disabilities.

[]{#__RefHeading___Toc515774988 .anchor}Table 33. Satisfaction of SDVI
Takers with SDVI Program

  ----------------------------------------- -----------------------------
  Factors                                   Impact

  No Mortgage Insurance                     Lower satisfaction

  Has Total Assets \> \$125,000             Lower satisfaction

  Over 70 years old                         Lower satisfaction

  Perceive future life insurance\           Lower satisfaction
  needs to increase                         
  ----------------------------------------- -----------------------------

Source: SDVI Taker Survey and Study Team Analysis

### Importance of Program Attributes

The next step in the analysis is to identify which attributes contribute
most to the customer's overall satisfaction. An analytical technique
called Causal Path Modeling[^10] (CPM) was used to identify the "key
drivers" of overall satisfaction. CPM is one of the latest methods in
market research that is used to identify attributes that "drive," or
influence overall satisfaction the most. This methodology analyzes the
statistical correlation among the different satisfaction variables,
between overall satisfaction and particular attributes such as the
benefit amount and providing help. Instead of merely taking direct
satisfaction responses at "face" value, CPM determines the relative
importance of a particular attribute based on the strength of
correlation between the attribute and overall satisfaction (compared to
the simultaneous correlation between other attributes and overall
satisfaction).

Table 34 below shows the relative importance of each attribute to
overall satisfaction in percentage terms. For the sake of comparison,
the mean satisfaction scores that were reported already in Table 31 are
presented in Table 34. The importance weights are expressed in
percentage terms that add up to 100% and are derived from the causal
path modeling analysis. Their ranking is indicated in parentheses.

The attributes that contribute the most to overall satisfaction ratings
are "forms," "brochures," and the "premium" cost, which are, roughly
speaking, about equal in importance. The attributes, "helpfulness of VA
staff" and "VA counseling," are of the least importance to overall
satisfaction.

[]{#__RefHeading___Toc515774989 .anchor}Table 34. Importance of Program
Attributes for SDVI Takers

  ------------------------------------- ---------------- -----------------
  Satisfaction with:                    Importance       Survey
                                        Weights &        Satisfaction Mean
                                        (Ranking)        Score & (Ranking)

  Brochures                             24% (1)          4.06 (2)

  Forms                                 20% (2)          4.15 (1)

  Premiums                              20% (2)          3.87 (4)

  Maximum insurance amount              15% (3)          3.22 (7)

  Amount of current insurance policy    14% (4)          3.40 (6)

  Helpfulness of VA staff               3% (5)           4.05 (3)

  VA counseling                         3% (5)           3.62 (5)

  Overall satisfaction                  100%             3.94
  ------------------------------------- ---------------- -----------------

Source: Q73(a-i) in SDVI Taker Survey and Study Team Analysis

The relative importance measure is an additional dimension of analysis
that enhances the interpretation of findings. For instance, while SDVI
takers are very satisfied with their interactions with VA staff, their
satisfaction with the quality of the written materials is more important
to their overall satisfaction. The availability of information, which is
useful and readily accessible, is relatively more important than the
interactions they had with VA staff.

Figure 20 combines the rankings of importance weights and satisfaction
scores for each attribute and sorts them into four quadrants of a
priority matrix. Each attribute is ranked for both satisfaction and
importance. As one moves from left to right on the horizontal axis for
satisfaction scores and from bottom to top on the vertical axis for
importance weights, the respective ranking increases from low to high.
The attributes are sorted into four categories: "Low Yields" (low
satisfaction/low importance); "Basics" (high satisfaction/low
importance); "Value Adds" (low satisfaction/high importance); and "High
Yields" (high satisfaction/high importance). Approximately half the
attributes are low in satisfaction and half are high. Similarly,
approximately half the attributes are low in derived importance and half
are high.

The quadrant labeled "High Yields" contains three attributes that rank
high in both importance to the customer and the customer's satisfaction
score. VA needs to keep the satisfaction results high for these
attributes ("forms for enrolling," "brochures," and "premium") in order
to maintain a high level of overall satisfaction. The quadrant,
"Basics," contains one attribute, "helpfulness of VA staff," which has a
high satisfaction score but is relatively less important to the customer
than other program attributes.

The quadrant labeled "Value Adds" (low satisfaction/high importance)
offers the highest yield potential for improvement in overall
satisfaction. In particular, the attributes, "premium" and "maximum
coverage amount you can buy," have a relatively low satisfaction score,
but are viewed as more important to the customer than other attributes.
In particular, the attributes, maximum coverage amount and premium, have
a relatively low satisfaction score, but the customer views them as
relatively important. While the actual amount of coverage that the taker
has in the Low Yield quadrant, it is close behind the maximum amount
attribute in terms of relative importance. The quadrant, "Basics,"
contains one attribute, "helpfulness of VA staff," which has a high
satisfaction score but is relatively less important to the customer than
other program attributes.

[]{#__RefHeading___Toc515774723 .anchor}Figure 20. Rankings of
Importance Weights and Mean Satisfaction Scores for SDVI Takers

![](media/image21.wmf){width="6.147916666666666in"
height="3.7069444444444444in"}

Note that the points in the chart are plotted on the basis of rankings,
not the actual values of the weights or satisfaction scores.

Source: SDVI Taker Survey and Study Team Analysis

## 7. Profile of SDVI Surviving Spouses

This section provides a profile of survey respondents who were the
recipients of SDVI benefits. As Table 35 shows 76% of SDVI survivors in
the study sample identified themselves as the surviving spouses of the
veteran, whereas only 5% identified themselves as the veteran's
children. For the remainder of this report, we will focus on the 310
surviving spouses (that is, 76% of survey respondents) including with
and without dependent children. Some questions in the survey, such as
age, marital status, dependency status, living quarters, living
situation, and employment status were asked to surviving spouses and
children only. Since the percentage of veteran's children who were the
recipients of the SDVI benefits is very low in the sample we focus on
the profile of surviving spouses (with and without children). In this
section we are particularly interested in identifying characteristics of
two groups of SDVI surviving spouses: those of severely or
catastrophically disabled veterans and those of veterans who were *not*
severely or catastrophically disabled at time of death. (The "universe"
profile of all of the SDVI beneficiaries is presented in Appendix C.)

[]{#__RefHeading___Toc515774990 .anchor}Table 35. Relationship of SDVI
Beneficiaries to the Deceased Veteran

  ----------------------------------------------- -----------------------
  Beneficiary Is:                                 Percent

  Surviving spouse                                76%

  Veteran's child                                 5%

  Another relative                                18%

  Other                                           2%

  Total %                                         100%

  Total Number of Survey Respondents              406
  ----------------------------------------------- -----------------------

Source: SDVI Survivor Survey

Using the identification process presented in Section 1, Figure 21 shows
the breakdown of the 310 surviving spouses surveyed by veteran's
disability status.

[]{#__RefHeading___Toc515774724 .anchor}Figure 21. SDVI Surviving
Spouses by Veteran's Disability Status

![](media/image22.wmf){width="2.6777777777777776in"
height="1.9680555555555554in"}

Source: SDVI Survivor Survey and VA Administrative Electronic Files

Table 36 presents the characteristics of the SDVI surviving spouses by
selected variables. The highlights of the characteristics of the survey
respondents include:

[]{#__RefHeading___Toc515774991 .anchor}Table 36. Characteristics of
SDVI Surviving Spouses Based on Survey Responses

  --------------------------------- ------------------ ------------------ -----------
  Surviving Spouse Characteristics  Surviving Spouses                     Surviving
                                    of                                    Spouses,
                                                                          Overall (%)

                                    Veterans Who Were  Severely or        
                                    Not Severely or    Catastrophically   
                                    Catastrophically   Disabled Veterans  
                                    Disabled (%)       (%)                

  Age (Q2)                                                                

  Under 51                          13%                20%                16%

  51 to 60                          20%                29%                24%

  61 to 70                          38%                40%                38%

  Over 70                           30%                11%                22%

  Education (Q130)                                                        

  No high school                    17%                11%                15%

  High school diploma               38%                33%                36%

  Some college                      30%                40%                34%

  At least a bachelor's degree      14%                15%                15%

  Gender (Q129)                                                           

  Female                            97%                99%                98%

  Male                              3%                 1%                 2%

  Living Situation (Q4)                                                   

  Lives alone or in a group setting 74%                68%                72%
  (nursing home, assisted living)                                         

  Lives with dependents             13%                21%                16%

  Lives with others, but no         11%                9%                 10%
  financial dependency on others                                          

  Depends on those he/she lives     2%                 2%                 2%
  with                                                                    

  Living Quarters (Q13)                                                   

  Home that he/she owns             93%                94%                93%

  Rental apartment/House            6%                 4%                 5%

  Home owned/rented by someone else 1%                 2%                 2%

  Assisted Living Center/Nursing    0%                 0%                 0%
  Home                                                                    

  Misc.                                                                   

  Has dependent children (Q4, Q5)   12%                21%                16%

  Has health problems (Q8)          42%                40%                41%

  Dependent child has health        2%                 7%                 4%
  problems (Q8)                                                           

  Veteran required full-time care   2%                 68%                30%
  (Q72b)                                                                  

  Provided care over 2 years prior  3%                 58%                26%
  to\                                                                     
  veteran's death (Q72a)                                                  

  Years Since Veteran's Death (VA                                         
  Files)                                                                  

  0-2                               43%                38%                41%

  2-5                               57%                62%                59%

  Employment Status (Q2 and Q52)                                          

  Working                           29%                36%                32%

  Under 60 years of age and not     10%                20%                14%
  working                                                                 

  Retired (Over 60 years of age and 61%                44%                54%
  not working)                                                            

  Race (Q128)                                                             

  White                             88%                86%                87%

  African American                  9%                 13%                11%

  Other                             3%                 2%                 3%

  Total Number of Survey            178                132                310
  Respondents                                                             
  --------------------------------- ------------------ ------------------ -----------

Source: SDVI Survivor Survey

[]{.mark}

-   Eleven percent of the surviving spouses of severely or
    catastrophically disabled veterans are over 70 years old compared to
    30% of those of veterans who were not severely or catastrophically
    disabled.

-   Almost all (98%) of the SDVI surviving spouses are female.

-   Forty-nine percent of the surviving spouses have at least some
    college education.

-   Seventy-two percent of the surviving spouses live alone or in a
    group setting.

-   Most (93%) of the SDVI surviving spouses live in a home they own.

-   A larger percentage (21%) of surviving spouses of severely or
    catastrophically disabled veterans indicated they have dependents
    compared to 12% of the surviving spouses of veterans who were not
    severely or catastrophically disabled, but the difference is not
    statistically significant.

-   Forty-one percent of the surviving spouses have health problems.

-   A significantly larger percentage (68%) of surviving spouses of
    severely or catastrophically disabled veterans indicated they
    provided full-time care for the veteran before his/her death
    compared to 2% of the surviving spouses of veterans who were not
    severely or catastrophically disabled.

-   A significantly lower percentage (44%) of surviving spouses of
    severely or catastrophically disabled veterans were identified as
    retired (that is, over 60 years of age and not working) compared to
    61% of the surviving spouses of veterans who were not severely or
    catastrophically disabled.

-   The majority (87%) of SDVI surviving spouses are White.

Table 37 provides the mean and median age for the SDVI surviving
spouses. Findings are summarized as follows:

-   Mean and median ages for SDVI surviving spouses are about 62 and 64,
    respectively.

-   Surviving spouses with dependent children are younger (52), on
    average, than those with no dependent children (64).

-   In general, there are no statistically significant differences
    between the mean or median ages for the survivors of veterans who
    were and who were not severely or catastrophically disabled.

-   Among SDVI surviving spouses with no dependent children, there is no
    statistically significant age differences between surviving spouses
    of veterans who had severe or catastrophic disabilities at time of
    death and those of veterans who did not.

[]{#__RefHeading___Toc515774992 .anchor}Table 37. Mean and Median Age of
SDVI Survey Respondents by Dependency Status

  ------------------- ------------------ -------- ------- ------------------ -------- ------- ----------- -------- -------
  Surviving Spouse    SDVI Surviving                                                          SDVI                 
  Group               Spouses of:                                                             Surviving            
                                                                                              Spouses              
                                                                                              Sample               

                      Veterans Who Were                   Severely or                                              
                      Not Severely or                     Catastrophically                                         
                      Catastrophically                    Disabled Veterans                                        
                      Disabled                                                                                     

                      Mean Age           Median   Count   Mean Age           Median   Count   Mean Age    Median   Count
                                         Age                                 Age                          Age      

  Surviving spouses   66                 67       157     61                 62       104     64          65       261
  with no dependent                                                                                                
  children                                                                                                         

  Surviving spouses   51                 48       21      52                 51       28      52          49       49
  with dependent                                                                                                   
  children                                                                                                         

  Surviving spouses,  64                 66       178     59                 59       132     62          64       310
  All                                                                                                              
  ------------------- ------------------ -------- ------- ------------------ -------- ------- ----------- -------- -------

Source: Q2, Q4, and Q5 in SDVI Survivor Survey

## 8. Finances of SDVI Surviving Spouses

In this section, we provide a picture of the SDVI surviving spouses'
finances including the level and sources of all household income,
expenses, assets, and debts before and after veteran's death, using
results from the SDVI survivor survey. The intent is to assess the
financial impact of the veteran's death on the household. Do survivors
maintain the same household income level after the veteran's death as
before? Are there significant differences in finances of different
surviving spouse groups? We address these and similar types of questions
in this section.

We also focus on the survivors in the transitional period (that is,
survivors of veterans who died in 1998 or 1999) and show the impact of
the veteran's death on household income comparing "before" to "after"
death household income. We also present the impact that a veteran's
disability and survivor's dependent children have on survivor income.

We present the results of analysis of income using secondary (non-VA)
data sources where we compare survivors of veterans who died of
service-connected disabilities to other comparable groups such as
survivors of non-veterans and survivors of veterans who did not die of
service-connected disabilities.

Finally, we provide results from the SDVI survivor survey on the sources
and amount of expenditures of survivors followed by a discussion on SDVI
survivors' assets and debts.

### Survivor Income -- After Death of Veteran

In the next several tables, we present the composition of annual total
income for SDVI surviving spouses by disability status of veterans and
whether they have dependent children. In some of these tables, we show
taxable income and non-taxable income (including financial help received
from relatives and friends) separately. These data are compiled from the
SDVI survivor survey.

In Table 38 we present the mean annual total income for survivors by
years since veteran's death. Survivors in the transitional period have
higher average taxable individual incomes and total incomes, though
these differences are not statistically significant. As indicated
before, the "transition" period is the first two years after the
veteran's death.

Table 39 gives the sources of taxable income for SDVI surviving spouses.
The two largest sources of taxable income are salaries and wages, for
one and Social Security benefits, for the other, making up 37% and 32%
of taxable income, respectively. At the other end of the spectrum,
unemployment compensation makes up 1% of taxable income.

[]{#__RefHeading___Toc515774993 .anchor}Table 38. Annual 1999 Individual
Total Income for SDVI Surviving Spouses

  ---------------------- ----------- ------- ---------- ------- ----------- --------
  Income Source          SDVI                                               
                         Surviving                                          
                         Spouses                                            
                         Survey                                             
                         Sample                                             

                         Years Since                            All         
                         Veteran's                              Surviving   
                         Death                                  Spouses     

                         0-2                 2-5                            

                         Mean        Count   Mean       Count   Mean        Count

  Taxable income         \$22,533    107     \$20,620   156     \$21,398    263

  VA payments            \$5,986     122     \$6,023    171     \$6,008     293

  Financial help         \$208       123     \$797      178     \$556       301

  Total income           \$27,302    123     \$26,598   178     \$26,889    301
  ---------------------- ----------- ------- ---------- ------- ----------- --------

Source: SDVI Survivor Survey

[]{#__RefHeading___Toc515774994 .anchor}Table 39. Annual 1999 Individual
Taxable Income Sources for SDVI Surviving Spouses

  -------------------------- -------------- -------------- ---------------
  Income Source              Mean Dollars   Percent of     Percent
                                            Total Income   Receiving
                                            Received from  Income

  Dividends and interest     \$1,332        6%             32%

  Social Security benefits   \$6,127        32%            58%

  Pension and annuities      \$4,416        24%            31%

  Salaries and wages         \$6,977        37%            35%

  Unemployment compensation  \$234          1%             3%

  Average taxable income     \$21,398       100%           Number of SDVI
                                                           surviving
                                                           spouses = 310
  -------------------------- -------------- -------------- ---------------

Source: SDVI Survivor Survey

In Table 40 we present the mean annual income for survivors by veteran's
disability status. Ideally, we would like to be able to group survivors
by the combined disability rating of the veteran, but data limitations
prevent us from doing this. Instead, we use information from the SDVI
Survivor Survey to create our disability groupings. All SDVI surviving
spouses are survivors of service-disabled veterans. Of these
service-disabled veterans, a subset were severely or catastrophically
disabled. As Table 40 indicates, taxable income and total income is
greater, on average, for both survivor groups in the transitional period
than after the transitional period. Overall, taxable income is greater,
on average, for survivors of veterans who were not severely or
catastrophically disabled than those who were. The opposite is true for
average total income. This difference is not statistically significant,
however.

[]{#__RefHeading___Toc515774995 .anchor}Table 40. Annual 1999 Individual
Total Income for SDVI Surviving Spouses\
by Veterans' Disability Status

  ---------------------- ----------- ------- ---------- ------- ----------- --------
  Income Source          SDVI                                               
                         Surviving                                          
                         Spouses                                            
                         Survey                                             
                         Sample                                             

                         Years Since                            All         
                         Veteran's                              Surviving   
                         Death                                  Spouses     

                         0-2                 2-5                            

                         Mean        Count   Mean       Count   Mean        Count

  Surviving Spouses of                                                      
  Veterans Who Were                                                         
  Severely or                                                               
  Catastrophically                                                          
  Disabled                                                                  

  Taxable income         \$21,464    43      \$20,226   68      \$20,705    111

  VA payments            \$8,497     48      \$7,398    76      \$7,824     124

  Financial help         \$150       48      \$1,294    79      \$170       127

  Total income           \$28,469    48      \$27,200   79      \$27,688    127

  Surviving Spouses of                                                      
  Veterans Who Were Not                                                     
  Severely or                                                               
  Catastrophically                                                          
  Disabled                                                                  

  Taxable income         \$23,252    64      \$20,924   88      \$21,904    152

  VA payments            \$4,356     74      \$4,924    95      \$4,675     169

  Financial help         \$246       75      \$400      99      \$333       174

  Total income           \$26,507    75      \$26,097   99      \$26,275    174
  ---------------------- ----------- ------- ---------- ------- ----------- --------

Source: SDVI Survivor Survey

Table 41 shows mean annual income for survivors by whether or not a
survivor has dependent children. From the table we see that, for
survivors with at least one dependent child, both average taxable income
and total income are higher after the transitional period than during
the transitional period. The opposite is true for survivors with no
dependent children. These differences are not statistically significant.
Overall, taxable income and total income are insignificantly higher, on
average, for surviving spouses with at least one dependent child than
for surviving spouses with no dependent children.

[]{#__RefHeading___Toc515774996 .anchor}Table 41. Annual 1999 Individual
Total Income for SDVI Surviving Spouses\
by Whether Spouse has Dependent Children

  ---------------------- ----------- ------- ---------- ------- ----------- --------
  Income Source          SDVI                                               
                         Surviving                                          
                         Spouses                                            
                         Survey                                             
                         Sample                                             

                         Years Since                            All         
                         Veteran's                              Surviving   
                         Death                                  Spouses     

                         0-2                 2-5                            

                         Mean        Count   Mean       Count   Mean        Count

  Surviving Spouses With                                                    
  at Least One Dependent                                                    
  Child                                                                     

  Taxable income         \$16,502    16      \$26,508   32      \$23,173    48

  VA payments            \$9,125     17      \$6,826    32      \$7,650     49

  Financial help         \$0         17      \$1,308    32      \$888       49

  Total income           \$24,300    17      \$33,161   32      \$30,094    49

  Surviving Spouses With                                                    
  No Dependent Children                                                     

  Taxable income         \$23,594    91      \$19,100   124     \$21,002    215

  VA payments            \$5,407     103     \$5,824    137     \$5,645     240

  Financial help         \$242       106     \$667      146     \$485       248

  Total income           \$27,853    106     \$24,895   146     \$26,161    252
  ---------------------- ----------- ------- ---------- ------- ----------- --------

Source: SDVI Survivor Survey

#### Household Income -- Before and After Veteran's Death

In this section, we compare *household* income before the veteran's
death to surviving spouse income in the first year after the death of a
veteran. Most likely, the veteran's income (including disability
compensation payments received from VA) as well as the survivor's income
supported the household when the veteran was alive. After the veteran's
death, the household income is that of the survivor (including payments
received from VA as well as financial help received from any sources
such as dependents, relatives and friends). We provide the analysis of
*household* income before and after the veteran's death only for
surviving spouses in the transitional period, that is, the first two
years after veteran's death. We utilize the SDVI taker survey and SDVI
survivor survey. The SDVI taker survey asks respondents for their total
household income. We use the responses to this question, for the sample
of SDVI takers over age 60 (since mean/median age for SDVI surviving
spouses is 62/64, respectively), as a proxy for household income before
veteran's death. Since this question was asked for the year 1999, we
adjusted the household income by taking into account the average pay
increases[^11] between 1998 and 1999 so that comparisons can be made
with household income before veteran's death (that is, 1998) for SDVI
surviving spouses.

As Table 42 shows, average household income falls by \$21,540 after the
death of the veteran for SDVI surviving spouses as a whole. This table
also shows household income before and after death by the veteran's
disability status. Both groups of survivors experienced a significant
(about 44%) fall in average household income after the death of the
veteran.

Table 43 shows household income before and after death by whether a
spouse has dependent children. Both survivors with at least one
dependent child and survivors with no dependent children experienced a
significant (51% and 43%, respectively) fall in average household income
after the death of the veteran.

[]{#__RefHeading___Toc515774997 .anchor}Table 42. Average Annual
Household Income\
Before and After Veteran's Death by Veteran's Disability Status

  --------------------- ------------ ------- ------------ ------- ------------
  Surviving Spouse      Before               After                Difference
  Groups                Veteran's            Veteran's            
                        Death                Death                

                        \$           Count   \$           Count   

  Surviving Spouses of  \$50,022     32      \$28,469     48      \$21,553
  Veterans who were                                               
  Severely or                                                     
  Catastrophically                                                
  Disabled                                                        

  Surviving Spouses of  \$48,345     76      \$26,507     75      \$21,838
  Veterans who were not                                           
  Severely or                                                     
  Catastrophically                                                
  Disabled                                                        

  Surviving Spouses     \$48,842     108     \$27,302     123     \$21,540
  Group Total                                                     
  --------------------- ------------ ------- ------------ ------- ------------

Source: SDVI Taker Survey (respondents over 60 years of age) and SDVI
Survivor Survey

[]{#__RefHeading___Toc515774998 .anchor}Table 43. Average Annual
Household Income\
Before and After Veteran's Death, Surviving Spouses With and Without
Dependents

  ---------------------- ----------- ------- ------------ ------- ------------
  Surviving Spouse       Before              After                Difference
  Groups                 Veteran's           Veteran's            
                         Death               Death                

                         \$          Count   \$           Count   

  Surviving Spouses with \$49,467    9       \$24,300     17      \$25,167
  at Least One Dependent                                          
  Child                                                           

  Surviving Spouses with \$48,785    99      \$27,853     106     \$20,932
  No Dependent Child                                              

  Surviving Spouses      \$48,842    108     \$27,302     123     \$21,540
  Group Total                                                     
  ---------------------- ----------- ------- ------------ ------- ------------

Source: SDVI Taker Survey (respondents over 60 years of age) and SDVI
Survivor Survey

### Expenditures

In this section, we look at the expenditures of SDVI survivors who were
asked several questions about their expenditure items and amount of
monthly expenditures as of the time of the survey. Note that monthly
expenditure amounts are converted to an annual basis in order to compare
to annual income presented above.

Table 44 shows the percentage of survivors reporting annual expenditures
by type of expenditure. The most common expenditures are utilities,
health, food, and automobile-related, whereas the least common
expenditure is housing followed by clothing expenditures. Only 47% of
the survivors reported having housing-related expenditures and 71%
reported having clothing expenditures. The question on housing was asked
in reference to expenses such as mortgage and rent. The responses
indicate that a significant percentage (48%) of SDVI recipients have
paid off their mortgages or do not pay any rent.

The "Other" category in Table 44 includes expenditures on children,
alimony, primary and secondary health insurance premiums, education, and
expenses reported as "other" in the survey.

[]{#__RefHeading___Toc515774999 .anchor}Table 44. Types of Expenditure
for SDVI Surviving Spouses

  ------------------------------ ----- ------------- ----- ------------- ----- --------- ------ -----------
  Expenditure                          Percentage of                                            Count=310
                                       Surviving                                                
                                       Spouses                                                  

                                       Do Have             Do Not Have         Don't            Total %
                                       Expenditure         Expenditure         Know/            
                                                                               Refused          

  Utility (electricity,          96%                 1%                  3%              100%   
  heating - cooling,                                                                            
  water/sewer/trash & telephone)                                                                
  --\                                                                                           
  Q18a, Q19a, Q20a, Q21a                                                                        

  Health-related -- Q34a, Q35a,  93%                 6%                  1%              100%   
  Q36a, Q37a, Q38, Q40a                                                                         

  Food (groceries & dining out)  93%                 2%                  5%              100%   
  -- Q22a, Q23a                                                                                 

  Transportation (car,           92%                 7%                  1%              100%   
  insurance, gas & public                                                                       
  transportation) -- Q42, Q44a,                                                                 
  Q45a, Q46a                                                                                    

  Clothing -- Q24a, Q25a         71%                 14%                 15%             100%   

  Housing -- Q16a                47%                 48%                 6%              100%   

  Other                          89%                 1%                  10%             100%   
  ------------------------------ ----- ------------- ----- ------------- ----- --------- ------ -----------

Source: SDVI Survivor Survey

As Table 45 reveals, almost all SDVI surviving spouses have telephone
and electricity expenses, whereas only 55% of the respondents have
water, sewer, and trash expenses. Table 46 indicates that most of the
respondents (92%) have automobile insurance expenses, but only 22% of
the respondents have automobile payments. Many (77%) respondents have
their cars paid off. Only a small percentage (6%) of the respondents
reported a public transportation expense. Note that the data in Table 46
reflect transportation expenditures for all SDVI recipients; that is,
although 92% of the SDVI recipients indicated they have an automobile,
the data reflect expenditure percentages over the entire survey group,
including the 6% who do not have an automobile.

[]{#__RefHeading___Toc515775000 .anchor}Table 45. Types of Utility
Expenditure for SDVI Surviving Spouses

  ------------------------ ----- ------------- ------ ------------- ------ ------------ ------ -----------
  Utility Expenditure            Percentage of                                                 Count=310
                                 Surviving                                                     
                                 Spouses                                                       

                                 Do Have              Do Not Have          Don't Know/         Total %
                                 Expenditure          Expenditure          Refused             

  Telephone - Q21a         95%                 0.3%                 4.7%                100%   

  Electricity - Q18a       93%                 1%                   6%                  100%   

  Water/sewer/trash - Q20a 83%                 12%                  5%                  100%   

  Heating/cooling\         55%                 40%                  5%                  100%   
  (other than electric) -                                                                      
  Q19a                                                                                         
  ------------------------ ----- ------------- ------ ------------- ------ ------------ ------ -----------

Source: SDVI Survivor Survey

[]{#__RefHeading___Toc515775001 .anchor}Table 46. Types of
Transportation Expenditure for SDVI Surviving Spouses

  ------------------------ ----- ------------- ----- ------------- ---- ------------ ------ -----------
  Transportation                 Percentage of                                              Count=310
  Expenditure                    Surviving                                                  
                                 Spouses                                                    

                                 Do Have             Do Not Have        Don't Know/         Total %
                                 Expenditure         Expenditure        Refused             

  Automobile insurance --  92%                 6%                  2%                100%   
  Q44a                                                                                      

  Gas & maintenance --     90%                 8%                  2%                100%   
  Q45a                                                                                      

  Automobile payment --    22%                 77%                 1%                100%   
  Q42                                                                                       

  Public transportation -- 6%                  94%                 0%                100%   
  Q46a                                                                                      
  ------------------------ ----- ------------- ----- ------------- ---- ------------ ------ -----------

Source: SDVI Survivor Survey

As Table 47 shows, 64% to 70% of the respondents indicated that they
have expenses related to eye care and hearing aids, prescription
medicine, dentist and eye doctor visits; 54% of them reported expenses
related to other doctor visits. Sixteen percent of the respondents
reported they had hospitalization expenses during the past year, while
13% of them reported other health care expenses. For those respondents
who report some type of health expenditure, we do not know if they were
reimbursed for the particular expense.

[]{#__RefHeading___Toc515775002 .anchor}Table 47. Types of Health
Expenditure for SDVI Surviving Spouses

  ------------------------ ----- ------------- ----- ------------- ----- ------------ ------ -----------
  Health Expenditure             Percentage of                                               Count=310
                                 Surviving                                                   
                                 Spouses                                                     

                                 Do Have             Do Not Have         Don't Know/         Total %
                                 Expenditure         Expenditure         Refused             

  Eyeglasses/contact       70%                 24%                 6%                 100%   
  lenses/hearing aids --                                                                     
  Q40a                                                                                       

  Prescription medicine -- 62%                 31%                 7%                 100%   
  Q36a                                                                                       

  Dentist/eye doctor --    64%                 22%                 14%                100%   
  Q37a                                                                                       

  Doctor visits -- Q35a    54%                 36%                 10%                100%   

  Hospitalization-- Q34a   16%                 77%                 7%                 100%   

  Other health care --     13%                 83%                 4%                 100%   
  Q38a                                                                                       
  ------------------------ ----- ------------- ----- ------------- ----- ------------ ------ -----------

Source: SDVI Survivor Survey

Figure 22 below shows the distribution of annual expenditures for SDVI
surviving spouses. As the figure shows, the distribution is skewed to
the left, indicating that the median is below the mean value.[^12] On
average, SDVI surviving spouses reported about \$16,500 for their annual
expenditures with a median value of about \$14,600.

[]{#__RefHeading___Toc515774725 .anchor}Figure 22. Distribution of
Annual Expenditures for all SDVI Surviving Spouses

![](media/image23.wmf){width="3.748611111111111in"
height="2.884027777777778in"}

Source: SDVI Survivor Survey

We should note that the expenditures reported in our survey are likely
less than the actual "total" expenditures respondents have. While the
survey does have an "Other Expenses" category, time constraints
prevented detailed inquiries of "other" expenses. Respondents often need
to be reminded of other specific expenses to trigger their recollection
of outlays. Irregularly timed expenses such as property taxes, cash
contributions, splurges, vacations, house maintenance (repair, plumbing,
electrical, and so on), insurance on housing, household furnishings and
appliances, pension contributions, Social Security (FICA), and
entertainment (that is, electronic equipment, fees and admissions, and
other entertainment supplies) may be omitted. Another item that is
likely omitted is the estimate for taxes paid to Federal and State
Government. The end result is that the expenditures shown here very
likely understate total expenditures.

Surveys such as Consumer Expenditure Survey (CES)[^13] capture
expenditures at more detail. For example, CES exclusively addresses
expenditures and asks several sets of very specific questions about
property taxes, household furnishings and equipment, all personal taxes
paid (Federal, state, Social Security, and other), entertainment, cash
contributions, pension contributions, repairs, and maintenance expenses.
Due to the broad focus of our effort, it was not possible to devote a
substantial portion of the survey time and space needed to request this
information in such detail. It is very likely that survey respondents
may not have reported all of their expenses in the "Other Expenses"
category. Therefore, we suggest using the expenditure data from our
survey cautiously in comparing expenditure level to pre-tax income
level. Comparison of *relative* expenditure levels for different
survivor groups yield a more valid analysis. Are the expenditures for
survivors with dependent children higher than those without dependent
children? Are there any significant differences between average
expenditures of survivors of veterans who were severely or
catastrophically disabled at time of death and those of veterans who
were not?

In Table 48, we show mean annual expenditures by type and time since the
veteran's death.[^14] Note that there are only 308 respondents for whom
we report total expenditures. The two respondents not included here
reported that they had zero expenditures on some items and that they
either did not know how much they spent on the other items or refused to
provide an answer.

Across all respondents, the highest average annual expenditure is on
food (\$4,560 on average), followed by housing, utilities, and
transportation, whereas the lowest average expenditure is on clothing
(\$568). There are no significant differences in the distribution of
expenditures between the survivors of veterans who died within the past
year and those of who died within the past 2 to 5 years. Total
expenditures, on average, rise as the time since the veteran's death
increases, although the difference is not statistically
significant.[^15]

[]{#__RefHeading___Toc515775003 .anchor}Table 48. Annual Expenditures
for SDVI Surviving Spouses By Expenditure Item

  ----------------------- ----------- ------- ---------- ------- ----------- ----------
  Expenditure             SDVI                                               
                          Surviving                                          
                          Spouses                                            
                          Survey                                             
                          Sample                                             

                          Years Since                            All         
                          Veteran's                              Surviving   
                          Death                                  Spouses     

                          0-2                 2-5                            

                          Mean        Count   Mean       Count   Mean        Count

  Food -- Q22a, Q23a      \$3,888     123     \$5,038    173     \$4,560     296

  Housing -- Q16a         \$3,455     120     \$4,071    172     \$3,818     292

  Utility --\             \$3,074     123     \$3,115    179     \$3,098     302
  Q18a, Q19a, Q20a, Q21a                                                     

  Transportation --\      \$2,882     127     \$2,673    183     \$2,759     310
  Q42, Q44a, Q45a, Q46a                                                      

  Health-related -- Q34a, \$1,721     126     \$2,339    183     \$2,087     309
  Q35a, Q36a, Q37a, Q38,                                                     
  Q40a                                                                       

  Other                   \$1,611     112     \$1,450    164     \$1,516     276

  Clothing -- Q24a, Q25a  \$484       105     \$624      156     \$568       261

  Sum of Expenditure      \$15,360    125     \$17,291   183     \$16,507    308
  ----------------------- ----------- ------- ---------- ------- ----------- ----------

Source: SDVI Survivor Survey

Table 49 shows the annual mean expenditures by veteran's disability
status and time since death. Keep in mind that all SDVI surviving
spouses are survivors of service-disabled veterans and that the set of
surviving spouses of severely or catastrophically disabled veterans is a
subset of survivors of service-disabled veterans.

[]{#__RefHeading___Toc515775004 .anchor}Table 49. Annual Expenditures
for SDVI Surviving Spouses By Veteran's Disability Status

  ------------------------ ----------- ------- ---------- ------- ----------- -------
  Survivor Group           SDVI                                               
                           Surviving                                          
                           Spouses                                            
                           Survey                                             
                           Sample                                             

                           Years Since                            All         
                           Veteran's                              Surviving   
                           Death                                  Spouses     

                           0-2                 2-5                            

                           Mean        Count   Mean       Count   Mean        Count

  Survivors of severely or \$18,586    50      \$18,815   82      \$18,728    132
  catastrophically                                                            
  disabled veterans                                                           

  Survivors of veterans    \$14,342    75      \$17,224   101     \$15,995    176
  not severely of                                                             
  catastrophically                                                            
  disabled                                                                    

  All surviving spouses    \$15,360    125     \$17,291   183     \$16,507    308
  surveyed                                                                    
  ------------------------ ----------- ------- ---------- ------- ----------- -------

Source: SDVI Survivor Survey

As shown above, overall average expenses increase insignificantly
between those survivors of veterans who died within 2-5 years and those
in the transitional year for both groups. Overall, survivors of severely
or catastrophically disabled veterans have higher average expenditures
for survivors of veterans not severely or catastrophically disabled.
Table 50 shows the annual mean expenditures by whether or not a survivor
has a dependent child and time since death.

[]{#__RefHeading___Toc515775005 .anchor}Table 50. Annual Expenditures
for SDVI Surviving Spouses\
By Whether Spouse has Dependent Children

  ----------------------- ----------- ------- ---------- ------- ----------- --------
  Survivor Group          SDVI                                               
                          Surviving                                          
                          Spouses                                            
                          Survey                                             
                          Sample                                             

                          Years Since                            All         
                          Veteran's                              Surviving   
                          Death                                  Spouses     

                          0-2                 2-5                            

                          Mean        Count   Mean       Count   Mean        Count

  Has at least one        \$21,309    16      \$23,411   33      \$22,685    49
  dependent child                                                            

  Has no dependent        \$14,294    109     \$15,792   150     \$15,164    259
  children                                                                   

  All surviving spouses   \$15,360    125     \$17,291   183     \$16,507    308
  surveyed                                                                   
  ----------------------- ----------- ------- ---------- ------- ----------- --------

Source: SDVI Survivor Survey

Expenditures are on average greater during the transitional period
whether the survivor has a dependent child, though this difference is
not statistically significant. Average expenditures for survivors who
have at least one dependent child are significantly greater in each time
period and overall by \$7,015, \$7,619, and \$7,521, respectively, than
average expenditures for survivors who have no dependent children.

[]{#__RefHeading___Toc515774726 .anchor}Figure 23. Distribution of
Expenditures for SDVI Surviving Spouses\
with no Dependent Children

> ![](media/image24.wmf){width="4.127083333333333in"
> height="3.2895833333333333in"}

Source: SDVI Survivor Survey

[]{#__RefHeading___Toc515774727 .anchor}Figure 24. Distribution of
Expenditures for SDVI Surviving Spouses\
with at Least One Dependent Child

![](media/image25.wmf){width="4.497222222222222in"
height="3.5854166666666667in"}

Source: SDVI Survivor Survey

#### Expenditures for Surviving Spouses in the Transitional Period - Before and After Veteran's Death

Table 51 presents the annual before and after death expenditures by type
of expenditure for those survivors in the transitional period. The
results indicate that survivors reduced their food expenditures from
\$8,025 to \$4,047 per year and their utilities expenditures from
\$3,763 to \$3,071. The decrease in expenditures after the death of the
veteran is statistically significant for both these categories. Their
health and clothing expenses on average also decreased, but not
significantly. This is expected since food and clothing expenses for the
veteran no longer occur after the veteran's death. In addition, if bills
associated with the veteran's last illness do not extend beyond the
veteran's death, then this holds true for health-related expenses as
well. Housing, transportation, and other expenses stay relatively the
same before and after death. Overall, expenditures, on average,
experience a statistically significant decrease, from \$21,446 to
\$15,360.

Note that the individual components do not add up to the totals shown.
This is because respondents did not provide numerical responses to all
items. In some cases, for example, they might have said "Don't Know" and
in other cases, they might have actually reported \$0; these responses
are not the same. The values shown for each component provide good
indicators of the average amounts of expenditures for food, health,
housing, utilities, and so on, for those who provided numerical
responses. To assess the total expenditures, however, the numbers shown
are based upon the sum of expense items for individual respondents.
Hence, to get a good idea of total typical respondent expenditures, one
should use the totals shown at the bottom of each table, rather than add
up the individual components.

[]{#__RefHeading___Toc515775006 .anchor}Table 51. Annual Expenditures
for SDVI Surviving Spouses --Transitional Period\
Before and After Veteran's Death, By Source of Income

  -------------------------------- ------------ ------------ -------------
  Expenditure                      Survivors of              Number of
                                   Veterans Who              Respondents
                                   Died within               
                                   0-2 Year                  

                                   Before Death After Death  

  Mean Expenditure                                           

  Food -- Q22a, Q23a               \$8,025      \$4,047      116

  Health-related --\               \$4,739      \$1,919      102
  Q34a, Q35a, Q36a, Q37a, Q38,                               
  Q40a                                                       

  Housing -- Q16a                  \$8,507      \$8,401      48

  Utility -- Q18a, Q19a, Q20a,     \$3,763      \$3,071      119
  Q21a                                                       

  Transportation --\               \$2,728      \$3,157      108
  Q42, Q44a, Q45a, Q46a                                      

  Other                            \$1,438      \$1,853      88

  Clothing -- Q24a, Q25a           \$661        \$590        82

  Sum of Expenditure               \$21,446     \$15,360     125
  -------------------------------- ------------ ------------ -------------

Source: SDVI Survivor Survey

Table 52 presents the annual expenditures for those survivors in the
transitional period by veteran's disability status. Expenditures
decrease after the death of the veteran for both groups of survivors,
though this difference is not statistically significant.

[]{#__RefHeading___Toc515775007 .anchor}Table 52. Annual Expenditures
for SDVI Surviving Spouses in the Transitional Period --\
Before and After Veteran's Death By Veteran's Disability Status

  -------------------------------- ------------ ------------ -------------
  Survivor Group                   Survivors of              Number of
                                   Veterans Who              Respondents
                                   Died within               
                                   0-2 Year                  

                                   Before Death After Death  

  Mean Expenditure                                           

  Survivors of severely or         \$23,788     \$18,586     50
  catastrophically disabled                                  
  veterans                                                   

  Survivors of veterans not        \$20,724     \$14,342     75
  severely of catastrophically                               
  disabled                                                   

  All surviving spouses surveyed   \$21,446     \$15,360     125
  -------------------------------- ------------ ------------ -------------

Source: SDVI Survivor Survey

Table 53 shows the annual expenditures for those survivors in the
transitional period by whether a survivor has a dependent child or not.
Expenditures decrease significantly by \$5,180 after the death of the
veteran for survivors who do not have any dependent children, while the
decrease in expenditures following the death of a veteran for survivors
with at least one dependent child is not significant.

[]{#__RefHeading___Toc515775008 .anchor}Table 53. Annual Expenditures
for SDVI Surviving Spouses in the Transitional Period --\
Before and After Veteran's Death, By Whether Spouse has Dependents

  -------------------------------- ------------ ------------ -------------
  Survivor Group                   Survivors of              Number of
                                   Veterans Who              Respondents
                                   Died within               
                                   0-2 Year                  

                                   Before Death After Death  

  Mean Expenditure                                           

  Has at least one dependent       \$30,922     \$21,309     16

  Has no dependents                \$19,747     \$14,294     109

  All surviving spouses surveyed   \$21,446     \$15,360     125
  -------------------------------- ------------ ------------ -------------

Source: SDVI Survivor Survey

### Assets and Debts

In this section, we look at the assets and debts of SDVI surviving
spouses as reported in the survey. The respondents were asked whether
they had any assets or debts greater than \$1,000 and, if the answer was
yes, they were asked to give an amount on asset or debt items such as
home, car, stocks, bonds, savings or retirement accounts for assets; and
home mortgage, consumer/education loan, car loan, or credit card for
debts. As Table 54 indicates, 83% of the SDVI surviving spouses surveyed
say they have at least one asset item such as a home, car, stocks,
bonds, savings or retirement accounts worth more than \$1,000, whereas
52% of the surviving spouses say they have a debt such as a home
mortgage, consumer/education loan, car loan, or credit card of more than
\$1,000.

[]{#__RefHeading___Toc515775009 .anchor}Table 54. SDVI Surviving Spouses
with Assets and Debts

  ----------------------------------- ------------------- ----------------
  Response                            Percentage of       
                                      Surviving Spouses   
                                      with:               

                                      Assets              Debts

  Yes                                 83%                 52%

  No                                  14%                 46%

  Don't Know/Refused                  3%                  2%

  Number of Respondents               310                 310
  ----------------------------------- ------------------- ----------------

Source: Q60 and Q63 in SDVI Survivor Survey

Note that some respondents did not give an amount for their assets
and/or debts although they indicated that they do have assets and/or
debts over \$1,000. In the next several tables, we provide statistics on
total assets and debts of those respondents who reported an amount for
their assets and/or debts.

Table 55 shows the mean debts and assets by veteran's disability status
and time since death. Recall that all SDVI surviving spouses are
survivors of service-disabled veterans. Average debts are greater after
the transitional period than during the transitional period for both
survivor groups. Overall, average debts are higher for survivors of
severely or catastrophically disabled veterans than for survivors of
those who weren't. For the total sample, average debts are higher during
the transitional period than after the transitional period. None of the
above differences are statistically significant.

For survivors of severely or catastrophically disabled veterans, total
assets are, on average, higher during the transitional period than after
the transitional period. The opposite is true for the total survey
sample of SDVI Surviving Spouses.

[]{#__RefHeading___Toc515775010 .anchor}Table 55. Debts and Assets for
SDVI Surviving Spouses Who Reported More than\
\$1,000 in Debts or Assets By Veteran's Disability Status

+---------------------+-------+------+-------+------+--------+------+
| Survivors Group     | SDVI  |      |       |      |        |      |
|                     | Surv  |      |       |      |        |      |
|                     | iving |      |       |      |        |      |
|                     | Sp    |      |       |      |        |      |
|                     | ouses |      |       |      |        |      |
|                     | S     |      |       |      |        |      |
|                     | urvey |      |       |      |        |      |
|                     | S     |      |       |      |        |      |
|                     | ample |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
|                     | Years |      |       |      | All    |      |
|                     | Since |      |       |      | Sur    |      |
|                     | Vete  |      |       |      | viving |      |
|                     | ran's |      |       |      | S      |      |
|                     | Death |      |       |      | pouses |      |
+---------------------+-------+------+-------+------+--------+------+
|                     | 0-2   |      | 2-5   |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
|                     | >     | > C  | >     | > C  | > Mean | > C  |
|                     |  Mean | ount |  Mean | ount |        | ount |
+---------------------+-------+------+-------+------+--------+------+
| Debts               |       |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
| Survivors of        | \$5   | 28   | \$6   | 41   | \$     | 69   |
| severely or         | 5,609 |      | 2,853 |      | 59,913 |      |
| catastrophically    |       |      |       |      |        |      |
| disabled veterans   |       |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
| Survivors of        | \$5   | 33   | \$3   | 47   | \$     | 80   |
| veterans not        | 6,299 |      | 7,974 |      | 45,533 |      |
| severely of         |       |      |       |      |        |      |
| catastrophically    |       |      |       |      |        |      |
| disabled            |       |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
| Debts for all       | \$5   | 61   | \$4   | 88   | \$     | 149  |
| surviving spouses   | 5,982 |      | 9,565 |      | 52,192 |      |
| surveyed            |       |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
| > Assets            |       |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
| Survivors of        | \$17  | 40   | \$16  | 57   | \$1    | 97   |
| severely or         | 4,665 |      | 6,441 |      | 69,832 |      |
| catastrophically    |       |      |       |      |        |      |
| disabled veterans   |       |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
| Survivors of        | \$18  | 58   | \$22  | 69   | \$2    | 127  |
| veterans not        | 2,896 |      | 4,855 |      | 05,693 |      |
| severely of         |       |      |       |      |        |      |
| catastrophically    |       |      |       |      |        |      |
| disabled            |       |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+
| Assets for all      | \$17  | 98   | \$19  | 126  | \$1    | 224  |
| surviving spouses   | 9,536 |      | 8,430 |      | 90,164 |      |
| surveyed            |       |      |       |      |        |      |
+---------------------+-------+------+-------+------+--------+------+

Source: Q61(a-d) and Q63(a-e) in SDVI Survivor Survey

Figure 25 shows the distribution of total debts and total assets for
SDVI surviving spouses who reported more than \$1,000 in debts or
assets. As the figure shows, the distributions are skewed to the left,
indicating that the median is below the mean value. On average, SDVI
surviving spouses reported about \$52,000 for their annual debts, with a
median value of about \$40,000. On average, SDVI surviving spouses have
\$190,000 in assets, with a median value of \$126,000.

[]{#__RefHeading___Toc515774728 .anchor}Figure 25. Distribution of Total
Debts and Total Assets for SDVI Surviving Spouses\
Who Reported More than \$1,000 in Debts or Assets

![](media/image26.wmf){width="4.240277777777778in"
height="3.392361111111111in"}

> ![](media/image27.wmf){width="4.277777777777778in"
> height="3.2895833333333333in"}

Source: SDVI Survivor Survey

Table 56 shows average total assets and total debts by whether or not a
survivor has a dependent child and time since death. Total debts, on
average, are greater during the transitional period than after the
transitional period for both groups of survivors. In both time periods
and overall average debts are higher for survivors with at least one
dependent child. These differences are not statistically significant.

Total assets, on average, are greater after the transitional period than
during the transitional period for both groups of survivors. In both
time periods and overall, average total assets are higher for survivors
with no dependent children than for survivors with at least one
dependent child. None of these differences are significant.

[]{#__RefHeading___Toc515775011 .anchor}Table 56. Debts and Assets for
SDVI Surviving Spouses Who Reported More than\
\$1,000 in Total Assets or Total Debts\
by Whether Spouse Has Dependent Children

+---------------------+-------+------+--------+------+--------+------+
| Survivors Group     | SDVI  |      |        |      |        |      |
|                     | Surv  |      |        |      |        |      |
|                     | iving |      |        |      |        |      |
|                     | Sp    |      |        |      |        |      |
|                     | ouses |      |        |      |        |      |
|                     | S     |      |        |      |        |      |
|                     | urvey |      |        |      |        |      |
|                     | S     |      |        |      |        |      |
|                     | ample |      |        |      |        |      |
+---------------------+-------+------+--------+------+--------+------+
|                     | Years |      |        |      | All    |      |
|                     | Since |      |        |      | Sur    |      |
|                     | Vete  |      |        |      | viving |      |
|                     | ran's |      |        |      | S      |      |
|                     | Death |      |        |      | pouses |      |
+---------------------+-------+------+--------+------+--------+------+
|                     | 0-2   |      | 2-5    |      |        |      |
+---------------------+-------+------+--------+------+--------+------+
|                     | Mean  | C    | Mean   | C    | Mean   | C    |
|                     |       | ount |        | ount |        | ount |
+---------------------+-------+------+--------+------+--------+------+
| Debts               |       |      |        |      |        |      |
+---------------------+-------+------+--------+------+--------+------+
| Has at least one    | \$6   | 10   | \$     | 24   | \$     | 34   |
| dependent child     | 8,939 |      | 62,427 |      | 64,342 |      |
+---------------------+-------+------+--------+------+--------+------+
| Has no dependent    | \$5   | 51   | \$     | 64   | \$     | 115  |
| children            | 3,442 |      | 44,742 |      | 48,600 |      |
+---------------------+-------+------+--------+------+--------+------+
| Debts for all       | \$5   | 61   | \$     | 88   | \$     | 149  |
| surviving spouses   | 5,982 |      | 49,565 |      | 52,192 |      |
| surveyed            |       |      |        |      |        |      |
+---------------------+-------+------+--------+------+--------+------+
| > Assets            |       |      |        |      |        |      |
+---------------------+-------+------+--------+------+--------+------+
| Has at least one    | \$17  | 16   | \$1    | 27   | \$1    | 43   |
| dependent child     | 1,475 |      | 77,611 |      | 75,327 |      |
+---------------------+-------+------+--------+------+--------+------+
| Has no dependent    | \$18  | 82   | \$2    | 99   | \$1    | 181  |
| children            | 1,109 |      | 04,108 |      | 93,688 |      |
+---------------------+-------+------+--------+------+--------+------+
| Assets for all      | \$17  | 98   | \$1    | 126  | \$1    | 224  |
| surviving spouses   | 9,536 |      | 98,430 |      | 90,164 |      |
| surveyed            |       |      |        |      |        |      |
+---------------------+-------+------+--------+------+--------+------+

Source: SDVI Survivor Survey

[]{#__RefHeading___Toc515774729 .anchor}Figure 26. Distribution of Total
Debts for SDVI Surviving Spouses Who Reported\
More than \$1,000 in Total Debts by Whether Spouse Has Dependent
Children

> ![](media/image28.wmf){width="4.353472222222222in"
> height="3.482638888888889in"}
> ![](media/image29.wmf){width="4.746527777777778in"
> height="4.038888888888889in"}

Source: SDVI Survivor Survey

[]{#__RefHeading___Toc515774730 .anchor}Figure 27. Distribution of Total
Assets for SDVI Surviving Spouses Who Reported\
More than \$1,000 in Total Assets by Whether Spouse Has Dependent
Children

![](media/image30.wmf){width="4.156944444444444in"
height="3.3256944444444443in"}
![](media/image31.wmf){width="4.315972222222222in"
height="3.6034722222222224in"}

Source: SDVI Survivor Survey

We next present asset and debt values for SDVI surviving spouses by
whether or not a survivor received non-VA life insurance benefits. Table
57 shows average total debts and assets by these survivor groups. Total
debts, on average, are higher during the transitional period than after
the transitional period for SDVI survivors who receive non-VA life
insurance benefits. The opposite is true for SDVI survivors who do not
receive non-VA life insurance benefits. In both time periods and
overall, SDVI survivors who receive non-VA life insurance benefits have
higher average debts than SDVI survivors who do not. None of these
differences are significant.

Total assets, on average, are higher after the transitional period for
both survivor groups. Survivors who receive non-VA life insurance
benefits in addition to SDVI benefits have higher total assets on
average than survivors who do not receive non-VA life insurance
benefits. This is true for both time periods and overall. None of these
differences are significant.

[]{#__RefHeading___Toc515775012 .anchor}Table 57. Debts and Assets for
SDVI Surviving Spouses Who Reported More than\
\$1,000 in Debts or Assets, by Sources of Life Insurance Benefits

  --------------------- ----------- -------- ----------- ------- ----------- -------
  Survivors Group       SDVI                                                 
                        Surviving                                            
                        Spouses                                              
                        Survey                                               
                        Sample                                               

                        Years Since                              All         
                        Veteran's                                Surviving   
                        Death                                    Spouses     

                        0-2                  2-5                             

                        Mean        Count    Mean        Count   Mean        Count

  Debts                                                                      

  Received non-VA life  \$61,763    38       \$53,316    39      \$57,484    77
  insurance benefits                                                         

  Did not receive       \$43,445    19       \$48,849    41      \$47,138    60
  non-VA life insurance                                                      
  benefits                                                                   

  Missing observations              4                    8                   12

  Debts for all         \$55,982    61       \$49,565    88      \$52,192    149
  surviving spouses                                                          
  surveyed                                                                   

  Assets                                                                     

  Received non-VA life  \$189,409   52       \$217,060   58      \$203,989   110
  insurance benefits                                                         

  Did not receive       \$167,826   38       \$171,475   58      \$170,030   96
  non-VA life insurance                                                      
  benefits                                                                   

  Missing observations              8                    10                  18

  Assets for all        \$179,536   98       \$198,430   126     \$190,164   224
  surviving spouses                                                          
  surveyed                                                                   
  --------------------- ----------- -------- ----------- ------- ----------- -------

Source: SDVI Survivor Survey

[]{#__RefHeading___Toc515774731 .anchor}Figure 28. Distribution of Total
Debts for SDVI Surviving Spouses Who Reported\
More than \$1,000 in Total Debts by Source of Life Insurance Benefits

![](media/image32.wmf){width="4.127083333333333in"
height="3.301388888888889in"} ![](media/image33.wmf){width="4.36875in"
height="3.5006944444444446in"}

Source: SDVI Survivor Survey

[]{#__RefHeading___Toc515774732 .anchor}Figure 29. Distribution of Total
Assets for SDVI Surviving Spouses Who Reported\
More than \$1,000 in Total Assets by Source of Life Insurance Benefits

#### ![](media/image34.wmf){width="4.08125in" height="3.265277777777778in"}

![](media/image35.wmf){width="4.240277777777778in"
height="3.392361111111111in"}

Source: SDVI Survivor Survey

#### Assets and Debts for Surviving Spouses in the Transitional Period - Before and After Veteran's Death

Our comparison of debts and assets before and after the veteran's death
is made by including in our sample only those respondents who gave a
debt or asset amount both before and after the veteran's death. This is
why the number of respondents are, in some instances, lower for
corresponding groups than in the previous tables.

Table 58 presents the average total debts and assets for those survivors
in the transitional period by veteran's disability status. There is an
insignificant decrease in total debt for the overall survivor group
after the death of the veteran. For survivors of severely or
catastrophically disabled veterans, average total debt falls after the
death of the veteran. Again, this difference is not significant.

Average total assets are greater after the death of the veteran for the
overall survivor group as well as for survivors of severely or
catastrophically disabled veterans. These differences are not
significant.

[]{#__RefHeading___Toc515775013 .anchor}Table 58. Debts and Assets for
SDVI Surviving Spouses Who Reported More than\
\$1,000 in Debts or Assets in the Transitional Period --\
Before and After Veteran's Death By Veteran's Disability Status

  -------------------------------- ------------ ------------ -------------
  Survivors Group by Veterans\     Survivors of              Number of
  Disability Status                Veterans Who              Respondents
                                   Died within               
                                   0-2 Year                  

                                   Before Death After Death  

  Mean Debt                                                  

  Survivors of severely or         \$72,885     \$58,733     26
  catastrophically disabled                                  
  veterans                                                   

  Survivors of veterans not        \$63,236     \$59,258     30
  severely of catastrophically                               
  disabled                                                   

  Debts for all surviving spouses  \$67,716     \$59,014     56
  surveyed                                                   

  Mean Assets                                                

  Survivors of severely or         \$157,572    \$174,665    40
  catastrophically disabled                                  
  veterans                                                   

  Survivors of veterans not        \$175,489    \$182,896    58
  severely of catastrophically                               
  disabled                                                   

  Assets for all surviving spouses \$168,176    \$179,536    98
  surveyed                                                   
  -------------------------------- ------------ ------------ -------------

Source: SDVI Survivor Survey

Table 59 presents the average total debts and assets for those survivors
in the transitional period by whether or not a survivor has a dependent
child. For survivors who have at least one dependent child, average
total debt increases, insignificantly, after the death of the veteran.
For survivors who have no dependent children, the decrease in average
debt after the veteran's death is insignificant.

Average total assets are greater after the death of the veteran for both
survivor groups. This difference is not statistically significant.

[]{#__RefHeading___Toc515775014 .anchor}Table 59. Debts and Assets for
SDVI Surviving Spouses Who Reported\
More than \$1,000 in Debts or Assets in the Transitional Period --\
Before and After Veteran's Death By Whether Spouse has Dependent
Children

  -------------------------------- ------------ ------------ -------------
  Survivors Group by Whether\      Survivors of              Number of
  Have Dependents                  Veterans Who              Respondents
                                   Died within               
                                   0-2 Year                  

                                   Before Death After Death  

  Mean Debt                                                  

  Has at least one dependent child \$72,016     \$76,265     9

  Has no dependent children        \$66,893     \$55,711     47

  Debts for all surviving spouses  \$67,716     \$59,014     56
  surveyed                                                   

  Mean Assets                                                

  Has at least one dependent child \$152,756    \$171,475    16

  Has no dependent children        \$171,185    \$181,109    82

  Assets for all surviving spouses \$168,176    \$179,536    98
  surveyed                                                   
  -------------------------------- ------------ ------------ -------------

Source: SDVI Survivor Survey

Table 60 presents the average total debts and assets for those survivors
in the transitional period by the source of life insurance benefits.
Average debts decrease after the death of the veteran for both SDVI
surviving spouses who receive non-VA life insurance benefits and for
SDVI surviving spouses who do not receive non-VA life insurance
benefits. These differences are not significant.

On average, total assets increase after the death of the veteran for
both SDVI surviving spouses who receive non-VA life insurance benefits
and for SDVI surviving spouses who do not receive non-VA life insurance
benefits. Again, these differences are not significant.

[]{#__RefHeading___Toc515775015 .anchor}Table 60. Debts and Assets for
SDVI Surviving Spouses Who Reported\
More than \$1,000 in Debts or Assets in the Transitional Period --\
Before and After Death by Source of Life Insurance Benefits

  -------------------------------- ------------ ------------ -------------
  Survivors Group by Whether Have  Survivors of              Number of
  Dependents                       Veterans Who              Respondents
                                   Died within               
                                   0-2 Year                  

                                   Before Death After Death  

  Mean Debt                                                  

  Received non-VA life insurance   \$79,747     \$67,783     33
  benefits                                                   

  Did not receive non-VA life      \$48,313     \$43,445     19
  insurance benefits                                         

  Missing observations                                       4

  Debts for all surviving spouses  \$67,716     \$59,014     56
  surveyed                                                   

  Mean Assets                                                

  Received non-VA life insurance   \$173,930    \$189,409    52
  benefits                                                   

  Did not receive non-VA life      \$160,289    \$167,826    38
  insurance benefits                                         

  Missing observations                                       8

  Assets for all surviving spouses \$168,176    \$179,536    98
  surveyed                                                   
  -------------------------------- ------------ ------------ -------------

Source: SDVI Survivor Survey

## 9. Need Analysis of SDVI Surviving Spouses

In this section, we provide an interpretative analysis of the survivor's
financial situation from a need perspective. We examine income levels
and report survey respondents' self-assessment of financial and other
needs. Since there may be different meanings of need to different
people, we analyze more than one definition of need such as financial
need and qualitative need. Financial needs are examined, alternatively,
from an income replacement and an income maintenance perspective. We
address the following types of questions in this section:

-   Are surviving spouses able to replace the loss of income attributed
    to the veteran's death?

-   Do surviving spouses have an acceptable level of income?

-   Do SDVI surviving spouses cut expenses because they fall short in
    income every month?

-   If they do, by how much do they cut their expenses and what expenses
    are cut?

-   For those survivors in the transition period receiving life
    insurance payments, do the payments help decrease their financial
    needs and/or debts?

-   Do SDVI surviving spouses think their veteran spouses had enough
    life insurance coverage?

-   How do SDVI survivors of veterans compare to survivors of
    non-disabled veterans?

-   Did they need financial and/or employment counseling?

### Income Replacement

Financial need can be thought of as the loss of income occurring after
the death of a spouse. Section 3 of this volume reported that total
household income for SDVI survivors decreased from about \$48,840 to
\$27,300 in the year after the veteran's death on average for all SDVI
surviving spouses. Clearly, from an income replacement perspective, SDVI
survivors fall significantly short of meeting financial needs if we look
at only the \$10,000 basic coverage. Other considerations are the
receipt of other life insurance benefits and what the survivors
themselves think their needs are.

#### Life Insurance

Life insurance benefits are intended to provide a temporary replacement
of income in the event of unexpected or premature death of a spouse.
Besides participating in the SDVI program, some SDVI veterans had bought
optional life insurance from other VA or non-VA sources and left the
proceeds to their SDVI survivors. As Table 61 indicates, more than half
(53%) of SDVI surviving spouses reported that they received life
insurance benefit payments from a private company, employer, or other
non-VA source. On the other hand, only 18% and 12% of SDVI surviving
spouses reported receiving life insurance payments from VGLI and SGLI
programs, respectively.

[]{#__RefHeading___Toc515775016 .anchor}Table 61. SDVI Surviving Spouses
Receiving Other VA and/or Non-VA Life Insurance Benefits

  --------------------- ----- ------------------- ------------------ ---------------- -------------
                              SDVI Surviving                                          All SDVI
                              Spouses of:                                             Surviving
                                                                                      Spouses
                                                                                      Surveyed

                              Veterans Who Were   Severely or                         
                              Not Severely or     Catastrophically                    
                              Catastrophically    Disabled Veterans                   
                              Disabled                                                

  Surviving Spouse                                                                    
  Received Non-VA                                                                     
  Insurance Payments?                                                                 

  Yes                         52%                 53%                                 53%

  No                          46%                 44%                                 45%

  Don't know/Refused          2%                  3%                                  2%

  Number of Surviving         178                 132                                 310
  Spouses                                                                             

  Surviving Spouse                                                                    
  Received Insurance                                                                  
  Payments from Other                                                                 
  VA Programs?                                                                        

  Received VGLI payment 16%                                          21%              18%

  Received SGLI payment 11%                                          12%              12%

  Had VMLI              0%                                           0%               0%

  Number of Surviving   178                                          132              310
  Spouses                                                                             

  Surviving Spouse                                                                    
  Received Insurance                                                                  
  Payments\                                                                           
  from at least one                                                                   
  source (non-VA or                                                                   
  VA)?                                                                                

  Yes                   65%                                          70%              67%

  No                    35%                                          30%              33%

  Number of Surviving   178                                          132              310
  Spouses                                                                             
  --------------------- ----- ------------------- ------------------ ---------------- -------------

Source: SDVI Survivor Survey

Table 62 shows the mean and median life insurance payments from VA and
non-VA sources for all SDVI surviving spouses (including those who did
not receive any life insurance payments from non-VA or other VA
sources). Note that some respondents who indicated that they received
payments from VA and/or non-VA sources did not give the amount received
and therefore the "counts" shown in the tables below are lower than the
actual number of survivors receiving life insurance payments. The
benefit payments vary greatly across individual survivors as reflected
by the wide divergence between mean and median results. The average
amount of benefit payment from both VA and non-VA sources is \$32,198
for all SDVI surviving spouses surveyed while the respective median
amount is only \$15,000. The \$32,198 would replace the \$21,550 drop in
household income for survivors cited above (\$48,840 - \$27,300 =
\$21,540). However, this is only a one-time replacement only. Also, half
of the survivors receive only \$15,000 in life insurance payments.

[]{#__RefHeading___Toc515775017 .anchor}Table 62. Life Insurance
Payments Received by SDVI Surviving Spouses\
from VA and Non-VA Sources (Includes all surviving spouses surveyed)

  ------------------ ------------------ ---------- ------------------ ---------- ----------- ----------
  Surviving Spouses  Surviving Spouses                                           All         
  Received Life      of:                                                         Surviving   
  Insurance Payments                                                             Spouses     
  from                                                                                       

                     Veterans Who Were             Severely or                               
                     Not Severely or               Catastrophically                          
                     Catastrophically              Disabled Veterans                         
                     Disabled                                                                

                     Mean               Median     Mean               Median     Mean        Median

  Other VA programs  \$6,319            \$0\*      \$9,622            \$0\*      \$7,719     \$0\*
  (VGLI/SGLI)                                                                                

  SDVI program       \$8,885            \$10,000   \$9,492            \$10,000   \$9,144     \$10,000

  Non-VA sources     \$14,047           \$0        \$17,152           \$0        \$15,363    \$0
  (private company,                                                                          
  employer)                                                                                  

  Total amount       \$29,251           \$13,000   \$36,234           \$15,500   \$32,198    \$15,000
  received                                                                                   

  Total Number of    178                           132                           310         
  Respondents                                                                                

  \* Since less than                                                                         
  50% of surviving                                                                           
  spouses indicated                                                                          
  receiving life                                                                             
  insurance benefits                                                                         
  from other VA                                                                              
  programs,\                                                                                 
  the median value                                                                           
  is zero.                                                                                   
  ------------------ ------------------ ---------- ------------------ ---------- ----------- ----------

Source: SDVI Survivor Survey

Respondents were asked whether the veteran had enough life insurance
coverage given the survivor's current situation and as Table 63
indicates, almost half (49%) responded that they did not have enough.
Table 64 shows the reasons that survivors gave for veterans not having
enough life insurance. Primary reasons given were the cost of insurance
and the veteran's disability. Twenty-six percent of respondents of
veterans who were *not* severely or catastrophically disabled gave "too
expensive" as a reason compared to 30% for the group with veterans who
were severely disabled. Forty-nine percent of respondents of veterans
who were severely or catastrophically disabled gave "couldn't get
coverage due to veteran's disability" as a reason compared to 38% for
the group with veterans who were not severely or catastrophically
disabled.

[]{#__RefHeading___Toc515775018 .anchor}Table 63. Perception of SDVI
Surviving Spouses on Whether Veteran Had Enough Life Insurance

  ------------------------ ------------------ ------------------ ------------
  SDVI Surviving Spouses   Surviving Spouses                     All SDVI
                           of:                                   Surviving
                                                                 Spouses
                                                                 Surveyed

                           Veterans Who Were  Severely or        
                           Not Severely or    Catastrophically   
                           Catastrophically   Disabled Veterans  
                           Disabled                              

  \% Who said veteran did  45%                55%                49%
  not have enough                                                
  insurance                                                      

  \% Who said veteran had  51%                42%                47%
  enough insurance                                               

  Don't know/Refused       4%                 3%                 4%

  Total Survey Respondents 178                132                310
  ------------------------ ------------------ ------------------ ------------

Source: Q121 in SDVI Survivor Survey

[]{#__RefHeading___Toc515775019 .anchor}Table 64. Reasons Given by SDVI
Surviving Spouses for Veterans Not Having Enough Insurance

  ------------------------ ------------------ ------------------ ------------
  Reason                   Among Who Said                        
                           Veteran Did Not                       
                           Have Enough                           
                           Insurance                             

                           Surviving Spouses                     All
                           of:                                   Surviving
                                                                 Spouses

                           Veterans Who Were  Severely or        
                           Not Severely or    Catastrophically   
                           Catastrophically   Disabled Veterans  
                           Disabled                              

  Couldn't get coverage    38%                49%                43%
  due to veteran's                                               
  disability                                                     

  Too expensive            26%                30%                28%

  Veteran didn't think we  15%                10%                12%
  needed it                                                      

  Had maximum program      4%                 10%                7%
  allowed                                                        

  Veteran thought he/she   0%                 0%                 0%
  had enough insurance                                           

  Other reason             11%                5%                 8%

  Don't know/Refused       20%                12%                16%

  Total Number who said    80                 73                 153
  veteran did not have                                           
  enough insurance                                               
  ------------------------ ------------------ ------------------ ------------

Source: Q122 in SDVI Survivor Survey

#### Survivor Assessment of Financial Need

In the study, survey respondents were asked questions concerning what
they perceived their financial needs to be. In particular, the
respondents were asked to choose one of the following statements that
described their then-current financial situation:

-   Good -- I can take care of my needs and have some money left over

-   Getting by -- I can afford the basic necessities, but little else

-   Poor -- I have to make major sacrifices and cut back on necessities

As shown in Table 65, more than half (59%) of SDVI surviving spouses
rated their current financial situation as "getting by" or "poor."
Moreover, 63% of surviving spouse of veterans who had severe or
catastrophic disabilities at time of death indicated that they were
"getting by" or "poor," compared to 56% of those of veterans who did not
have severe or catastrophic disabilities at time of death.

Table 66 shows the respondents' self-rating of their financial situation
for those with dependent children and those without. As the table
indicates, a higher percentage (71%) of surviving spouses with dependent
children rate their financial situation as "getting by" or "poor"
compared to surviving spouses with no dependent children (57%).

[]{#__RefHeading___Toc515775020 .anchor}Table 65. Assessment of Current
Financial Situation, by Veteran's Disability Status

  ---------------- ------------------- --------------------- -------------
  Financial Status Surviving Spouses                         All SDVI
  Rating           of:                                       Surviving
                                                             Spouses
                                                             Surveyed

                   Veterans Who Were   Severely or           
                   Not Severely or     Catastrophically      
                   Catastrophically    Disabled Veterans     
                   Disabled                                  

  Good             44%                 36%                   40%

  Getting by       46%                 52%                   49%

  Poor             10%                 11%                   10%

  Don't            0%                  1%                    1%
  know/Refused                                               

  Total Count      178                 132                   310
  ---------------- ------------------- --------------------- -------------

Source: Q65 in SDVI Survivor Survey

[]{#__RefHeading___Toc515775021 .anchor}Table 66. Assessment of Current
Financial Situation, by Dependency Status

  ---------------- -------------------- --------------------- -------------
  Financial Status Surviving Spouses:                         All SDVI
  Rating                                                      Surviving
                                                              Spouses

                   Without Dependent    With Dependent        
                   Children             Children              

  Good             42%                  29%                   40%

  Getting by       47%                  57%                   49%

  Poor             10%                  14%                   10%

  Don't know/      1%                   0%                    1%
  Refused                                                     

  Total Count      261                  49                    310
  ---------------- -------------------- --------------------- -------------

Source: Q65 in SDVI Survivor Survey

We next looked to see what expenditures were cut back for those
survivors who said their financial situation was something other than
"good." The results are shown in Table 67. More than three out of four
surviving (77%) spouses whose financial status rating was less than
"good" reported that they had cut expenses in at least one of the
expenditure items listed below.

The areas of greatest cutbacks, in order, were clothing, food, and
entertainment. Entertainment and clothing expenditures are perhaps more
discretionary and hence not surprisingly, are among the most frequently
mentioned items. However, a significant percentage (at least 24%) of
survey respondents indicated cutbacks in utilities, transportation, and
health care. The lowest cutbacks appear to be in children's education
and entertainment expenses and in savings for college. However, 16% of
the SDVI survivors have dependent children (as shown in Section 7) so
that among only those survivors who do have children, the cutback in
children's education is much more prevalent (for example, 19% cutback
for the survivors with children versus 3% for the whole survivor group).

[]{#__RefHeading___Toc515775022 .anchor}Table 67. Expenditure Cutbacks
for SDVI Surviving Spouses Who Rated Their\
Financial Situation as "Getting By" or "Poor"

  ------------------------- ------------------ ------------------ -----------
  Expenditure               Percent Who Cut                       
                            Back                                  

                            Surviving Spouses                     Surviving
                            of:                                   Spouses
                                                                  Surveyed

                            Veterans Who Were  Severely or        
                            Not Severely or    Catastrophically   
                            Catastrophically   Disabled Veterans  
                            Disabled                              

  Clothing                  57%                58%                57%

  Food                      42%                40%                41%

  Entertainment             32%                48%                40%

  Utilities                 34%                35%                35%

  Transportation            24%                28%                26%

  Healthcare                20%                29%                24%

  Savings for retirement    17%                24%                20%

  Housing                   10%                17%                13%

  Self education            6%                 11%                8%

  Child's entertainment     5%                 10%                7%

  Savings for college       2%                 11%                6%

  Children's education      3%                 4%                 3%

  Percent of survivors who  76%                79%                77%
  cut at least one                                                
  expenditure                                                     

  No Cut                    22                 19%                21%

  Don't know/Refused        2%                 2%                 2%

  Total Count (for those    99                 83                 182
  who rated their financial                                       
  status as "getting by" or                                       
  "poor")                                                         
  ------------------------- ------------------ ------------------ -----------

Source: Q65a in SDVI Survivor Survey

Overall, there are no significant differences in the percentage of
survivors who cut at least one expense by the veteran's disability
status at time of death, but significant differences appear when we
focus on some expenditure items individually. For example, among those
who rated their financial status as "getting by" or "poor," 48% of
surviving spouses of veterans who had severe or catastrophic disability
at time of death cut back their entertainment expenses compared to 32%
of those of who did not have a severe or catastrophic disability. Among
the other expenditure items that have significant differences in the
percentage who cut expenses by veteran's disability status: healthcare
(29% vs. 20%); savings for retirement (24% vs. 17%); and housing (17%
vs. 10%).

A more sophisticated statistical analysis (that is, logistic regression)
was also performed to try to assess the characteristics of respondents
who rated their finances as "poor" or "getting by." (Please see Glossary
for a description of logistic regression.) The results indicate that the
likelihood of a survivor rating his/her financial situation as "poor" or
"getting by" is *higher* for a surviving spouse:

-   With dependent children

-   Who has a current health problem

In contrast, the likelihood of a survivor rating his/her financial
situation as "poor" or "getting by" is *lower* for a surviving spouse:

-   Who is white (race)

-   Who received life insurance payments from SGLI

-   Who received life insurance payments from non-VA source

There is no statistically significant difference in results between
survivors of veterans who were and who were not severely or
catastrophically disabled and between survivors in their transitional
period and beyond transitional period.[^16]

Respondents were also asked how much more monthly income would they need
in order not to have to make sacrifices or cut back in areas that they
mentioned above. As Table 68 indicates, among those who reported that
they had to cut back at least one item, the additional annual amount
that they reported, on average, is \$8,173. Surviving spouses with
dependent children reported a higher average amount needed (\$11,008)
compared to that of survivors with no dependent children (\$7,397). The
additional perceived annual income needed by survivors of veterans who
were not severely or catastrophically disabled at time of death is lower
than that of survivors of veterans who did have severe or catastrophic
disabilities at time of death, that is, \$6,926 vs. \$9,528,
respectively.

[]{#__RefHeading___Toc515775023 .anchor}Table 68. Additional Annual
Income Needed by SDVI Surviving Spouses\
(Among those who indicated they cut back at least one expenditure item)

  ------------------------------------- ------------ ----------- ---------
  Surviving Spouse Group                Mean         Median      Count

  Survivor of veterans who were not     \$6,926      \$6,000     63
  severely or catastrophically disabled                          
  at time of death                                               

  Survivor of severely or               \$9,528      \$6,000     58
  catastrophically disabled veterans at                          
  time of death                                                  

  Survivor does not have dependent      \$7,397      \$6,000     95
  children                                                       

  Survivor has dependent children       \$11,008     \$6,600     26

  Not Working (Under 60)                \$9,736      \$6,000     22

  Working                               \$8,372      \$6,000     43

  Retired (Not Working & Over 60)       \$7,406      \$6,000     56

  Surviving Spouses, Total              \$8,173      \$6,000     121
  ------------------------------------- ------------ ----------- ---------

Source: Q65b in SDVI Survivor Survey

In Table 69, we also present the results computed as an average of all
SDVI surviving spouses regardless of whether they cut back expenses or
not. In this table, respondents who rated their financial status as
"good" were assigned zeros for additional income needed. Respondents who
rated their financial status as "getting by" or "poor" but reported that
they do not cut back any expenses were also assigned zeros for
additional income needed. On average, across all surviving spouses
surveyed, the perceived additional amount of income needed is \$4,285
per year. Surviving spouses with dependent children reported a higher
amount of additional income needed (\$6,581) compared to those without
dependent children (\$3,799). Also, survivors who are under 60 years of
age and not working reported a greater amount of additional income per
year (\$5,795) compared to those working (\$4,880) and retired
(\$3,504). Note that the median additional income needed is zero.

[]{#__RefHeading___Toc515775024 .anchor}Table 69. Additional Annual
Income Needed by SDVI Surviving Spouses\
(Including those who do not need any additional income)

  -------------------------------------------- -------------- -----------
  Surviving Spouse Group                       Mean           Count

  Survivors of veterans who were not severely  \$3,481        155
  or catastrophically disabled at time of                     
  death                                                       

  Survivors of severely or catastrophically    \$5,369        115
  disabled veterans at time of death                          

  Survivors with no dependent children         \$3,799        227

  Survivor with dependent children             \$6,851        43

  Not working (Under 60)                       \$5,795        38

  Working                                      \$4,880        90

  Retired (not working & over 60)              \$3,504        142

  Surviving spouses, group total               \$4,285        270

  Unknown (Don't know-Refused) responses                      40
  -------------------------------------------- -------------- -----------

Source: SDVI Survivor Survey

We also conducted regression analysis on the amount of additional money
needed in order not to have to cut back expenses or make sacrifices by
surviving spouses, controlling for survivor characteristics. The results
are reported in Table 70.[^17] The following groups of surviving spouses
need more money per month compared to the reference group listed in the
table below: survivors with dependent child(ren), survivors under 60
years of age and not working, working survivors, survivors of veterans
that were severely or catastrophically disabled, and survivors that have
health problems. In contrast, the following groups of survivors need
less additional money per month (hence, their needs are less) compared
to the reference group of survivors: survivors who receive DIC payments,
survivors who received non-VA life insurance payments, and those who
received SGLI payments.

[]{#__RefHeading___Toc515775025 .anchor}Table 70. Results of Regression
Analysis on "Additional Money Needed"\
by SDVI Surviving Spouses

  ------------------------- -------------- ------------------------------
  Survivor Characteristics  Impact         Comparison Group

  Has dependent child(ren)  Higher Need    No dependent child(ren)

  Under 60 and not working  Higher Need    Retired (\> 60 and not
                                           working)

  Working                   Higher Need    Retired (\> 60 and not
                                           working)

  Veteran was severely or   Higher Need    Veteran was not severely or
  catastrophically disabled                catastrophically disabled

  Has current health        Higher Need    No health problem
  problem                                  

  Receives DIC payment      Lower Need     Does not receive DIC payment

  Received non-VA life      Lower Need     Did not receive non-VA life
  insurance payments                       insurance payments

  Received payments from    Lower Need     Did not receive payments from
  SGLI                                     SGLI
  ------------------------- -------------- ------------------------------

Source: SDVI Survivor Survey

### Income Maintenance

Financial need can be thought of as maintaining a minimum level of
income, as opposed to fully maintaining the level of income after the
veteran's death that is the same as prior to the veteran's death. Some
minimum threshold of income could be applied to define this level. This
could be the poverty level as defined by the Department of Health and
Human Services or some percent above the poverty level. A standard could
also be based on comparison to the income of survivors of disabled
non-veterans.

#### Comparison to Poverty Level

The Department of Health and Human Services has poverty guidelines for
different household sizes. For the year 2000, the poverty threshold for
a household of one is \$8,350. Each additional person increases the
poverty threshold by \$2,900.

The average household incomes for survivors reported previously are well
above the poverty line. The question then is: are there any survivor
households at the low end of the income range below poverty? Table 71
reports the percent of SDVI survey respondents below poverty and below
150% of the poverty line based on income reported by survey respondents
(excluding life insurance payments).

[]{#__RefHeading___Toc515775026 .anchor}Table 71. SDVI Surviving Spouses
Below Poverty and Below 150% of Poverty\
(Not Including Insurance Payments)

  ---------------------------------------- -------------- ---------------
  SDVI Surviving Spouse Group              \% Below       \% Below 150%
                                           Poverty        of Poverty

  Survivors of veterans who were not       8%             24%
  severely or catastrophically disabled at                
  time of death                                           

  Survivors of severely or                 8%             18%
  catastrophically disabled veterans at                   
  time of death                                           

  SDVI Surviving Spouses, Group Total      8%             21%
  ---------------------------------------- -------------- ---------------

Source: SDVI Survivor Survey

[]{.mark}

The percent below poverty is 8% for SDVI surviving spouses while the
percent below 150% of the poverty line is 21%. The statistics on poverty
shown in Table 71 do not vary significantly by veteran's disability
status. The average amount of additional annual income needed to rise
above poverty is only about \$330, while the additional amount needed to
rise above 150% of the poverty line is about \$1,155.

The reader should keep in mind that the income used in the calculations
does not include life insurance payments. If such payments were
included, then virtually all households would be above both poverty
thresholds for the transition period after the veteran's death. However,
life insurance payments for SDVI surviving spouses, on average, tend to
be small. This points to a possible need for additional life insurance
coverage for disabled veterans.

#### Comparison to Survivors of Disabled Non-Veterans

Another standard for assessing whether income of SDVI surviving spouses
is at a minimum acceptable level is to compare their income to survivors
of disabled non-veterans. In order to make this comparison, we use data
from two non-VA data sources, Survey of Income and Program Participation
(SIPP) and Current Population Survey (CPS). These data sources contain
detailed income information including total personal income, total
earned income, sources of income, and participation in welfare
programs.[^18]

These data were analyzed to: 1) examine the income differences between
the surviving spouses of veterans who died in the military or with a
service-connected disability with other comparable survivor populations,
2) examine the income differences between the disabled veterans and the
survivors of disabled veterans to assess whether there is a decline in
financial status of survivors following the death of the veteran, and 3)
explain to the extent possible the sources of the income outcome
differences. A full report on the analysis of income using non-VA data
sources is included in Appendix G.

We found notable income differences among the study groups. Table 72
lists the average annual income including payments received from VA for
the survivor after veterans' death. The major findings are as follows:

-   Survivors of veterans who had service-connected disabilities have
    about \$5,600 higher average income annually than their non-veteran
    counterparts.

-   Survivors of veterans with service-connected disabilities receive
    about 40% of their income from VA. Hence, the payment of benefits
    from the Department of Veterans Affairs is an important factor in
    raising the total income of the recipients.

-   Survivors of veterans who died in the military or with a
    service-connected disability had lower income than service-connected
    veterans, implying that there is a decline in financial status
    following the death of the veteran.[^19]

In analyzing these data, we were not able to control for severity of
disability status in either the veteran group or non-veteran group.
Taking this factor into account, we consider the figures in Table 72 to
be roughly similar to comparable income figures reported in Section 8.

[]{#__RefHeading___Toc515775027 .anchor}Table 72. Annual Average Income
of Survivors After Spouse's Death\
(Over 35 Years Old)\
1996 SIPP Data (adjusted to 1999)

  ---------------------------------- ------------- ----------- -----------
  Study Group                        Income                    Count

                                     Mean          Median      

  Survivors of veterans who had      \$28,282      \$24,553    57
  service-connected disabilities                               

  Survivors of non-veterans (in      \$22,675      \$18,419    695
  receipt of survivor benefits in                              
  addition to Social Security                                  
  benefits)                                                    

  Disabled veterans (individual)     \$39,752      \$35,367    281
  ---------------------------------- ------------- ----------- -----------

Source: Survey of Income Program Participation Data, 1996

### Other Needs

In this section, we provide results from the survey of SDVI surviving
spouses on other needs including counseling need of survivors,
education, and career development.

#### Counseling

Several questions relating to counseling were asked of SDVI surviving
spouses including:

-   Did you receive any counseling to help you cope with your loss
    (bereavement counseling)?

-   Did you take any courses to improve your chances of getting a good
    job since your spouse's death?

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```
-   If not, did you want to take courses?

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```
-   Did you receive any counseling to help you find employment?

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```
-   If not, did you want employment counseling?

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```
-   Did you receive any financial counseling to help you plan your
    income and expenses?

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```
-   If not, did you want financial counseling?

Table 73 shows the percentage of people who received bereavement
counseling. As the table indicates, 26% of the SDVI survivors received
bereavement counseling, and among survivors who received bereavement
counseling with dependent children, 23% indicated that their children
also received bereavement counseling. The respondents were also asked
the sources of bereavement counseling. As Table 74 shows, among those
who received bereavement counseling, 27% got counseling by a private
counselor, followed by counseling at a clinic/hospital (26%), at a
religious institution (21%), and at VA (14%). The most statistically
significant difference in results by veteran's disability status is for
counseling received at a clinic/hospital, 39% for survivors of severely
or catastrophically disabled veterans, and 18% for those who were not.

[]{#__RefHeading___Toc515775028 .anchor}Table 73. Bereavement Counseling
of SDVI Surviving Spouses

  --------------------------------- ------------------ ------------------ -----------
  Received Bereavement Counseling?  Survivors of       Survivors of       All
  (Q89)                             Veterans Who Were  Severely or        Surviving
                                    Not Severely or    Catastrophically   Spouses
                                    Catastrophically   Disabled Veterans  
                                    Disabled                              

  Yes                               28%                23%                26%

  No                                72%                76%                73%

  Don't know/Refused                0%                 1%                 1%

  Total Number of Respondents       178                132                310

  Children received bereavement                                           
  counseling? (Q91)\                                                      
  (Among survivors who received                                           
  bereavement counseling with                                             
  dependent children))                                                    

  Yes                               29%                17%                23%

  No                                71%                24%                77%

  Total Number of Respondents       7                  12                 19
  --------------------------------- ------------------ ------------------ -----------

Source: SDVI Survivor Survey

[]{#__RefHeading___Toc515775029 .anchor}Table 74. Bereavement Counseling
Providers\
(for those Surviving Spouses Who Received Counseling)

  ----------------------- -------------------- ------------------ -----------
  Provider of Counseling  Survivors of         Survivors of       All
                          Veterans Who Were    Severely or        Survivors
                          Not Severely or      Catastrophically   
                          Catastrophically     Disabled Veterans  
                          Disabled                                

  Private counselor       28%                  26%                27%

  Clinic/hospital         18%                  39%                26%

  Religious institution   24%                  16%                21%

  Veterans Affairs        14%                  13%                14%

  Other government agency 8%                   10%                9%

  Community center        4%                   3%                 4%

  Other                   12%                  6%                 10%

  Don't know/Refused      6%                   0%                 4%

  Total Number of         50                   31                 81
  Respondents                                                     

  Totals may add up more                                          
  than 100% since                                                 
  respondents were                                                
  allowed to give                                                 
  multiple responses.                                             
  ----------------------- -------------------- ------------------ -----------

Source: Q90 in SDVI Survivor Survey

[]{.mark}

Table 75 presents the percentage of surviving spouses who received
counseling to find employment and who took courses to improve chances of
getting a job after the veteran's death. Note that these two questions
are asked of survivors who did not report any current earnings or
self-employment. As the table below indicates, 8% of surviving spouses
took courses and only 1% received employment counseling across all
surviving spouses. To better assess the need for these counseling and
training programs, we also asked the respondents who did not participate
if they had wanted to. As shown in Table 75 a small proportion had
wanted to participate in training but did not -- 23% and 8% of those who
did not get counseling indicated that they wanted to take courses and
receive employment counseling but did not, respectively.

[]{#__RefHeading___Toc515775030 .anchor}Table 75. Educational,
Financial, and Employment Counseling of SDVI Surviving Spouses

  --------------------------------- ------------------ ------------------ -----------
  Surviving Spouses                 Survivors of       Survivors of       All
                                    Veterans Who Were  Severely or        Surviving
                                    Not Severely or    Catastrophically   Spouses
                                    Catastrophically   Disabled Veterans  
                                    Disabled                              

  \% Took courses to improve job    3%                 16%                8%
  skills (Q96)                                                            

  \% Received financial counseling  7%                 9%                 8%
  (Q102)                                                                  

  \% Received employment counseling 0%                 3%                 1%
  (Q99)                                                                   

  Total Number of Respondents       178                132                310

  The following percentages are                                           
  based on those who did not take                                         
  courses or receive counseling                                           

  \% Wanted to take course (Q97)    17%                32%                23%

  \% Wanted financial counseling    8%                 15%                11%
  (Q103)                                                                  

  \% Wanted employment counseling   3%                 14%                8%
  (Q100)                                                                  
  --------------------------------- ------------------ ------------------ -----------

Source: SDVI Survivor Survey

#### Career Development

Table 76 presents responses to career development questions and the
impact of living a military life. Respondents were allowed to respond in
multiple categories, so the numbers in the cells are not mutually
exclusive and do not add up to 100%. Most (72%) indicated that military
life had no effect on career development. There does not appear to be a
strong effect from the disability status of the veteran. Overall, the
most often cited barriers were frequent moves and parenting, both of
which tended to hamper career development.

[]{#__RefHeading___Toc515775031 .anchor}Table 76. Effect of Military
Life on SDVI Surviving Spouses' Career Development

  ----------- ------------------------ ------------------ ------------ -----------
  Military    Response                 Surviving Spouses               All
  Life                                 of Severely or                  Survivors
                                       Catastrophically                
                                       Disabled Veterans               

                                       No                 Yes          

  Had No                               73%                72%          72%
  Effect                                                               

  Helped      Greater exposure helped  2%                 3%           2%
              prepare for employment                                   

              Took classes while       1%                 1%           1%
              spouse was in service                                    

              Have job related to      0%                 2%           1%
              military                                                 

              Volunteer work helped    1%                 1%           1%
              prepare me                                               

              Other help               0%                 1%           0%

  Did not     Could not go to school   1%                 5%           3%
  help        due to frequent moves                                    

              Could not develop career 5%                 7%           6%
              due to frequent moves                                    

              Could not develop due to 4%                 7%           5%
              parenting                                                
              responsibilities                                         

              Other barrier            4%                 2%           3%

  Total                                178                132          310
  Number of                                                            
  Surviving                                                            
  Spouses                                                              
  ----------- ------------------------ ------------------ ------------ -----------

Source: Q94b in SDVI Survivor Survey

Respondents were asked about their employment status during the first
year after the veteran's death. AS shown in Table 77, 60% indicated that
they were not working and not looking for work, whereas 33% indicated
that they were working. The results do not differ significantly by the
veteran's disability status.

[]{#__RefHeading___Toc515775032 .anchor}Table 77. Surviving Spouses'
Employment Status in the First Year Following Veteran's Death

  --------------------------------- ------------------ ------------------ -----------
  Surviving Spouse                  Survivors of       Survivors of       All
                                    Veterans Who Were  Severely or        Surviving
                                    Not Severely or    Catastrophically   Spouses
                                    Catastrophically   Disabled Veterans  
                                    Disabled                              

  Was not working and not looking   59%                60%                60%
  for work                                                                

  Was working                       33%                34%                33%

  Was not working, but was looking  7%                 6%                 7%
  work                                                                    

  Don't know/Refused                2%                 2%                 2%

  Total Number of Surviving Spouses 437                551                988
  --------------------------------- ------------------ ------------------ -----------

Source: Q92 in SDVI Survivor Survey

Table 78 below displays the distribution by age and level of educational
attainment for SDVI surviving spouses. Eighty-six percent of surviving
spouses have less than a bachelor's degree. Younger surviving spouses
have higher educational attainment. For example, 28% of surviving
spouses who are less than 51 years old have a bachelor's degree or above
compared to 8% of those who are in the 71 to 80 years old age group.

[]{#__RefHeading___Toc515775033 .anchor}Table 78. Age and Educational
Attainment of SDVI Surviving Spouses

  --------------- ------ ----------- ------ --------- ------ --------- ------ --------- ------ --------- ------ ---------
  Highest Level          Surviving                                                                              Total
  of Education           Spouse's                                                                               
                         Age                                                                                    

                         \<51               51-60            61-70            71-80            80+              

  \< High School  6%                 8%               13%              31%              33%              15%    

  High School     27%                36%              39%              37%              33%              36%    

  Some College    39%                43%              34%              25%              33%              35%    

  Bachelor's      18%                8%               12%              8%               0%               11%    
  Degree                                                                                                        

  Graduate School 10%                6%               3%               0%               0%               4%     

  Total %         100%               100%             100%             100%             100%             100%   

  Total Count     49                 74               119              65               3                310    
  --------------- ------ ----------- ------ --------- ------ --------- ------ --------- ------ --------- ------ ---------

Source: Q2 and Q130 in SDVI Survivor Survey

[Impacts of Caring for a Disabled Veteran]{.underline}: Some surviving
spouses devoted considerable time providing care and assistance for a
disabled veteran. Forty-one percent of SDVI surviving spouses indicated
that they provided care for the veteran. Among SDVI recipients who said
they provided care for the veteran before his/her death, 79% reported
providing full-time care and assistance due to the veteran's
service-connected disabilities. Thirty-five percent reported providing
at least some level of care for up to two years and one-fifth (20%)
reported providing at least some level of care to a disabled veteran for
more than 20 years.

The time required for care and assistance affected both the education
and employment plans of spouses receiving SDVI. Spouses also reported
they were forced to leave or cut back on full time employment, or they
were forced to delay, extend or cancel education or job training
programs in order to provide care to their disabled veteran spouse.
Table 79 illustrates survey frequency data responses for impacts on work
and Table 80 for impacts on educational or employment training.

As Table 79 shows, about 40% of survey respondents indicated they
stopped working or took a leave of absence and 2% reported having to
change work schedules.

[]{#__RefHeading___Toc515775034 .anchor}Table 79. Impacts of Caring for
Disabled Veteran on Changes in Employment\
for SDVI Survivors of Veterans Who Died within the Past Five Years

  ---------------------------- ------------------ ------------------ -----------
  Impact                       Survivors of       Survivors of       All
                               Veterans Who Were  Severely or        Survivors
                               Not Severely or    Catastrophically   
                               Catastrophically   Disabled Veterans  
                               Disabled                              

  No effect                    61%                34%                41%

  Stopped working or took a    27%                44%                40%
  leave of absence                                                   

  Changed work schedule        0%                 3%                 2%

  Reduced from full to part    3%                 9%                 8%
  time                                                               

  Started part-time work       3%                 6%                 5%

  Started full-time work       3%                 0%                 1%

  Reduced part-time hours      3%                 3%                 3%

  Increased from part to full  0%                 1%                 1%
  time                                                               

  Worked full time and got a   0%                 0%                 0%
  second job                                                         

  Don't know/Refused           0%                 2%                 2%

  Total %                      100%               100%               100%

  Total- Surviving spouses who 33                 97                 130
  cared for service-connected                                        
  disabled veterans and had at                                       
  least one job before veteran                                       
  was disabled                                                       
  ---------------------------- ------------------ ------------------ -----------

Source: Q80 in SDVI Survivor Survey

[]{#__RefHeading___Toc515775035 .anchor}Table 80. Impacts of Caring for
Disabled Veteran on Changes in Educational or Employment Training for
SDVI Survivors of Veterans Who Died within the Past Five Years

  ----------------------------- ------------------ ------------------ -----------
  Impact                        Survivors of       Survivors of       All
                                Veterans Who Were  Severely or        Survivors
                                Not Severely or    Catastrophically   
                                Catastrophically   Disabled Veterans  
                                Disabled                              

  No effect                     50%                46%                46%

  Stopped or postponed          50%                36%                37%

  Prevented participation       0%                 15%                14%

  Continued                     0%                 2%                 2%

  Started                       0%                 0%                 0%

  Other/don't know              0%                 2%                 2%

  Total %                       100%               100%               100%

  Total -- Surviving spouses    2                  61                 63
  whose caring for veterans                                           
  caused them to make changes                                         
  in their employment                                                 
  ----------------------------- ------------------ ------------------ -----------

Source: Q82b in SDVI Survivors Survey

Responses to the question about impact on education or training programs
caused by caring for a disabled veteran indicate, of those survivors
whose caring for veterans caused them to make changes in their
employment:

-   Thirty-seven percent who were in educational training reported they
    had to stop an ongoing education or training program, or postpone
    entry into an education or training program because of caregiving to
    a disabled veteran.

-   Another 14% indicated they were prevented from beginning an
    education program.

-   In total 54% indicated adverse consequences with respect to
    education or training.

-   About 46% indicated caregiving had no effect on education or
    training plans, and approximately 2% indicated they continued with
    their education or training.

Table 81 provides data illustrating how spouses' education levels
changed from before the veterans' disabilities to the present. Overall,
education levels did not increase.

[]{#__RefHeading___Toc515775036 .anchor}Table 81. Spouse's Education
Level Prior to and After Veteran's Disability

  ------------------------------- -------------------- -------------------
  Education Level                 Prior to Disability  After Disability

  \< High School                  14%                  14%

  High School                     38%                  36%

  Some College                    33%                  35%

  Bachelor's Degree               11%                  11%

  Graduate School                 4%                   4%

  Don't know/ Refused             0%                   0%

  Total                           100.0%               100.0%

  Total Respondents               310                  310
  ------------------------------- -------------------- -------------------

Source: Q130 and Q131 in SDVI Survivor Survey

## 10. Satisfaction of SDVI Surviving Spouses

In the survey for this study, customer satisfaction questions were one
component as well. The intent of this study in this area is to provide
an independent assessment of customer satisfaction. We obtained results
from over 400 responses on overall satisfaction and somewhat fewer
numbers of responses on satisfaction on specific program features or
attributes. The results reported here are based only on the responses of
surviving spouses, not children.

This section addresses the satisfaction of SDVI Surviving Spouses with
the following objectives:

-   Measure the overall satisfaction level of the beneficiaries

-   Measure the satisfaction level of respondents with specific program
    attributes such as benefit amount or timeliness to receive the
    benefit

-   Determine which program attributes are the most important in
    affecting overall satisfaction

-   Identify areas of improvement that will have the greatest impact on
    satisfaction.

Respondents were asked two sets of questions related to satisfaction.
The first set of questions include overall satisfaction with:

-   Forms to fill out to get benefits

-   Amount of time required to fill out forms

-   Brochures/written material that explain benefits

-   Time it took to get benefits started

-   Being able to call a toll free number for help

-   The helpfulness of VA staff

-   Amount of benefits received

Satisfaction ratings had five levels of gradation from very satisfied to
very dissatisfied: 5 = very satisfied; 4 = satisfied; 3 = neutral; 2 =
dissatisfied, and 1 = very dissatisfied. The responses that did not
express the intensity of satisfaction/dissatisfaction such as "not aware
of this feature," "don't know," and "refused" were coded, but not
analyzed.

The second set of questions, using the same scale, address the relative
ease of:

-   Finding out who to contact at VA

-   Finding out what the survivor was eligible for

-   Understanding the forms and instructions

-   Finding out where to send the forms

-   Getting the death certificate and other documents (VA requires the
    claimant to furnish a death certificate)

-   Overall score on the relative ease of getting SDVI benefits.

As explained above in the section on satisfaction of takers, we relied
primarily on the calculation of average ratings and the frequency
distribution of the five satisfaction ratings to analyze the survey
responses on customer satisfaction. We also calculated the relative
importance of each program attribute to overall satisfaction.
Tabulations of average survey results showed that most respondents (over
80% of those who provided a satisfaction score) were either "satisfied"
or "very satisfied" *overall*. Satisfaction scores, however, still
showed enough variation to let us assess differences in satisfaction
scores by program attributes.

We also found that the most important factors driving overall
satisfaction had relatively lower scores. That is, respondents were most
satisfied with attributes that are not the key drivers of satisfaction,
such as ease of "where to send forms," "finding out information on
eligibility," and "helpfulness of VA staff." However, respondents gave
relatively lower satisfaction scores to the key drivers of satisfaction,
such as the "benefit amount" itself and the "amount of time it takes to
receive benefits."

### Average Satisfaction Scores

Table 82 shows mean satisfaction scores for overall satisfaction and 13
attributes of the SDVI process. Overall satisfaction with the SDVI
benefits was 3.99. Overall satisfaction with the relative "ease to get
benefits" was 4.20.

Highest satisfaction scores were for providing/getting required
documents, such as the "death certificate" (score of 4.36), "knowing
where to send the forms" (4.27), and "finding out who to contact"
(4.25). "Benefit amount" has the lowest satisfaction rating with an
average score of 3.77 (that is, somewhat less than "satisfied"). The
"time it takes to get benefits" started and the relative "ease of
understanding the forms and instructions" also have relatively lower
satisfaction scores of 4.01 and 4.02, respectively. The adjective
"lower" is used advisedly since the mean scores are above 4, indicating
a level of satisfaction somewhat above "satisfied."

[]{#__RefHeading___Toc515775037 .anchor}Table 82. Mean Satisfaction
Scores for SDVI Spouses

  ---------------------------------- ------------------ ------- ------------------ ------- ---------- -------
  Satisfaction and Relative Ease     SDVI Spouses of                                       SDVI       
                                                                                           Spouses,   
                                                                                           Overall    

                                     Veterans Who W*ere         Veterans Who                          
                                     Not* Severely or           W*ere* Severely or                    
                                     Catastrophically           Catastrophically                      
                                     Disabled                   Disabled                              

                                     Mean Score         Count   Mean Score         Count   Mean Score Count

  Helpfulness of VA staff            4.17               106     4.23               88      4.20       194

  Amount of time required to fill    4.11               106     4.23               75      4.16       181
  out forms                                                                                           

  Forms you had to fill out to get   4.08               114     4.25               79      4.15       193
  benefits                                                                                            

  Being able to call a toll-free     4.10               93      4.13               71      4.11       164
  number for help                                                                                     

  Brochures & written materials      4.06               99      4.12               77      4.09       176
  explaining benefits                                                                                 

  Time it took to get benefits       4.04               112     3.99               89      4.01       201
  started                                                                                             

  Amount of benefits received        3.86               85      3.68               78      3.77       163

  Overall satisfaction with SDVI     4.00               124     3.97               96      3.99       220

  Get the death certificate & other  4.38               104     4.33               84      4.36       188
  documents                                                                                           

  Find out where to send the forms   4.29               95      4.23               74      4.27       169

  Find out who to contact            4.33               108     4.15               87      4.25       195

  Find out benefit eligibility       4.21               104     4.10               84      4.16       188

  Understand the forms &             4.02               97      4.03               77      4.02       174
  instructions                                                                                        

  Relative ease to get benefit       4.13               115     4.28               93      4.20       208
  ---------------------------------- ------------------ ------- ------------------ ------- ---------- -------

Source: Q117(a-h) and Q118(a-f) in SDVI Survey

The distributions of responses are reported in Figure 30 to Figure 33.
Note that not all of the survey respondents provided a satisfaction
score for each attribute shown in the figures. For example, for overall
satisfaction, out of the total of all respondents, about 60% reported
"satisfied" or "greatly satisfied" (Figure 30). However, over 80%
reported "satisfied" or "greatly satisfied" among those who did provide
a satisfaction score (Figure 32).

[]{#__RefHeading___Toc515774733 .anchor}Figure 30. Distribution of
Satisfaction Scores by Attributes\
(For all SDVI Surviving Spouses)

![](media/image36.wmf){width="6.06875in" height="3.670138888888889in"}

Source: Q117(a-h) of SDVI Survivor Survey

[]{#__RefHeading___Toc515774734 .anchor}Figure 31. Distribution of
"Easiness" Scores (For all SDVI Surviving Spouses)

![](media/image37.wmf){width="6.110416666666667in"
height="3.701388888888889in"}

Source: Q118(a-f) of SDVI Survivor Survey

[]{#__RefHeading___Toc515774735 .anchor}Figure 32. Distribution of
Satisfaction Scores by Attributes\
(For SDVI Surviving Spouses Who Provided Satisfaction Score)

![](media/image38.wmf){width="6.1375in" height="3.6354166666666665in"}

Source: Q117(a-h) of SDVI Survivor Survey

[]{#__RefHeading___Toc515774736 .anchor}Figure 33. Distribution of
"Easiness" Scores by Attributes\
(For SDVI Surviving Spouses Who Provided Easiness Score)

![](media/image39.wmf){width="6.325694444444444in"
height="2.9583333333333335in"}

Source: Q118(a-f) of SDVI Survivor Survey

#### Who is satisfied and who is not?

We looked at differences in overall satisfaction scores for different
veteran survivor groups, but did not find many differences among
different groups. Mean satisfaction scores are presented in Table
83[^20] for a few characteristics worth noting. In particular, we found
that groups with less satisfaction included: those who had to cut at
least one expense after the veteran's death; has health problems; and/or
was working.

[]{#__RefHeading___Toc515775038 .anchor}Table 83. Mean Overall
Satisfaction Scores by Characteristics

  ------------------------------------ ------------ ----------- ----------
  Characteristics                                   Mean Score  Count

  Had to cut at least one expense      No           4.21        124
  after veteran's death (Q65a)                                  

                                       Yes          3.70        96

  Has health problems (Q8wh1)          No           4.07        136

                                       Yes          3.85        84

  Employment (Q2ans & Q52)             Retired      4.12        105

                                       Working      3.79        77

                                       Not working  4.00        38
  ------------------------------------ ------------ ----------- ----------

Source: SDVI Survivor Survey

[]{.mark}

A more sophisticated statistical technique, regression analysis, was
performed to corroborate the results in Table 84. This technique allows
us to take into account the simultaneous influences of several factors
on satisfaction that the simple mean calculation does not.

[Table 84]{.mark} confirms that the regression results[^21] for overall
satisfaction support the results in the previous table. Insignificant
variables included in the regression analysis were: surviving spouse's
age, veteran's disability status, years since death of veteran, whether
survivor has dependent child, has DIC, received SGLI payments, received
VGLI payments, and received non-VA insurance benefit.

[]{#__RefHeading___Toc515775039 .anchor}Table 84. Overall Satisfaction
with the SDVI Program\
Regression Results

  ------------------------------------------- ---------------------------
  Factors                                     Impact

  Had to cut at least one expense after       Less satisfied
  veteran's death (Q65a)                      

  Has health problem (Q8wh1)                  Less satisfied

  Working - Under 60 years old (Q2ans and     Less satisfied
  Q52)                                        
  ------------------------------------------- ---------------------------

Source: SDVI Survivor Survey

[]{.mark}

### Importance of Program Attributes

The next step in the analysis is to identify which attributes contribute
most to the customer's overall satisfaction. As explained in the section
on satisfaction of takers (Section 6), an analytical technique called
Causal Path Modeling[^22] (CPM) was used to identify the "key drivers"
of overall satisfaction.

Table 85 below states the relative importance of the detailed attributes
to overall satisfaction in percentage terms. For the sake of comparison,
the mean satisfaction scores that were reported already in Table 82 are
presented in Table 85. The importance weights are expressed in
percentage terms that add up to 100% and are derived from the causal
path modeling analysis.

[]{#__RefHeading___Toc515775040 .anchor}Table 85. Importance of Program
Attributes for SDVI Surviving Spouses

  ------------------------------------------ ------------ ---------------
  Satisfaction and Relative Ease             Importance   Survey
                                             Weights &    Satisfaction
                                             (Ranking)    Mean Score &
                                                          (Ranking)

  Amount of benefits received                17% (1)      3.81 (12)

  Forms you had to fill out to get benefits  12% (2)      4.22 (5)

  Amount of time required to fill out forms  12% (2)      4.17 (6)

  Understand the forms & instructions        12% (2)      4.06 (11)

  Brochures and written materials that       12% (2)      4.15 (8)
  explain benefits                                        

  Time it took to get benefits started       10% (3)      4.11 (10)

  Ease of Getting Benefits                   9% (4)       4.28 (3)

  Get the death certificate & other          9% (4)       4.37 (1)
  documents                                               

  Find out benefit eligibility               2% (5)       4.16 (7)

  Find out who to contact                    2% (5)       4.22 (5)

  Find out where to send the forms           1% (6)       4.32 (2)

  Helpfulness of VA staff                    1% (7)       4.24 (4)

  Being able to call a Toll-free number for  1% (8)       4.13 (9)
  help                                                    
  ------------------------------------------ ------------ ---------------

Source: Q117(a-h) and Q118(a-f) in SDVI Survivor Survey and Study Team
Analysis

The attribute that contributes the most to the overall satisfaction
rating is the amount of the benefit received. It is also the attribute
with the lowest satisfaction score. Other attributes that contribute
significantly to the overall satisfaction rating are "forms," "amount of
time required to fill out forms," "brochures," and "understanding the
forms and instructions." The attributes, "helpfulness of VA staff,"
"toll-free number," and "finding out where to send the forms" are of the
least importance to overall satisfaction.

Figure 34 combines the rankings of relative importance and satisfaction
scores for each attribute and sorts them into four quadrants of a
priority matrix. The quadrant labeled "High Yields" contains attributes
that rank high in both importance to the customer and the customer's
stated satisfaction score. VA needs to keep the satisfaction results
high for these attributes (forms and ease of getting benefit) in order
to maintain a high level of overall satisfaction. The quadrant labeled
"Value Adds" represents the greatest potential for improvement in
overall satisfaction. One attribute, in particular, benefit amount, has
the lowest satisfaction score, but it is viewed as the most important to
the customer. Other areas for potential improvement are "time to fill
out forms," "explanation of benefits," "understand the forms and
instructions," and "time to get benefits."

[]{#__RefHeading___Toc515774737 .anchor}Figure 34. Rankings of
Importance Weights and Mean Satisfaction Scores\
for SDVI Surviving Spouses

![](media/image40.wmf){width="6.419444444444444in"
height="3.696527777777778in"}

Note that the points in the chart are plotted on the basis of rankings,
not the actual values of the weights or satisfaction scores.

Source: SDVI Survivor Survey and Study Team Analysis

## 11. Cost of Insuring Veterans with Service-Connected Disabilities 

In this section we report the cost and funding of providing life
insurance to disabled veterans who are eligible for certain subsidized
VA insurance programs under which they can purchase insurance at
standard premium rates (rates for healthy individuals). These programs
require subsidies because the standard premium rates charged to veterans
are not sufficient to fund the full costs of the programs.

There are three such programs currently available to disabled veterans:

-   The **[Service-Disabled Veterans Insurance (SDVI)]{.underline}**
    program, which makes up to \$30,000 in life insurance available to
    veterans with service-connected disabilities,

-   The **[Veterans' Mortgage Life Insurance (VMLI)]{.underline}**
    program, which makes up to \$90,000 of mortgage life insurance
    available to severely disabled veterans who receive grants for
    Specially Adapted Housing, and

-   The **[Veterans' Group Life Insurance (VGLI)]{.underline}** program,
    which provides SGLI policyholders the option of converting their
    SGLI coverage (available in \$10,000 increments up to a maximum of
    \$200,000 at time of study) to 5-year renewable term insurance upon
    separation from the service, regardless of the condition of their
    health.

A fully-funded life insurance program requires that, over the lifetime
of the group of policies, the premium income, with interest, will be
sufficient to fund the benefits paid out. If the premium income, with
interest, is not sufficient, then the insurance company suffers a loss
on that set of policies.

With the exception of one-year term insurance, fully-funded insurance
also requires build-up of a reserve. The reason for the reserve is that,
in the early years of the policy, the cost of insurance each year is
less than the premium collected in that year, but in the later years of
the policy the cost of insurance is greater than the premium collected.

All three of the insurance programs described above, at the time they
originated, intended to make insurance available to disabled veterans at
premium levels which were at (or close to) standard premium rates (that
is, competitive with rates offered by commercial insurers to healthy
individuals). As a result, these premiums do not cover the full cost of
insurance, and the programs are not fully-funded (that is,
self-supporting) from premium income alone. Of course, this is all in
keeping with Congressional intent of making life insurance coverage (i)
readily available and (ii) affordable to veterans and separating
servicemembers, whether they are healthy or disabled. Therefore, by
design, these programs need a subsidy to enable them to operate and
remain solvent.

The need for subsidies under the SDVI and VMLI programs, which only
cover disabled veterans, is quite clear since premiums for both programs
are at standard rates. Less evident is the need for the VGLI program to
be subsidized since it is available to both healthy and unhealthy VGLI
policyholders. When servicemembers separate from the service, they need
to decide whether to convert their SGLI to VGLI or to convert their
coverage to a commercial insurance carrier. Veterans desiring to
purchase permanent life insurance will be able to convert to a permanent
plan with any of the participating companies regardless of their health
status. For veterans desiring to purchase term insurance, healthy
individuals will generally seek out the lowest premium, commercial term
insurance for which they qualify; while unhealthy individuals will find
that they are either uninsurable or that commercial term insurance
premium rates applicable to them are unaffordable. As a result, the
unhealthy individuals seeking term insurance will be more likely to
convert their SGLI to VGLI. This selection process generally results in
higher risk (that is, poorer health) veterans opting for VGLI and
healthy individuals leaving VGLI, resulting in the need to subsidize the
VGLI program.

### Sources of Funding of Program Subsidies

#### Service-Disabled Veterans Insurance (SDVI) & Veterans' Mortgage Life Insurance (VMLI)

Because of their reliance upon annual subsidies in order to be able to
pay claims and other program expenses, both the SDVI and VMLI programs
operate on a virtually pay-as-you-go basis. Each year, both programs
receive annual federal government contributions from the Veterans
Insurance and Indemnities (VI&I) appropriation (established by Congress
and maintained by VA) in such amounts as are required to meet the year's
operating deficit. Annually, VA actuaries determine reserves for each
program (in such amounts as would be needed if the programs were
fully-funded) and report them in their insurance financial statements.

#### Veterans' Group Life Insurance (VGLI)

Unlike SDVI and VMLI, the source of VGLI's subsidy is not the Veterans
Insurance & Indemnities (VI&I) appropriation but rather the
Servicemembers' Group Life Insurance (SGLI) fund. That is, in a manner
very similar to the way that the VI&I provides annual subsidies to SDVI
and VMLI to keep them solvent, the SGLI fund makes annual transfers of
funds to meet VGLI's operating deficit. Annually, as a part of the
ongoing financial operation of the SGLI fund, reserves for future VGLI
costs (based upon anticipated future premium deficiencies in the VGLI
program) are actuarially determined and reported in the SGLI financial
statements.

Since SGLI, besides being the source of subsidy of VGLI, is also a
self-supporting program on its own, SGLI premium levels must be set
somewhat higher than the level needed to fully-fund SGLI. Therefore,
SGLI policyholders subsidize the VGLI program by financing the
additional cost related to those veterans who are disabled or in poor
health at the time they convert their coverage to VGLI. There is a
certain equity here since the SGLI policyholder population, some of whom
may not be in good health upon separation from the service, will be
eligible to convert their SGLI to VGLI at that time, without evidence of
good health.

Note that the VGLI subsidy approach described above (whereby the premium
for actives includes a charge toward the cost of the post-conversion
subsidy) is very similar to the process used by the Federal Employees'
Group Life Insurance (FEGLI) program and many group life policies
covering private sector company employees.

### Analysis of Program Subsidies

Our analysis of the SDVI, VMLI, and VGLI program subsidies consisted of:

-   A compilation of the annual subsidies under each program for the
    years 1990 through 2020, based upon actual amounts from 1990 through
    1999 and projected amounts from 2000 through 2020. The results of
    this analysis are shown in Table 86.

-   A compilation of the total annual premiums and annual subsidies
    under each program for the years 1990 through 2020, with each year's
    subsidy expressed as a percent of that year's total premium. The
    results of this analysis are shown in Table 87.

Both the actual past information (for 1990-1999) and the projected
future information (for 2000-2020) for Table 86 and Table 87 were
provided to us by VA actuaries at VA Regional Office and Insurance
Center in Philadelphia. All SDVI and VMLI information in these tables is
reported on a fiscal year end 9/30 basis; all VGLI information is
reported on a plan year-end 6/30 basis. As noted at the bottom of the
tables, since VGLI premium reductions are expected in the future, VA
actuaries did not feel it would be meaningful to project annual
subsidies for the VGLI program beyond the year 2010.

It should also be noted that the SDVI subsidy and premium information in
Table 86 and Table 87 include both Basic and Supplemental SDVI.

### Table 86. History of Subsidization of VA Insurance Programs Actual Through 1999; Projected 2000-2020 {#table-86.-history-of-subsidization-of-va-insurance-programs-actual-through-1999-projected-2000-2020 .Tabel-Heading}

  ------ ------------ ----------- ------------ ---------------- ------------
  Year   Subsidy (\$)                          Subsidy (\$)     Total (\$)
         From VI&I                             from SGLI        

         SDVI         VMLI        Sub Total    VGLI\*           

  1990   8,268,000    3,399,000   11,667,000   10,328,323       21,995,323

  1991   8,840,000    4,246,000   13,086,000   18,987,768       32,073,768

  1992   19,804,000   3,336,000   23,140,000   21,674,339       44,814,339

  1993   15,795,000   3,705,000   19,500,000   23,181,638       42,681,638

  1994   6,989,500    5,429,000   12,418,500   8,368,428        20,786,928

  1995   28,504,689   5,818,000   34,322,689   26,570,635       60,893,324

  1996   34,283,000   6,157,000   40,440,000   15,202,216       55,642,216

  1997   29,705,510   5,902,299   35,607,809   11,418,980       47,026,789

  1998   43,430,000   5,139,930   48,569,930   (10,228,654)     38,341,276

  1999   34,364,000   6,061,001   40,425,001   (13,547,876)     26,877,125

  2000   20,470,000   6,205,519   26,675,518   20,300,000       46,975,518

  2001   11,710,000   6,356,593   18,066,593   21,400,000       39,466,593

  2002   27,006,869   6,303,018   33,309,887   20,200,000       53,509,887

  2003   27,925,583   6,400,365   34,325,949   19,100,000       53,425,949

  2004   28,830,979   6,512,608   35,343,587   18,700,000       54,043,587

  2005   29,730,615   6,636,658   36,367,273   17,800,000       54,167,273

  2006   30,546,524   6,834,342   37,380,866   16,400,000       53,780,866

  2007   31,297,997   6,953,587   38,251,584   17,000,000       55,251,584

  2008   32,018,403   7,128,526   39,146,928   17,500,000       56,646,928

  2009   32,473,605   7,286,441   39,760,046   16,900,000       56,660,046

  2010   32,859,839   7,404,801   40,264,641   16,800,000       57,064,641

  2011   33,096,034   7,510,605   40,606,639   N/A              N/A

  2012   33,245,540   7,593,855   40,839,395   N/A              N/A

  2013   33,331,390   7,655,256   40,986,647   N/A              N/A

  2014   33,338,034   7,672,072   41,010,106   N/A              N/A

  2015   33,321,275   7,670,756   40,992,031   N/A              N/A

  2016   33,237,372   7,675,572   40,912,944   N/A              N/A

  2017   32,883,353   7,658,828   40,542,181   N/A              N/A

  2018   32,264,855   7,565,305   39,830,160   N/A              N/A

  2019   31,763,754   7,441,777   39,205,532   N/A              N/A

  2020   31,200,434   7,356,067   38,556,501   N/A              N/A
  ------ ------------ ----------- ------------ ---------------- ------------

\* Note: Since VGLI premium reductions are expected in the future, it
would not be meaningful\
to project annual subsidies for the VGLI program beyond the year 2010.

Source: VA Philadelphia Insurance Center

[]{#__RefHeading___Toc515775042 .anchor}Table 87. History of
Subsidization of VA Insurance Programs as a Percent of Premiums Paid\
Actual Through 1999; Projected 2000-2020

  ------ ------------ ------------ --------- ----------- ----------- --------- ------------- -------------- ---------
  Year   SDVI                                VMLI                              VGLI                         

         Premiums     Subsidy (\$) Subsidy   Premiums    Subsidy     Subsidy   Premiums (\$) Subsidy (\$)   Subsidy
         (\$)                      as % of   (\$)        (\$)        as % of                                as % of
                                   Premium                           Premium                                Premium

  1990   19,033,000   8,268,000    43%       1,360,000   3,399,000   250%      31,140,051    10,328,323     33%

  1991   20,899,000   8,840,000    42%       1,306,000   4,246,000   325%      33,321,298    18,987,768     57%

  1992   19,743,000   19,804,000   100%      1,382,000   3,336,000   241%      36,161,327    21,674,339     60%

  1993   21,434,000   15,795,000   74%       1,529,000   3,705,000   242%      44,760,508    23,181,638     52%

  1994   33,460,756   6,989,500    21%       2,132,000   5,429,000   255%      57,886,218    8,368,428      14%

  1995   34,034,793   28,504,689   84%       1,774,000   5,818,000   328%      68,939,458    26,570,635     39%

  1996   33,025,775   34,283,000   104%      2,210,000   6,157,000   279%      77,926,256    15,202,216     20%

  1997   34,089,974   29,705,510   87%       2,140,439   5,902,299   276%      91,510,318    11,418,980     12%

  1998   35,920,210   43,430,000   121%      2,178,333   5,139,930   236%      103,949,444   (10,228,654)   -10%

  1999   35,624,740   34,364,000   96%       2,240,887   6,061,001   270%      110,078,877   (13,547,876)   -12%

  2000   36,241,663   20,470,000   56%       2,238,827   6,205,519   277%      101,400,000   20,300,000     20%

  2001   36,487,136   11,710,000   32%       2,244,934   6,356,593   283%      111,500,000   21,400,000     19%

  2002   36,681,882   27,006,869   74%       2,283,603   6,303,018   276%      120,000,000   20,200,000     17%

  2003   36,853,502   27,925,583   76%       2,323,795   6,400,365   275%      128,700,000   19,100,000     15%

  2004   36,998,615   28,830,979   78%       2,365,074   6,512,608   275%      138,700,000   18,700,000     13%

  2005   37,115,094   29,730,615   80%       2,412,875   6,636,658   275%      149,300,000   17,800,000     12%

  2006   37,198,668   30,546,524   82%       2,444,179   6,834,342   280%      159,800,000   16,400,000     10%

  2007   37,247,431   31,297,997   84%       2,482,457   6,953,587   280%      168,800,000   17,000,000     10%

  2008   37,257,451   32,018,403   86%       2,514,634   7,128,526   283%      177,800,000   17,500,000     10%

  2009   37,221,557   32,473,605   87%       2,535,230   7,286,441   287%      188,500,000   16,900,000     9%

  2010   37,134,655   32,859,839   88%       2,550,483   7,404,801   290%      199,500,000   16,800,000     8%

  2011   36,987,546   33,096,034   89%       2,562,043   7,510,605   293%      N/A           N/A            N/A

  2012   36,768,530   33,245,540   90%       2,564,744   7,593,855   296%      N/A           N/A            N/A

  2013   36,467,600   33,331,390   91%       2,559,680   7,655,256   299%      N/A           N/A            N/A

  2014   36,081,611   33,338,034   92%       2,550,638   7,672,072   301%      N/A           N/A            N/A

  2015   35,615,623   33,321,275   94%       2,543,419   7,670,756   302%      N/A           N/A            N/A

  2016   35,075,693   33,237,372   95%       2,529,802   7,675,572   303%      N/A           N/A            N/A

  2017   34,462,465   32,883,353   95%       2,500,899   7,658,828   306%      N/A           N/A            N/A

  2018   33,779,623   32,264,855   96%       2,469,044   7,565,305   306%      N/A           N/A            N/A

  2019   33,027,358   31,763,754   96%       2,445,460   7,441,777   304%      N/A           N/A            N/A

  2020   32,204,003   31,200,434   97%       2,424,957   7,356,067   303%      N/A           N/A            N/A
  ------ ------------ ------------ --------- ----------- ----------- --------- ------------- -------------- ---------

Note: Since VGLI premium reductions are expected in the future, it would
not be meaningful\
to project annual subsidies for the VGLI program beyond the year 2010.

Source: VA Philadelphia Insurance Center

Projected results for years 2000-2010 assume that the current premiums
charged SGLI and VGLI participants will remain in effect throughout the
projection. Since substantial gains from operations are expected in the
future, which will lead to SGLI and/or VGLI premium reductions, actual
future annual premiums and subsidies could differ significantly from
those shown. Also, as a result of this uncertainty, projections beyond
2010 are not shown.

The dollar amounts of annual SDVI and VGLI subsidies have fluctuated
rather significantly over the years 1990 through 1999. VMLI subsidy
levels, on the other hand, have been fairly stable and grading upward
over the same time period.

The only negative annual subsidies in Table 87 were for VGLI for the
years ended 6/30/98 and 6/30/99. During this period, there was a
significant improvement in VGLI mortality and annual VGLI premiums
exceeded annual VGLI death claims and other program expenses. As a
result, in each of these two years there was a transfer back to SGLI
from VGLI, rather than the usual transfer from SGLI to keep VGLI
solvent. \[Note: Due to the several years of favorable VGLI experience,
VA reduced VGLI premiums (by an average of 30%) for those under age 50
effective April 1, 1999. This is expected to restore the program to the
more common position of needing an annual transfer from SGLI to meet its
operating deficit.\]

The annual subsidies required to meet the operating deficits of these
programs can be thought of as an approximation of the annual premium
shortfalls for the programs, which arise because standard premiums are
being charged to many who may be living medically substandard lives.
Thus, it is appropriate to calculate (as in Table 87) the annual subsidy
as a percent of annual premium for each program and to observe how this
percentage changes over time and differs from program to program.

As an illustration of how these percentages might be interpreted,
suppose that the year-to-year subsidy as a percent of premium for a
particular program was 50%. Under this scenario, one could say that the
approximate level of premium which would have been necessary for the
program to be fully-funded was, on average, 50% of the actual premium
charged.

Based upon the percentages shown in Table 87 for each of the three
programs, the relative levels of subsidy (measured not in dollars, but
as a percent of premiums) over the years 1990 through 1999 are as
follows:

-   VMLI has required the heaviest subsidy, averaging 270% of premiums
    over these years,

-   SDVI has required the next most subsidy, averaging 80% of premiums
    over 1990 -- 1999, and

-   VGLI has required the least subsidy, averaging 17% of premiums over
    1990 -- 1999.

These results are expected, recognizing that:

-   The VMLI program generally covers the most severely disabled lives
    out of the three programs under consideration;

-   The VGLI program (unlike VMLI and SDVI, which cover
    [only]{.underline} disabled lives) covers both healthy and unhealthy
    veterans. Thus, much of the experience under this program is
    favorable healthy life experience.

-   The SDVI program covers only disabled lives, whose disabilities are,
    on average, less severe than those covered by VMLI. Therefore, it
    makes sense for the subsidy for this program (expressed as a percent
    of premiums) to be in between the VMLI and VGLI subsidy levels.

### Cost of Additional SDVI Coverage

Consideration in this study was also given to estimating the subsidy
costs for increasing SDVI Basic coverage from \$10,000 to \$50,000 and
reducing the premiums by basing the rates on the 1980 mortality rate
tables. We estimate the additional costs for newly eligible veterans as
well as current takers.

The following assumptions are made in developing the cost estimates: No
waiver of premium provisions will be available in the additional
\$40,000 coverage; premiums charged will be based on the 1980 mortality
tables; 50% of the currently insured will purchase the additional
coverage; lapse (non-renewal) rate is 2%; and interest rate is 5%. In
addition, a key parameter affecting the cost results is the assumption
for participation rate of the newly eligible veterans. The overall
participation for the total population of SDVI eligible veterans is
about 3.5%. Increasing the coverage and reducing the premium rate are
very likely to result in higher participation rates. However, the
specific level of increased participation is difficult to predict, and
therefore, we have specified alternative assumptions that reflect a
range of plausible rates. In particular, we specify a range of 6% to 25%
participation rate for newly eligible veterans. We assume that newly
eligible veterans who chose to participate in VGLI will not participate
in SDVI since they will already have a substantial amount of life
insurance coverage.

Estimates vary from \$57 to \$71 million for the year 2002 and from \$76
to \$162 million for the year 2010, reflecting the range in
participation rates from 6% to 25%. Table 88 provides the estimates for
three alternatives.

[]{#__RefHeading___Toc515775043 .anchor}Table 88. SDVI Cost to Offer
\$40,000 of Additional Coverage

  ----------- --------- --------------- ------------ ------------- --------------
  Fiscal Year Policy    Insurance       Premiums     Death Claims  Government
              Count     Amount                                     Subsidy
                                                                   Required

  New Issues:                                                      
  5,000 in                                                         
  first year                                                       

  2002        69,948    2,797,904,705   39,959,886   97,101,828    57,141,942

  2003        71,104    2,844,142,167   38,727,228   100,256,353   61,529,125

  2004        72,160    2,886,392,996   37,370,079   103,318,194   65,948,116

  2005        73,121    2,924,836,004   36,569,600   106,280,980   69,711,380

  2006        73,992    2,959,671,453   46,627,909   109,119,669   62,491,759

  2007        74,778    2,991,109,240   45,478,273   111,820,615   66,342,342

  2008        75,484    3,019,358,736   44,496,377   114,380,153   69,883,776

  2009        76,116    3,044,624,368   43,679,034   116,799,048   73,120,013

  2010        76,677    3,067,070,066   43,021,506   119,113,661   76,092,155

  New Issues:                                                      
  10,000 in                                                        
  first year                                                       

  2002        79,723    3,188,924,411   42,674,288   104,572,270   61,897,982

  2003        85,436    3,417,449,417   42,947,481   112,638,561   69,691,079

  2004        90,837    3,633,490,646   42,863,645   120,551,798   77,688,153

  2005        95,936    3,837,450,256   43,780,834   128,312,572   84,531,738

  2006        100,744   4,029,741,240   55,608,810   135,901,995   80,293,185

  2007        105,269   4,210,778,503   56,272,495   143,309,890   87,037,395

  2008        109,524   4,380,967,691   57,138,326   150,537,224   93,398,898

  2009        113,518   4,540,708,699   58,197,248   157,581,639   99,384,391

  2010        117,259   4,690,360,326   59,437,693   164,476,193   105,038,500

  New Issues:                                                      
  20,000 in                                                        
  first year                                                       

  2002        99,266    3,970,644,577   48,111,593   119,516,820   71,405,227

  2003        114,090   4,563,585,536   51,401,106   137,409,722   86,008,616

  2004        128,176   5,127,047,977   53,867,677   155,029,379   101,161,702

  2005        141,547   5,661,880,281   58,225,630   172,390,248   114,164,618

  2006        154,223   6,168,920,499   73,598,559   189,485,678   115,887,119

  2007        166,225   6,648,993,310   77,894,448   206,312,274   128,417,826

  2008        177,572   7,102,896,825   82,460,997   222,880,118   140,419,121

  2009        188,286   7,531,421,878   87,277,326   239,180,527   151,903,201

  2010        198,383   7,935,317,086   92,318,049   255,239,865   162,921,816

  Notes: 1.                                                        
  No waiver                                                        
  of premiums                                                      
  will be                                                          
  allowed. 2.                                                      
  Premiums                                                         
  based on                                                         
  1980 CSO                                                         
  Basic                                                            
  Tables and                                                       
  5%                                                               
  interest.                                                        
  ----------- --------- --------------- ------------ ------------- --------------

Source: VA SDVI Administrative Electronic Files and Study Team Analysis

## 12. Findings

### Meeting Program Intent

As discussed in Section 2, the study team reviewed the legislative
history of the programs and developed a recommended set of outcome
measures based on this review and VA's own draft measures. Section 2
lists the recommended outcomes, goals, and measures for each program,
which we applied in conducting the study.

Congress only provided general guidance on the expected outcomes of the
program, not specific parameters. For the insurance programs, the key
emphasis is on making insurance *available and affordable* to
servicemembers and veterans, regardless of health or disability status.
Another important outcome is that the programs achieve a high value as
perceived by the program participant.

The study team relied on several measures to evaluate actual outcomes
against expected outcomes. The outcome of available and affordable
insurance was based on comparisons to insurance in the private sector.
The outcome of appropriate level of income support for survivors was
evaluated by alternative measures of a minimum threshold of household
income including: poverty level; 50% above the poverty level; comparison
of disabled veteran survivor income to disabled non-veteran survivor
income; and self-assessment of financial need. The outcome of high value
perceived by the program participant was assessed by analysis of survey
responses to questions on customer satisfaction and expectations.

Table 89 presents the highlights of study results that relate to the
outcomes and goals listed in Table 3. In summary, the study findings
indicate that several of the expected outcomes are largely fulfilled but
there are important exceptions as well. In particular, the SDVI premiums
compare unfavorably to premiums in the private sector for healthy
individuals.

VA insurance, inclusive of VGLI as well as SDVI insurance, is available
regardless of the hazardous nature of certain work in the military or
disability status. Life insurance coverage under the VGLI program has a
current maximum of \$250,000 (or the previous maximum of \$200,000 at
the time of the study survey).

The availability and affordability of VA insurance for disabled veterans
exceed availability and affordability in the private sector. We did find
that many SDVI survivors had very little life insurance. Basic coverage
under SDVI is only \$10,000, and many survivors received no life
insurance other than SDVI. However, veterans of SDVI survivors had the
opportunity to have enrolled in VGLI upon leaving the service. Hence,
one could conclude that life insurance was available (and therefore
Congressional intent on availability is being met), but many veterans
had elected not to participate when they had the opportunity.

SDVI premium rates are much higher than standard commercial rates for
healthy individuals who are non-smokers.

[]{#__RefHeading___Toc515775044 .anchor}Table 89. Proposed Program
Outcomes, Goals, and Results

+-------------+---------------+----------------+---------------------+
| Program and | Outcomes      | Goals          | Results             |
| Group       |               |                |                     |
| Served      |               |                |                     |
+-------------+---------------+----------------+---------------------+
| SDVI        | Veterans with | For veterans   | SDVI participants   |
| Program:    | serv          | with           | had opportunity to  |
| Veterans    | ice-connected | ser            | obtain VGLI         |
| with        | disabilities  | vice-connected | insurance, but many |
| servic      | are provided  | disabilities,  | declined it. Half   |
| e-connected | with the      | parity with    | of SDVI             |
| d           | opportunity   | the options    | beneficiaries       |
| isabilities | to obtain     | available to   | receive only        |
|             | life          | healthy        | \$15,000 or less in |
|             | insurance at  | individuals of | life insurance      |
|             | standard      | similar ages   | payments from all   |
|             | premium rates | to purchase    | sources. The        |
|             | without       | reasonable     | \$10,000 basic      |
|             | regard to     | amounts of     | coverage provided   |
|             | their         | life insurance | by SDVI is not      |
|             | serv          | in the         | adequate.           |
|             | ice-connected | individual     |                     |
|             | impairments   | market, within | SDVI premium rates  |
|             | for a         | a reasonable   | are much higher     |
|             | reasonable    | time following | than standard       |
|             | time period   | the disability | commercial rates    |
|             | following     | being          | for non-smokers.    |
|             | establishment | established,   |                     |
|             | of a          | and with       |                     |
|             | serv          | comparable     |                     |
|             | ice-connected | policy         |                     |
|             | disability.   | features.      |                     |
+-------------+---------------+----------------+---------------------+

Source: Study Team Analysis

For the outcome measure of acceptable minimum level of income, the
lowest income standard that we examined is the poverty level. We found
that most survivors are well above the poverty level as defined by the
Department of Health and Human Services.[^23] This standard, though, is
not likely to be one that most citizens would accept as sufficient
gratitude for the service of veterans with service-connected
disabilities. If the minimum threshold is set at 50% above the poverty
level, we find that the income of most, but not all, survivors, exceed
this level. Another standard is comparison of disabled veteran survivor
income to the average income of other comparable survivors of
non-veterans. We found that the veteran survivors' annual income is, on
average, about \$5,000 ahead of their non-veteran counterparts.

Another standard that we examined is the survivors' self-assessment of
how much additional income that they need in order not to have to cut
back on basic living expenses or make sacrifices. We found this measure
of annual financial need to be mostly in the range of \$3,000 to
\$6,000. The need at the higher end of this range was for survivors with
dependent children. The presence of dependents in the SDVI survivor
household has a very pronounced effect on increasing the perceived need
for additional annual income from about \$3,000 to \$6,000. Furthermore,
annual expenditures of survivors with dependent children run about
\$7,500 higher than survivors without children.

Study findings indicate a loss in household income of over \$20,000 for
the survivor families. Income replacement for survivors of SDVI disabled
veterans without VGLI insurance is minimal. Most SDVI survivors receive
little life insurance payments to replace lost income. In particular,
half of SDVI survivors receive less than \$15,000 in life insurance
payments.

Overall satisfaction with the programs and fulfillment of expectations
is generally good, but there are some areas where customers were less
than satisfied. In particular, satisfaction ratings were relatively weak
for maximum insurance amounts for SDVI. Satisfaction ratings provided by
beneficiaries were relatively weak for certain program attributes,
including: understanding the benefit forms; filling out the forms; and
materials explaining benefits. These particular attributes ranked higher
in importance to the beneficiary compared to other program attributes
even though the satisfaction ratings were relatively weak.

More detailed findings are listed below.

### Coverage 

-   VA is consistent with private and public sector employers in
    providing the opportunity for continuing life insurance coverage
    following a disability. In the private sector, nearly all (87%)
    employers continue the employee's basic life insurance and allow the
    employee to continue purchasing the supplemental insurance in which
    they are enrolled. VA life insurance programs also allow
    opportunities for continuation of coverage following disability.

-   For service-disabled veterans who are enrolled in VGLI, SDVI
    provides the opportunity to purchase additional coverage. However,
    only 21% of SDVI participants are also enrolled in VGLI.

-   For service-disabled veterans who are not enrolled in VGLI, it
    provides the only VA opportunity for purchasing life insurance.

-   If VA determines that the veteran's disability is service-connected,
    then the veteran has the option of purchasing \$10,000 of SDVI
    coverage. If the disability is total, the \$10,000 coverage premium
    is waived, and the veteran may elect to purchase an additional
    \$20,000 of SDVI coverage.

-   A disabled veteran could have a maximum of \$230,000 in VA insurance
    (\$200,000[^24] in VGLI plus \$30,000 in SDVI). In most cases, this
    amount would exceed that for the typical private sector employee who
    would have basic life insurance coverage in disability of one or two
    times annual salary.

-   SDVI coverage amounts (\$10,000 for Basic coverage) are not
    consistent with current individual insurance market offerings. The
    average face amount of life insurance policies purchased in 1999 was
    \$119,900.

-   Sixty-six percent of SDVI participants also have non-VA life
    insurance. Sixty-six percent of SDVI participants also have non-VA
    life insurance.

### Premium Cost

-   SDVI premium rates are now significantly above standard
    (non-disabled) premium rates for healthy factors by a multiple
    factor. The legislative history is clear that Congress intended for
    SDVI to be priced comparably with coverage for non-disabled lives.

-   Two-thirds of SDVI participants state that premiums were what they
    expected, and 63% believe their SDVI coverage would cost more if
    purchased in the private sector.

### Factors Affecting Participation and Non-Participation 

-   Only 3.5% of eligible veterans participate in SDVI

-   Twenty-eight percent of survey respondents indicated that price of
    the premium was the main reason for participating in the SDVI
    program

-   Seventeen percent of participants indicated that they could not
    qualify for private sector alternatives due to disability

-   Other often-cited reasons include: encouragement by VA/military,
    convenience and responsibility felt towards family

-   Principal reasons for non-participation were:

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-   61% said they were unaware of the program

-   11% said they already had other insurance

-   4% indicated that SDVI cost too much

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-   Reasons for non-participation do not differ significantly by
    disability level or by other respondent characteristics: having
    dependents, race, income or age

-   Of those who said they were unaware of SDVI, 42% said they would
    take it now if offered

-   Veterans with a severely or catastrophically disabled rating of
    70-100 are 6 times more likely to be an SDVI taker than veterans
    with lesser degrees of disability

-   Veterans who are homeowners or who have VMLI are 5 times more likely
    to take SDVI than veterans who are not homeowners or who do not have
    VMLI

### Satisfaction of SDVI Participants

-   Overall, SDVI participants were satisfied or very satisfied with
    SDVI.

-   For some attributes, though, respondents on the whole were not
    "satisfied."

-   SDVI participants expressed highest levels of satisfaction with:
    forms; brochures; and helpfulness of VA staff.

-   The program attribute scoring lowest on satisfaction was the
    "Maximum amount of insurance you can buy."

### Financial Outcomes for Survivors

-   A loss in household income of over \$20,000 occurs for the survivor
    families after the veteran dies

-   Half of SDVI beneficiaries receive only \$15,000 or less in life
    insurance payments from all sources.

-   Survivors' self-assessment of how much additional income that they
    need in order not to have to cut back on basic living expenses or
    make sacrifices to be mostly in the range of \$3,000 to \$6,000
    annually. The need at the higher end of this range was for survivors
    with dependent children.

### Satisfaction of Beneficiaries

-   Overall level of satisfaction among SDVI beneficiaries was high.

-   Highest levels of satisfaction were found with: relative ease of
    getting the death certificate and other documents; relative ease of
    finding out where to send the forms; and finding out who to contact

-   Lowest levels of satisfaction were with: benefit amount; relative
    ease of understanding the forms & instructions; and time it took to
    get benefits started

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-   Groups with less satisfaction included: those who had to cut at
    least one expense after the veteran's death; has health problems;
    and/or was working.

###  

## 13. Recommendations

#### Policy Recommendations

A general recommendation in response to key findings is to aggressively
promote substantial increases in life insurance coverage for the
service-disabled veterans and to lessen the barriers to coverage.
Specific recommendations for this are:

1.  **Automatically provide SDVI insurance coverage to any newly
    eligible veteran with service-connected disability and is not
    enrolled in VGLI.** Current participation in the SDVI program
    requires that the eligible individual apply for the insurance within
    two years from the date that he or she is notified that
    service-connected disability has been established. Instead, VA
    should automatically provide insurance coverage to any member or
    veteran who has a service-connected disability and is not enrolled
    in VGLI. The veteran could opt out of participation but would have
    to formally decline the coverage. In order to expedite the process,
    VA could automatically deduct premium costs (albeit subsidized) for
    the insurance coverage from disability compensation payments to the
    veteran.

2.  **Increase basic coverage maximum amount from \$10,000 to
    \$50,000.** The SDVI coverage limits should be greatly expanded to
    cover the loss of income for at least two years after the veteran's
    death. Based on study estimates of lost income, the limit on Basic
    coverage should be increased from \$10,000 to \$50,000. Note that
    financial planners often recommend to their clients that they obtain
    enough life insurance to cover several multiples of their work
    salary.

3.  **Reduce SDVI premium rates based on 1980 Mortality tables.** VA
    should prepare and submit an appropriate legislative proposal that
    would implement reduced premium rates for veterans that reflect the
    more recent mortality rates (based on the 1980 tables, as opposed to
    the 1941 tables that the current premium rates are based on).
    Comparison to commercial rates justifies at least this reduction.

#### Technical Recommendations

The study team's overall technical recommendations are:

4.  **VA should review DIC and insurance forms for beneficiaries,
    procedures for filling out the forms, and materials that explain
    benefits for potential improvement that increases beneficiary
    satisfaction**.

5.  **VA should implement an ongoing review of the outcomes of DIC and
    the insurance programs.**

6.  **VA should implement efforts to integrate VA electronic files that
    are currently separate across the different programs.**

For the ongoing review, we recommend that the outcome measures be
structured more around the group of veterans being served rather than
focusing primarily on the different programs. In particular, we would
organize outcome measurement according to these customer groups:

-   Active duty servicemembers

-   Disabled insurance takers

-   Non-disabled insurance takers (who are not active duty members)

-   Beneficiaries of disabled veterans

-   Beneficiaries of non-disabled servicemembers and veterans

The reason for this approach is that it is more congruent with measuring
outcomes that focus on the *customer* and *One VA* core value (as cited
in VA's overall Strategic Plan FY 2001-2006). In addition, many
insurance-takers and beneficiaries are participants in multiple programs
and they have difficulty in distinguishing one program from another.
They tend to view the value of the different programs collectively
rather than separately from each other. Measures that distinguish one
program from another could still be applied, but at more detailed levels
of outcome measurement rather than at the highest level of aggregation.

The ongoing evaluation effort should focus on the major outcomes that
were recommended and investigated in this study, including:

-   Available and affordable insurance

-   Maintenance of a minimally acceptable level of income

-   Replacement of lost income after veteran's death

-   Value of the programs as perceived by program participants

For available and affordable insurance, comparison to the private sector
or other non-VA sources on coverage and premium costs should be made at
least once a year. The particular comparisons reported in this study
could serve as a basis on ongoing assessment. For acceptable level of
income and replacement of lost income, measures similar to the ones used
in this study should also be applied. For the customer's perception of
overall value, we recommend that VA administer a shorter version of the
study's survey that focuses on customer satisfaction and selected other
questions that address customer expectations.

Certain methodological issues should be addressed. One is to establish
relative importance for different outcomes and measures. Establishing
weights allows the managers to obtain an overall summary of outcome and
to consider trade-offs between different outcome criteria. Sensitivity
analysis can be performed to assess the impact of different management
intervention strategies on overall outcome.

For integration of VA administrative electronic files (Recommendation
19), the ongoing evaluation could be accomplished more readily if there
were an unduplicated population of veterans and their survivors that
included data about the veteran and survivor and all VA benefits
received. At present, these programs are administered separately, and
their electronic administrative records are not readily linkable, as
discussed in Section 1.

Recommendations for ongoing evaluation are discussed in greater detail
in Appendix J, *Methodological Considerations for Outcome Measures for
DIC and Insurance Programs*. This paper also provides estimates of the
cost to implement the recommendations for outcome measures of the
different VA insurance programs.

#### Estimated Costs of Recommendations

Table 90 presents costs estimates for SDVI recommendations listed above.
Cost estimates are provided for SDVI for all three SDVI policy
recommendations combined.

[]{#__RefHeading___Toc515775045 .anchor}Table 90. Cost Estimates for
Recommendations

+-------------------------------------+------------------------+-------+
| Recommendations                     | Cost to VA             | P     |
|                                     |                        | eriod |
+-------------------------------------+------------------------+-------+
| SDVI                                |                        |       |
+-------------------------------------+------------------------+-------+
| 1\. Automatically provide insurance | \$57-\$71 million in   | A     |
| coverage to any newly eligible      | 2002                   | nnual |
| veteran with service-connected      |                        |       |
| disability and is not enrolled in   | \$76-\$162 million in  |       |
| VGLI                                | 2010                   |       |
|                                     |                        |       |
| 2\. Basic coverage maximum amount   | Estimates vary         |       |
| should be increased from \$10,000   | depending on           |       |
| to \$50,000                         | assumptions of         |       |
|                                     | participation rate for |       |
| 3\. Reduce SDVI premium rates based | newly eligible         |       |
| on 1980 Mortality tables            | veterans varying from  |       |
|                                     | 6% to 25%.             |       |
+-------------------------------------+------------------------+-------+
| Technical Recommendations           |                        |       |
+-------------------------------------+------------------------+-------+
| 4\. Review DIC and insurance forms  | \$125,000 for review   | One   |
| for beneficiaries, procedures for   |                        | -time |
| filling out the forms, and          |                        |       |
| materials that explain benefits for |                        |       |
| potential improvement that          |                        |       |
| increases beneficiary satisfaction  |                        |       |
+-------------------------------------+------------------------+-------+
| 5\. Implement an ongoing review of  | \$235,000 - \$335,000  | A     |
| the outcomes of DIC and the         | (see App. J)           | nnual |
| insurance programs                  |                        |       |
+-------------------------------------+------------------------+-------+
| 6\. Implement efforts to integrate  | Further study needed   | One   |
| VA electronic files that are        | to provide accurate    | -time |
| currently separate across the       | estimate. Costs could  |       |
| different programs                  | be substantial,        |       |
|                                     | exceeding \$500,000.   |       |
+-------------------------------------+------------------------+-------+

Source: Study Team Calculations, Insurance Takers and Survivor Surveys
and VA Administrative Electronic Files

[^1]: Public Law 102-83, August 6, 1991, extended the application period
    from one year to two years from the date the veteran is notified of
    the service-connected nature of the disability.

[^2]: House Report 102-753 Part 1, House of Representatives, Committee
    on Veterans' Affairs, 102^nd^ Congress, 2^nd^ Session, July 29,
    1992, p. 12.

[^3]: The standard errors computed for each question and response after
    the survey revealed that the sample is typically representative of
    the universe population at 90% confidence level with +/- 4 points or
    lower margin of error for those questions that all respondents
    provided answers. If you conducted the same survey 100 times, 90 out
    of the 100 administrations should yield results within +/- 4% of the
    current numbers.

[^4]: Although totally disabled veterans could qualify for a waiver of
    premiums.

[^5]: The records were not matched against the income reported by these
    individuals on their 1040s. Instead, the information used from IRS
    was the data reported to IRS about each taxpayer's income. These
    include W2 forms, 1099 forms, and other reports made by employers,
    banks, brokers, and the like, to the IRS about the individuals in
    our survey.

[^6]: Private sector benefits information is taken from the 1999 Hay
    Benefits Report (HBR). The HBR is an annual survey of the benefit
    plans of over 1,000 medium to large employers representative of all
    major industrial sectors and geographic regions in the United
    States. The HBR survey has been conducted annually for 30 years and
    is regarded as one of the most complete sources of employer-provided
    benefits available.

[^7]: Georgia, New York, Oklahoma, Washington, and Wisconsin.

[^8]: The number of quotes received from commercial companies was in the
    range of 4 and 10, depending on factors such as age, health status,
    and smoking status (for example, some companies did not provide
    quotes for smokers over 50 years of age). All of the companies
    surveyed were rated at least A- by the rating companies. Quotes were
    received for two health classifications: Best Class (Preferred Plus)
    and Standard (Regular). Note that for smokers the best available
    health classification is Preferred or Standard. In Best Class
    classification no personal or family history of major illness is
    allowed. In Preferred classification no personal or family history
    of major illness is allowed and insured must have good weight, blood
    pressure, and cholesterol readings. Insured must have excellent
    weight, blood pressure, and cholesterol readings. In Standard
    classification some health impairments such as certain
    cardiovascular diseases or diabetes are allowed and average weight,
    blood pressure, and cholesterol readings are required.

[^9]: Valid Count (N) column indicates the number of respondents who
    provided an insurance coverage amount which is used in the
    computation of the mean and median. The Total Count (N) column
    indicates the total number of respondents who said they have that
    particular type of other insurance coverage. For example, 57 out of
    63 total VMLI takers who indicated they have term life insurance
    provided the *amount* of term life insurance coverage they have.

[^10]: ^?^ A full technical description of the CPM is provided in
    Glossary.

[^11]: Employment Cost Index (ECI) between 1998 and 1999 was used as the
    adjustment factor.

[^12]: The peak point of the curve in Figure 22 corresponds to the mean
    value.

[^13]: CES program conducted by Bureau of Labor Statistics (BLS)
    consists of two surveys---the quarterly Interview survey and the
    Diary survey---that provide information on the buying habits of
    American consumers, including data on their expenditures, income,
    and consumer unit (families and single consumers) characteristics.
    The Interview survey includes monthly out-of-pocket expenditures
    such as housing, apparel, transportation, health care, insurance,
    and entertainment. The Diary survey includes weekly expenditures of
    frequently purchased items such as food and beverages, tobacco,
    personal care products, and nonprescription drugs and supplies.

[^14]: Median expenditure data for surviving spouses are presented in
    Appendix F.

[^15]: Significance tests are done at the 95% level.

[^16]: Detailed results are presented in Appendix H.

[^17]: Detailed results are presented in Appendix H.

[^18]: Note that the SIPP data includes those survivors of veterans in
    receipt of DIC and those in receipt of death pension, but does not
    include the rest of survivors of veterans who do not receive any
    survivor payments from VA.

[^19]: This is not surprising given the fact that disability
    compensation received by severely or catastrophically
    service-disabled veterans can range from \$1,018 to \$5,000 per
    month. However, note that service-connected disability compensation
    benefits for calendar year 2000 could be as low as \$98 per month.

[^20]: The differences in mean scores by survivor characteristics are
    significant at the 95% level.

[^21]: Detailed results are included in Appendix E.

[^22]: A full technical description of the CPM is provided in Glossary.

[^23]: Percent of spouses below poverty cannot be based on the
    aggregated data received from IRS. Therefore, we rely on the study
    survey responses to compute this statistic.

[^24]: The maximum was increased to \$250,000, effective April 1, 2001,
    by PL 106-419.