October 1,1973 M29-1, Part I\
Change 5

CONTENTS

CHAPTER 2. PREMIUMS (INSURANCE AND TDIP)

PARAGRAPH PAGE\
2.01 Insurance Premium Rate and Due Date 2-1\
2.02 Total Disability Provision Premium (USGLI) 2-2\
2.03 Total Disability Income Provision Premium (NSLI) 2-2a\
2.04 Mode of Premium Payment 2-3

2.05 Grace Period, Computation of Grace Period and\
Acceptance of a Late Premium 2-3

2.06 Methods of Payment 2-3\
2.07 Application of Premium Payments 2-6\
2.08 Premium Overages and Shortages 2-7\
2.09 Premiums Paid in Advance and Discounting Premiums 2-7\
2.10 Reduction of Premiums on J Policies 2-8\
2.11 Paid-Up JS Policies 2-8

2-i

December 22, 1978 M29-1, Part I\
Change 8

CHAPTER 2. PREMIUMS (INSURANCE AND TDIP)

2.01 INSURANCE PREMIUM RATE AND DUE DATE

a\. Insurance is granted in consideration of the payment of premiums and
is subject to the terms and conditions set forth in laws, regulations
and the policy contract. The premium rate is based on the age of the
insured on the birthday nearest the effective date of the policy, the
amount and plan of insurance. In addition, the monthly premiums on
policies in the J series will include a monthly charge per policy to
cover administrative costs. Policies with a JS prefix may also include a
flat-extra premium for each \$1,000 of insurance based upon the severity
of the disability which prevented the insured from meeting good health
requirements at the time the insurance was issued.

b\. Premium rates may be obtained from VA pamphlets. The pamphlets which
also contain policy values are listed below with the numeric prefix
under which they were issued:

\(l\) VA Pamphlet 9-2, Premium Rates and Policy Values for United States
Government Life Insurance, and VA Pamphlet 90-2A, Special Endowment at
Age 96-Rates and Values, contain premium rates and policy values for all
policies with a K prefix.

\(2\) VA Pamphlet 29-5, Premium Rates and Policy Values for National
Service Life Insurance, contains premium rates and policy values of
insurance with a V or H prefix.

\(3\) VA Pamphlet \[29-8 j (formerly 9-8 \[and 90-8), Service-Disabled
(RH) Veterans Insurance Information, Premium Rates and Policy Values,\]
contains \[premium\] rates and policy values for all plans of insurance
with an RH prefix. \[ \]

\(4\) VA Pamphlet \[29-12 (formerly 90-12),\] Veterans Special Life
Insurance Information, Premium Rates and Policy Values, contains premium
rates and policy values for all plans of insurance with a W prefix. It
also contains the premium rates for RS term insurance.

\(5\) VA Pamphlet 29-15, Veterans Service-Disabled Standard Insurance
Information, Premium Rates and Policy Values, contains premium rates and
policy values for policies with a J prefix. Also, Supplement to VA
Pamphlet 29-15, Veterans Service-Disabled Standard Insurance, Reduced
Premium Rates Effective October 1970, and Supplement II, VA Pamphlet
29-15, Veterans Service-Disabled Standard Insurance, J Policies, Reduced
Premium Rates Effective October 1976.

\(6\) \[(Deleted.)\]

\(7\) VA Pamphlet 29-18, Veterans Service-Disabled Rated Insurance and
Veterans Non-Service Disabled Insurance, contains premium rates and
policy values for policies with a JR prefix. VA Pamphlet 29-18A,
Veterans Service-Disabled Rated (JR) Insurance-Reduced Premium Rates
Effective October 1976, contains reduced premium rates and policy values
for policies with a JR prefix. Policies with a JS prefix have the same
policy values as policies with a JR prefix.

\(8\) VA Pamphlet 29-21, Veterans Non-Service Disabled Insurance General
Information and Premium Rates for Special Classes, contains premium
rates for policies with a JS policy prefix.

\(9\) VA Pamphlet 29-72-3, National Service Life Insurance Information,
Premium Rates and Policy Values for the Modified Life 70 Plan.

c\. In addition, the following information pamphlets are available.

2-1

M29-1, Part I December 22,1978

Change 8

\(1\) VA Pamphlet 29-1, United States Government Life Insurance
Information and Premium Rates, K Policies.

\(2\) VA Pamphlet 29-3, National Service Life Insurance Information and
Premium Rates, V-H Policies.

\(3\) VA Pamphlet 29-9, Service-Disabled Veterans Insurance, RH,
Information and Premium Rates, and VA Pamphlet 29-9A, National Service
Life Insurance Information and Premium Rates for RH Policies for
Service-Disabled Veterans.

\(4\) VA Pamphlet 29-14, National Service Life Insurance Information
About Waiver of Premiums and Total Disability Income Provision.

\(5\) VA Pamphlet 29-17, National Service Life Insurance Information and
Premium Rates, J and JR Policies, contains the reduced premium rates
effective with the October 1976 premium due date on all plans of
insurance with a J or JR prefix. It also contains premium rates and
guaranteed values at age 45 and general information on all plans of
insurance with a J or JR prefix.

\(6\) (Deleted.)

\(7\) VA Pamphlet 29-20, National Service Life Insurance Information and
Premium Rates, RS-W Policies.

\(8\) VA Pamphlet 29-23, National Service Life Insurance Total
Disability Income Provision, Premium Rates on NSLI (V), (RS) and (W)
Policies for TDIP \"60\" and TDIP \"65\" \[ \] ; and VA Pamphlet 29-23A,
National Service Life Insurance (V and W Policies), Calculating
Instructions Applicable to Exchanges of TDIP \"60\" for TDIP \"65\" on
\[Permanent\] Plans.

\(9\) VA Pamphlet 29-24, Refund Life Income and Monthly Installment
Options for Payment of Cash Surrender Values and Matured Endowments,
NSLI and USGLI.

\(10\) (Deleted.)

\(11\) VA Pamphlet 29-73-1, Information About Conversion and Premium
Rates for National Service Life Insurance in the V, RS, W, II and RH
Programs.

\(12\) VA Pamphlet 29-76-1, Term Insurance.

\(13\) VA Pamphlet 29-76-2, Insurance Dividend Amount Tables for U.S.
Government \[Life Insurance\] and

National Service Life Insurance Programs.

\[(14) VA Pamphlet 29-77-I, Dividend Options Fact Pamphlet for
Government Life Insurance.

\(15\) VA Pamphlet 29-77-2, Information and Premium Rates for Veterans
Mortgage Life Insurance, VMLI.

\(16\) VA Pamphlet 29-77-3, Facts About Beneficiary and Option
Designations.

\(17\) VA Pamphlet 29-77-4, Veterans Special Life Insurance Information
About Conversion and Premium Rates for W Policies.\]

d\. The date on which a premium is due is the same date in the month as
that on which the insurance was originally made effective and on the
same day of each succeeding month during the lifetime of the insured, or
for the period provided by the terms and conditions of the policy
contract. If succeeding months do not contain that day of the month, the
premium due date is the last day of the month.

e\. The monthly premium rate per thousand for a JS policy with the
special class rating of maximum is the monthly premium rate per thousand
on a J policy, plus the administrative cost and \$50 flat extra premium.

2-2

December 22, 1978 M29-1, Part I\
Change 8

2.02 TOTAL DISABILITY PROVISION PREMIUM (USGLI)

a\. The premiums for this provision are level premiums, payable in the
same manner and at the same time as premiums on the insurance policy.

b\. On provisions issued before July 3, 1930, the premium on provisions
granted on policies issued on the ordinary life, 20-payment life,
30-payment life, and 5-year convertible term plans, are the same at any
given age. They are payable throughout the life of the policy,
irrespective of the period during which premiums are required on the
insurance contract. Total disability benefits granted in connection with
the endowment policies cover total disability occurring within the
endowment period and premiums are payable until the maturity of the
policy.

c\. On provisions issued on or after July 3, 1930, premiums are payable
to age 65 on reduced paid-up life plans and on the 5-year level premium
term, 5-year convertible term (whole life), and ordinary life plans. On
endowment plans, including reduced paid-up, premiums on the provisions
are payable to the end of the endowment period or age 65, whichever is
earlier. On 20- and 30-payment life policies, premiums on the provision
are payable to age 65 if the effective date of the provision is later
than the effective date of insurance. If the effective dates of the
provision and life insurance (20- and 30-payment life) are the same,
premiums on the provision are payable to age 65 or the end of the
premium-paying period, whichever is earlier.

d\. When a total permanent disability case with the total disability
provision is rerated, the premium is based on the reduced amount of life
insurance and the amount of the total disability provision in force at
the time the insured was rated totally and permanently disabled. Full
protection under the provision is restored if protection under the
provision has not ceased due to the age of the insured.

2.03 TOTAL DISABILITY INCOME PROVISION PREMIUM (NSLI)

a\. Premiums for this provision are payable in the same manner and at
the same time as premiums on the insurance policy. When the provision is
added to permanent plans of insurance, the premiums are level premiums;
that is, they remain the same. On term policies, premiums for the
provision are level premiums for the duration of the term period. They
are renewed at an increased rate each time a term contract is renewed
with the following exceptions:

\(l\) The rates for ages 55 through 59 on the age 65 provision are
payable to age 65 and will not increase at any subsequent renewal.

\(2\) The rate for age 60, on the \$10 age 60 provision will remain the
same as it was for age 55.

b\. The additional premium for the \$5 provision is payable to the
anniversary of the policy nearest the insured\'s 60th birthday or to the
end of the premium-paying period of the policy, whichever is earlier. On
the \$10 age 60 provision, premiums are payable either to the insured\'s
60th birthday or the end of the premium-paying

2-2a

A

May 15,1972 M29-1, Part 1\
Change 3

period of the policy, whichever is earlier. On the Sl0 age 65 provision
premiums are payable either to the insured\'s 65th birthday or to the
end of the premium paying period of the policy, whichever is earlier If
the plan of Insurance is other than a limited payment life plan with a
V, H, RS or W policy prefix. On limited payment life policies other than
those in the J series, the insured may elect to pay premiums either to
his 65th birthday or to the end of the premium-paying period If this
occurs before the insured\'s 65th birthday.

(c). A reduction in premiums for TDIP riders on NSLI term policies was
approved and made effective on the October 1970 premium due date.
Premiums were reduced on all TDIP Age 60 and 65 riders (\$5 and \$10)
attached to term policies with the following exceptions:

\(l\) HD riders.

\(2\) Age 65 rider and age at last renewal was 55 or over on the October
1970 due date.

\(3\) TDIP riders terminated during October 1970.

\(4\) Lapsed accounts (how paid l).\]

2.04 MODE OF PREMIUM PAYMENT

a\. Premiums are due monthly and payable in advance in legal tender of
the United States. Foreign remittances at the current rate of exchange
are acceptable. Payments may also be made annually, semiannually, or
quarterly, in advance, in which case the premium payable will be
discounted at the following per centum per annum:

V and H insurance 3 percent\
RS and RH insurance 2-1/4 percent\
W Insurance 2-1/2 percent\
J, JR, JS, and K insurance 3-1/2 percent

b\. On policies in the J series, the standard premium, flat-extra
premium, if any, and the administrative cost charge must be computed
separately.

2.05 GRACE PERIOD, COMPUTATION OF GRACE PERIOD AND ACCEPTANCE OF A LATE
PREMIUM

a\. A grace period of 31 days, excluding the due date, will be allowed
for the payment of any premium due on a policy. The policy will remain
in force during this period, but if the policy matures within the grace
period, the unpaid premium or premiums will be deducted from the amount
of Insurance payable. (VA Regulations 3035 and 3414)

b\. The grace period will be computed to include 31 days from and after
the date on which the premium was due. When a premium payment is mailed,
the postmark date will be accepted as the date on which payment was
tendered. If the last day for payment of any premium falls due on a
Saturday, Sunday or legal holiday, the time period will be extended to
include the following workday. (VA Regulations 3031,3036,3412 and 3415)

c\. Payments not tendered within the grace period but tendered during
the lifetime of the insured and within 61 days of the premium due date
may be accepted as timely. (VA Regulations 3018 and 3407.2)

d\. When the postmark date on remittance-bearing insurance collections
envelopes is missing or illegible, the Collections and Cashier Section
in the Finance and Data Processing Division will determine the postmark
date. The date is determined by subtracting 3 days from date of receipt
for closed mail and 4 days for open mail. Collections handled in this
way will be assigned batch numbers in 800-849 series. APO, registered
and foreign mail will not be assigned a postmark date in this manner.

**2-3**

M29-l, Part l May 15,1972

Change 3

*NOTE: Payment from the unencumbered funds of an incompetent without a
guardian will be applied to the premium due without regard to the date
of certification by the Finance Office of the hospital that there were
sufficient unencumbered funds to the insured\'s credit on the due date
of the premium or within the 31-day grace period.*

2.06 METHODS OF PAYMENT

a\. Payment of premiums, including the total disability income provision
and repayments on loan or lien accounts, may be made under one of the
following methods:

\(1\) Direct Payments in the form of a check, draft or money order
payable to the VA. To be acceptable, checks or drafts must be paid upon
presentation for payment. Payments may be made in cash to VA employees
authorized to accept such payments; however, cash sent by mail will be
at the insured\'s own risk. Payments may be made by a third party.

\(3\) Deduction From Benefits Paid by the VA (other than subsistence
allowance)

\(a\) The authorization must be in writing over the signature of the
insured, or his legal representative. If the insured is incompetent and
has no legal representative and has a wife to whom benefits are being
paid pursuant to 38 U.S.C. 3202(f) and VA Regulation 5057, she may
authorize payment of insurance premiums through the deduction system. If
the insured is incompetent and has no legal representative and an
institutional award has been made in his behalf, the authorization may
be executed by the Director of the station in which the insured is
hospitalized or receiving domiciliary care, and in appropriate cases by
the chief officers of State hospitals or other institutions to whom
similar awards have been approved. (VA Regulations 3020(A) and 3408(A)).

\(b\) The monthly benefits due and payable must equal or exceed the
amount of the monthly premium payment. (VA Regulations 3020(B) and
3408(B)).

\(c\) The deduction made from the benefit payment will be for the
insurance and/or TDIP premium due in the succeeding calendar month, and
the authorization must be mailed or otherwise delivered to the VA no
later than the last day of the calendar month preceding the month in
which the first premium to be paid from benefits becomes due. (VA
Regulations 3021 and 3409) Where there is a delay in processing an
establishment or increased authorization, a retroactive effective date
will be processed provided the retroactive effective date is within 11
months of the current processing month and the arrearage can be deducted
from benefit payments within a 6-month period. If the average amount
cannot be deducted, the monthly deduction amount will be established as
of the current processing month.

\(d\) The authorization will continue in effect as long as the benefit
payments due and payable are enough to pay the monthly premium or until
the authorization is canceled by the insured or otherwise terminated.
(VA Regulations 302l and 3409).

\(e\) The authorization may be canceled by the insured at any time by
notice in writing to the VA. Such cancellation will be effective on the
first day of the month following that in which it is received in the VA.
(VA Regulations 3020(C) and 3408(C)).

2domiciliary, or

**May 15,1972 M29-l, Part 1**

Chief Officer of a State hospital ,or other institution, the
authorization will cease and terminate at the termination of the
institutional award. (If subsequent premiums are to be paid by
deductions from monthly benefit payments and no other authorization was
executed by the insured or his legal representative or his wife.) The
insured will be notified by letter directed to his last address of
record of the last address of record of the termination of authorization
to deduct premiums, but failure to give such notice or (he failure to
receive such notice will not prevent lapse of the insurance. (VA
Regulations 3023 and 3411).

\(g\) The deduction authorized by a policyholder issued insurance in the
J series will be automatically adjusted the VA to take cognizance of any
premium adjustment made by the Administrator provided benefit payments
sufficient to pay (he monthly insurance premium. (VA Regulation 3408(E))

\(h\) Deduction authorizations are not acceptable as payment to effect
reinstatement of lapsed insurance. Deduction authorizations are
acceptable for payment of the initial premium on new insurance. Also,
deduction authorizations are acceptable for payment of the initial
premium in connection with conversion, reduction, or change of plan,
provided the insurance to be converted, reduced, or changed is being
paid in this manner. (New authorizations will be required when the
authorization for deductions presently in effect was submitted on VA
Form 9-887, Authorization for Deductions From Veterans Administration
Benefit Payments.)

\(4\) Employer Payroll Deductions if the VA has such an agreement with
the employer. The initial deduction should be in an amount sufficient to
pay premiums l month in advance. Where the initial remittance does not
provide for advance payment, the insured will be advised of the
discrepancy and the desirability of paying premiums on a
month-in-advance basis. Such a letter will not be sent if the
policyholders an employee of the American Telephone and Telegraph
Company or one of their subsidiary companies. The VA cannot be a party
to any agreement which may be made by the insured and his employer, and
premium payments tendered by an employer which are not timely will cause
the same lapse action to be initiated as would occur if the premium
payment were remitted directly by the policyholder.

\(5\) Waiver of Premiums Under 38 U.S.C. 712 and 748 during a period of
total disability as defined in the policy and in 38 U.S.C. 712 and 748.
The waiver applies to both insurance and disability premiums. (On
policies in the J, JR and JS series, the basic premium, the charge for
the administrative cost and, if paid, the flat-extra premium will be
waived under 38 U.S.C. 712.\] A waiver granted under either section will
suspend a waiver granted under 38 U.S.C. 724 (in service waiver).

\(6\) Waiver of Premiums Under 38 U.S.C. 724 (formerly referred to
Section 622 waiver). Premiums on term insurance or the pure insurance
risk portion of premiums on permanent plans are waived during continuous
active duty and for 120 days following separation from service in the
Armed Forces. Payment of the full premium is required on permanent plan
policies during the period of such waiver. (TDIP premiums are not waived
under section 724.)

NOTE: The Servicemen\'s Indemnity and Insurance Acts of 1951 provided
that NSLI or USGLI policyholders could apply for waiver of premiums
while in service. Applications were not acceptable until the person had
been in service for 31 days or longer and did not extend to premiums
falling due prior to the application for waiver, between the second day
of the second calendar month following entry into service, or before
June 2. 1951. The right to apply for such waiver ended December 31,
1956; however, existing waivers would \~\`o\'itini\".. unless terminated
by the insured, from 120 days after separation from continuous active
duty. Between December 23, 1953, and December 31. 1956, an in service
wavier was automatically continued if the insured reentered service at
any time within a 120-day period following separation from service.
Prior to December 23, 1953. and after December 31. 1956, reentry Into
service must be on the date of separation or the following day to meet
the requirements for continuous active duty.

(7.) Section 306 Liens (USGLI). Waiver of payment of premiums on the due
date may be authorized in certain cases. This is not to be interpreted
as waiver of premiums in the usual sense of the word. It is actually a
deferment of payment of premiums because the premiums waived (deferred)
create an indebtedness against the policy. (38 U.S.C. 760)

2-5

M29-1, Part II May 15, 1972

Change 3

\(8\) Dividends may be used to pay premiums in the following instances:

\(a\) Premium\'s are automatically deducted from any dividend credit
account when a premium is not timely paid on any of the insured\'s
policies.

NOTE:: Prior to October 2,1967, dividend credits could be transferred
between USGLI and NSLI \`only upon request of the insured.

\(b\) When the premium option is in effect, dividends are automatically
applied to pay premiums In advance only on the account on which the
dividend was earned.

b\. In addition to the above methods of paying premiums or indebtedness,
the insured may request that an amount be deducted from the loan value
of his policy, dividend credits, dividend deposits, or any refundable
credits to pay premiums or to pay an indebtedness. Premiums for
insurance and TDIP are also automatically withheld from the loan value
or dividend credits if premiums are not paid through the month in which
the loan is granted or the refund of dividend credits is made.

c\. Only one method may be selected to pay premiums on one policy at any
given time. However, second method may be selected for payment of an
indebtedness against that policy. This includes deductions from service
pay, deductions from VA benefits, and payroll deductions. A policyholder
may have deductions from service pay to pay premiums and have deductions
from VA benefits to reduce an Indebtedness.

2.07 APPLICATION OF PREMIUM PAYMENT

a\. A payment received within 61 days from and after the premium due
date and in the exact amount of a monthly, quarterly, semiannual or
annual premium will be applied to advance the next premium due date.
Such a remittance will also be applied as a monthly, quarterly,
semiannual or annual premium with a shortage of not more than 10 percent
of a monthly premium provided the shortage, plus any prior shortage,
does not exceed 30 percent of a monthly premium.

b\. When the remittance is sufficient to pay three or more monthly
premiums but does not exactly equal a quarterly, semiannual or annual
premium, it will be applied at a discounted rate.

c\. Where the remittance is not sufficient to pay a quarterly premium,
it will be applied as monthly premiums, except as indicated below:

\(l\) The last 2 months of a term or a premium-paying period are due,
and the policyholders have been paying premiums on other than a monthly
mode. The payment is l cent less than twice a monthly premium. This will
occur in instances where the amount of insurance is not evenly divisible
by 2.

\(2\) The premium for the 2-month period Is calculated by multiplying
the monthly premium for \$1,000 by 2; multiplying the results by the
face amount of insurance and dividing by l ,000.

d\. Where a remittance is for a premium on the life insurance and a
premium for the total disability income provision but is less than the
combined premium for both, the remittance will be applied:

\(l\) To The combined premium for insurance and TDIP, providing the
shortage will not exceed l0 percent of the combined monthly premium or
will not increase an existing shortage to an amount in excess of 30
percent of the combined monthly premium. The shortage will be on the
premium for insurance.

\(2\) To the life insurance premium, if the shortage exceeds 10 percent
of the combined monthly premium but not more than 10 percent of the life
insurance premium provided the shortage will not increase an existing
shortage to an amount in excess of 30 percent of the life premium.

2-6