**Dividends**

**§8.10 How paid.**

\(a\) Except as hereinafter provided in this paragraph, a National
Service Life Insurance policy shall participate in and receive such
dividends from gains and savings as may be determined by the Secretary
of Veterans Affairs. Dividends becoming payable after January 1, 1952,
shall be payable on the date preceding the anniversary of the policy
unless the Secretary shall declare them payable on some other date.
Dividends are not payable on insurance:

\(1\) Issued or reinstated under the provisions of section 602(c)(2) of
the National Service Life Insurance Act, as amended, where the
requirements of good health were waived at the time of such issue or
reinstatement;

\(2\) Issued under sections 620 and 621 of the National Service Life
Insurance Act, as amended;

\(3\) Issued under sections 1904(c) and 1922(a) of title 38 U.S.C.;
(Authority: 38 U.S.C. 1923(b) and 1925)

\(4\) Issued on the ordinary life plan under section 1904(d) of title 38
U.S.C., to replace the amount of insurance reduced under a modified life
plan policy issued under 38 U.S.C. 1904(c); and

\(5\) On which premiums are waived, in whole or in part, under the
provisions of section 622 of the National Service Life Insurance Act, as
amended, and 38 U.S.C. 1924 for the period during which such premium
waiver is in effect.

\(b\) Unless and until VA receives a written request from the insured
that National Service Life Insurance dividends be paid in cash, or that
they be used to pay an insurance indebtedness, or that they be placed on
deposit or be used to pay premiums in advance, or that they be used to
pay the premiums on a particular policy or policies, or that they be
used to purchase paid-up additions, any such dividends shall be held to
the credit of the insured to be applied to pay monthly premiums becoming
due and unpaid after the date such dividends are payable on any National
Service or United States Government Life Insurance policy or policies
held by the insured: *Provided,* That such dividend credits will be
applied as of the due date of any unpaid premium. Dividend credits will
earn interest at such rate and in such manner as the Secretary may
determine. (Authority: 38 U.S.C. 1997(c))

\(c\) In the event premiums on more than one policy having the same
premium due date are unpaid and the dividend credit of the insured for
application to payment of premiums is not sufficient to keep all
policies in force, in the absence of instructions to the contrary by the
insured, such dividend credit will be applied to pay premiums in such
manner as will provide the maximum amount of insurance protection.

\(d\) At the expiration of any term period, dividend credit of the
insured held for payment of premiums will be applied to pay the required
premium for renewal of term insurance unless the insured requests
otherwise in writing prior to the expiration of the term period.

\(e\) A request for payment of dividends in cash or for other
disposition will be effective as of the date the request is delivered to
the Department of Veterans Affairs: If forwarded by mail, properly
addressed, the postmark date will be taken as the date of delivery: If
forwarded through military channels by the insured while in military
service, the date the request is placed in military channels will be
accepted as the date of delivery. Unless otherwise stipulated by the
insured, such request will remain in force until revoked in writing
signed by the insured and delivered to the Department of Veterans
Affairs.

\(f\) Dividend credit of the insured held for payment of premiums may
not be used to satisfy any indebtedness due the United States without
the insured's consent. If the insured requests payment of such dividend
credit, or any unused portion thereof, in cash, or requests that such
credit be left to accumulate on deposit, as provided in paragraph (g) of
this section then any indebtedness due the United States, such as
described in §5301 of title 38 U.S.C. will be recovered therefrom.

\(g\) At the written request of the insured, National Service life
insurance dividends may be left to accumulate on deposit at interest
which will be credited in such manner and at such rate as the Secretary
may determine: *Provided,* That the policy is in force on a basis other
than extended term insurance or level premium term insurance. Dividend
credit of the insured held for payment of premiums or dividends left to
accumulate on deposit as provided in this paragraph may be applied to
the payment of premiums in advance upon written request of the insured
made before default in payment of a premium. Dividends on deposit under
the provisions of this paragraph will be used in addition to the reserve
on the policy for the purpose of computing the period of extended term
insurance or the amount of paid-up insurance as provided in §§8.14 and
8.15, respectively. Any dividend credit of a person who no longer has
insurance in force by payment or waiver of premiums will be paid in cash
to such person. If a person has a dividend credit option on a lapsed
level premium term policy or a permanent plan policy on which extended
term insurance has expired and such person has another policy in force
by payment or waiver of premiums, any dividend credit or unpaid
dividends on the lapsed policy, in the absence of instructions from the
insured to the contrary, will be transferred to the policy which is in
force and will be held on such policy as a dividend credit. Such
dividend credit will be deemed to have accrued on the policy which is in
force. Upon maturity of the policy, any dividend on deposit, any unpaid
dividend payable in cash, and any dividend credit accruing from such
policy which cannot be used to pay premiums will be paid to the person
currently entitled to receive payments under the policy. If the policy
is not in force at death, any such unpaid dividends and dividend credits
will be paid to the insured's estate.

\(h\) Any insured receiving an annual dividend in cash may return such
dividend check or an equivalent amount of money in order to have the
dividend retained under the deposit or credit option. The return of such
dividend must be made during the lifetime of the insured and before the
end of the calendar year during which the dividend was paid. Dividends
returned under this provision are not available for the payment of
premiums, receipt of interest, or calculation of cash value prior to the
postmark date of the returned check.

\[17 FR 2362, Mar. 19, 1952, as amended at 18 FR 3715, June 30, 1953; 24
FR 5021, June 20, 1959; 25 FR 7369, Aug. 5, 1960; 28 FR 12545, Nov. 23,
1963; 30 FR 3646, Mar. 19, 1965; 32 FR 13927, Oct. 6, 1967; 37 FR 3352,
Feb. 15, 1972; 46 FR 57043, Nov. 20, 1981; 50 FR 12252, Mar. 28, 1985.
Redesignated and amended at 61 FR 29290, 29292, June 10, 1996;
redesignated at 65 FR 7437, Feb. 15, 2000; amended at 65 FR 19659, Apr.
12, 2000\]

**Supplement *Highlights* reference**: 9(4)