August 3I, I971 M29-I,Part I

Change 2

CONTENTS

SECTION III. DISABILITY INSURANCE CLAIMS

CHAPTER PAGE31

DISABILITY BENEFITS ON NATIONALSERVICE LIFE INSURANCE 31-1

32\. DISABILITY BENEFITS ON UNITED

STATES GOVERNMENT LIFE INSURANCE 32-1

33\. DISABILITY BENEFITS ON WAR RISK INSURANCE 33-1

III-i

August 31,1971 M29-1, Part I

Change 2

CONTENTS

CHAPTER 31. DISABILITY BENEFITS ON

NATIONAL SERVICE LIFE INSURANCE

PARAGRAPH PAGE

SUBCHAPTER 1 - DEFINITION OF DISABILITIES

31.O1 Total Disability 31-1

31.02 Statutory Disability 31-1

31.03 Primary Requirements 31 -

31.04 Distinction Between Compensation or Pension

and Insurance Adjudication 31-2

31.05 Hospitalization 31-2

3 I .06 Convalescence 31-2

31.07 Remission 31-2

31.08 Industrial Outcasts 31-3

31.09 Age 31-3

31.10 Extent and Nature of Work 31-3

31.11 Average Hours and Wages 31-3

31.12 Sporadic and Part-Time Employment 31-4

31.13 Ability to Perform Competitive Employment 31 -4

31.14 Member Employee of VA Domiciliary 31 -4

31.15 Self-Employment 31-4

. SUBCHAPTER 2. DISABILITY WAIVER OF PREMIUMS (NSLI)

31.16 Requirements 31-5

31.17 Insurance Deemed In Force

(Premium-Paying Basis) 31-5

31.18 Necessity for a Claim 31-6

31.19 Definition of Claim 31-6

31.20 Timeliness of Filing Claim 31-7

31.21 Definition of Evidence 31-7

31.22 Evidence in Support of Claim 31-7

31.23 Periods of Total Disability 31-8

31.24 Beginning and Ending Dates of

Total Disability 31-8

31.25 Multiple Periods of Total Disability 31-9

31.26 Beginning Dates of Awards 31-9

31.27 Ending Dates of Awards 31-10

31.28 Failure to Cooperate or to Prosecute

New Claims 31-10

31.29 Failure to Cooperate on Review Actions 31-10

31.30 Supplemental Actions and Reviews 31 - 11

31.31 Routine Reviews 31-11

31.32 Twenty-Year Cases (38 U.S.C. 110) 31-11

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M29-1, Part 1 August 31, 1971

change 2

CONTENTS-Continued

PARAGRAPH PAGE

SUBCHAPTER 3. TOTAL DISABILITY INCOME PROVISION

31.33 Requirements 31-12

31.34 Definition of Required Proof 31-12

31.35 Date of Receipt of Required Proof 31-12

31.36 Commencing Date of TDIP Awards 31-13

31.37 Ending Date of TDIP Awards 31-13

SUBCHAPTER 4. CLAIMS AFTER DEATH OF INSURED

31.38 Conditions Applicable 31-13

SUBCHAPTER 5. COMPETENCY

31.39 Decisions as to Competency 3l-l4

SUBCHAPTER 6. FRAUD

31.40 Statutory Provisions for Incontestability 31-15

3l-41 Elements of Fraud 3l-l5

31.42 The Government\'s Role 31-15

3l.43 Applicable Criteria 31-15

31.44 Doctrines of Notice and Waiver 31-16

3 1.45 Application of Principles of Equity 31 - 16

31.46 Submission of Cases for Possible

Prosecution 31-17

SUBCHAPTER 7. EXTRA HAZARDS OF MILITARY SERVICE

31.47 Necessity for Decision 31-17

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August 31,1971 M29-1, Part I

Change 2

\[CHAPTER 31 - DISABILITY BENEFITS ON NATIONAL SERVICE LIFE INSURANCE

SUBCHAPTER I. DEFINITION OF DISABILITIES

31.01 TOTAL DISABILITY

Total disability is defined as any impairment of mind or body which
continuously renders it impossible for the insured to follow any
substantially gainful occupation Continuous, as referred to above, means
with reasonable regularity or continuity. It should not be restricted or
interpreted in its absolute sense. Substantially gainful occupation is
any kind of work for which the insured may be fitted, or competent, or.
qualified mentally and physically. The occasion, source, or cause of the
insured\'s illness is immaterial. The fact that the disability resulted
from the insured\'s misconduct is immaterial.

31.02 STATUTORY DISABILITY

Statutory disability is defined, without prejudice to any other cause of
disability, as the permanent loss of the use of both feet, of both
hands, or of both eyes, or of one foot and one hand, or of one foot and
one eye, or of one hand and one eye, or the total loss of hearing of
both ears, or the organic loss of speech, shall be deemed to be total
disability for insurance purposes.

a\. The loss of use of a foot or hand shall be deemed to exist when no
effective function remains other than that which would be equally well
served by an amputation stump with use of suitable prosthetic appliance;
i.e., when the member is impaired in effectiveness to a degree where
there is loss for all practical purposes of those functions for which
the member is normally used.

b\. The loss of use of an eye shall be deemed to exist when the disabled
person has impairment of central

visual acuity in such eye to 5/200 or less after correction, or where
the visual field of such eye has been reduced by concentric contraction
to within 5 degrees or less of point of fixation.

c\. Total loss of hearing shall be deemed to exist where the disabled
person has sustained the total loss of bone and air conduction in both
ears under current testing criteria after an audiometric examination in
a VA authorized audiology clinic.

d\. Organic loss of speech shall be deemed to exist where the disabled
person has lost the ability to express himself either by voice or
whisper through the normal organs of speech by reason of organic changes
in such organs. Where such loss exists, the fact that some speech can be
produced through the use of artificial appliance or other organs of the
body will be disregarded.

31.03 PRIMARY REQUIREMENTS

Disease or injury per se, unless statutory, is insufficient to support
an affirmative finding of total disability, no matter how severe. Such
finding must be based upon disease or injury with unemployment resulting
therefrom. Similarly, such finding may not be based upon unemployment in
conjunction with disease or injury in the absence of evidence
establishing that such unemployment is the reasonable consequence of the
disease or injury.

a\. It must be established that the existing disease or injury is
sufficient to lay the foundation for the claim for insurance benefits.
It is then a question of the extent of impairment. The extent of the
injury or disease as reflected in his unemployability must be
considered. It should be borne in mind that under existing criteria it
is not necessary that an insured establish complete helplessness and
unemployability in order to persuade the VA to acquiesce in totality. It
is sufficient that, by reason of his physical or mental condition, the
insured has been deprived of ability to perform a substantial amount of
work performed by others engaged in the same occupation. One must avoid
the danger of projecting himself into the insured\'s shoes. To say that
one would not consider himself totally disabled under the same
circumstances is merely to beg the question unless one has first

31-1

M29-1, Part 1, change 2 August 31,1971

satisfied himself that, except for the insured\'s impairment he and
one\'s self are equal. Such a comparison would very likely not properly
evaluate the difference in will power, in tenacity of purpose to
overcome the handicap, and in resistance between the insured and one\'s
self. As a proper approach to a sound determination, consideration must
be given to the effect of special factors, such as convalescence,
apparent arrest, remission, anatomical losses, and certain diseases,
such as epilepsy, leprosy and mental diseases, which are frequently
prone to render the insured an industrial outcast.

b\. The questions to be determined are: Does the insured have an
impairment? Does the impairment in fact

prevent him from continuously following substantially gainful
employment? Is the disability (for total and

permanent insurance benefits) founded upon conditions which render it
reasonably certain that the disability will

continue throughout the life of the disabled person? This latter
reference to total and permanent disability

applies to gratuitous insurance under section 602(c)(3)) of the National
Service Life Insurance Act of 1940 as

amended.

31.04 DISTINCTION BETWEEN COMPENSATION OR PENSION AND INSURANCE
ADJUDICATION

The standards for determining the degree of disability for pension or
compensation purposes and insurance are

distinctly dissimilar. The extent of disability for pension or
compensation purposes is determined on the basis of

a rating schedule founded on average-man impairment. 1n contrast, since
the rights to insurance benefits are

founded on contract, the extent of disability must be measured by its
effect on the insured in the individual case.

The former cannot be determinative for insurance purposes and the latter
cannot be determinative for pension or

compensation purposes. Accordingly, particular consideration must be
given to the many facts peculiar to each

case, such as age, type of work the individual is trained for, his
mental capacity, his mental attitude, and his

educational background.

31.05 HOSPITALIZATION .-\~

Based on the fact that an individual cannot work and be treated as a bed
patient in a hospital at the same time,

an insured undergoing hospitalization for treatment of disease or injury
is considered totally disabled. This rule

does not apply where the insured is hospitalized solely for purpose of
quarantine or observation.

31.06 CONVALESCENCE

Though an insured\'s injuries may have healed, or the disease from which
he has suffered is no longer active, if

it is prudent and sound medically for him to remain in convalescence for
a further period to recoup his strength,

such further period will be considered as one of total disability. The
length of periods of convalescence which will

be so considered varies with the individual case, with relatively short
periods being adequate generally in cases of

acute disease or injury which are not extensive and considerably longer
periods in cases of chronic disease or

injury of extensive nature. Some diseases require prolonged
convalescence. Because of difficulty in determining

when the disease has ceased to be active, and proneness to reactivation,
definite arrest is oftentimes not

determined until a relatively long period of restricted activity coupled
with a regimen of rest has expired. During

such period the insured must demonstrate a favorable response to
graduated exercise. Accordingly, in the absence

of affirmative evidence to the contrary, the insured during such period
may be considered as totally disabled.

31.07 REMISSION

Many diseases, including schizophrenia, manic-depressive psychosis,
multiple sclerosis, and Hodgkin\'s disease,

are prone to periods of remission. In all such instances the insured
should not be considered as recovered

following a period of active symptoms unless it is found that the
remission i- definite and complete. Where there

is a period of remission intervening between two periods of active
symptoms, a finding of total disability with

respect to the intervening period would depend upon the length and
extent of the remission. If it was so brief as

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August 31,1971 M29-1, Part 1

Change 2

10 raise a doubt as to its being a true remission or so limited that
there was no opportunity to demonstrate ability

to work, an affirmative finding in this connection may be made. Also,
even though the period extended over

several months, if the remission was only partial, the insured would be
considered as totally disabled. The latter

conclusion would not be reached, however, in the presence of an
affirmative record of continuous and

substantially gainful employment during such period.

31.08 INDUSTRIAL OUTCASTS

a\. It is well established that individuals suffering from such diseases
as epilepsy, leprosy and in some instances

mental diseases are oftentimes considered as industrial outcasts. In
addition to the fact that the knowledge of

one\'s having such a disease reduces his chance of employment, many
States prohibit individuals suffering from

such diseases from being employed in certain types of occupations. These
factors are not in themselves of

sufficient weight to support a finding of total disability, but they
must be given serious consideration in cases

where other pertinent factors are not sufficiently persuasive for an
affirmative finding in this connection.

b\. There may be instances where an individual, although no longer
suffering from physical disability, has

sustained such extensive facial or cosmetic damages that his appearance
is horribly repugnant in the sight of

others. If such impairment renders an insured unemployable, he is
totally disabled for insurance purposes.

31.09 AGE

Old age is important as a factor in determining whether an individual is
capable of following an occupation

efficiently; not because age itself is a deterrent to, or a criterion
for one\'s ability to work, but rather because of

the body changes accompanying the aging process in man. Because of the
principle of making total disability

findings on the basis of individual impairment, age is given weight in
this connection only when accompanied by

these normal body changes; and, because these characteristic body
changes vary with age in different individuals,

we must consider the debilitating effect of age upon the particular
individual concerned and not upon the average

man. Accordingly, retirement, irrespective of the category of employment
involved, is not persuasive in

determining whether one has become totally disabled. Likewise, the
attitude of employers toward aged

employees is not a factor for consideration. The determination must be
based on the degree of impairment of

mind and body due to disease or injury and the degenerative effects of
age. These must be evaluated in the light

of the vocational experience of the individual concerned. However, while
the mild, moderate, moderately severe

or severe degree of impairment must be considered in relation to the
physical and mental rather than the

chronological age of the individual affected, it is still to be
remembered generally that the same degree of

impairment may be more limiting for an old employee than for a young
one.

31.10 EXTENT AND NATURE OF WORK

Total disability as defined above does not indemnify the insured for
loss of his ability to perform a particular

occupation, but rather against loss of the capacity to perform any
continuous and substantially gainful

occupation. However, the rule must be applied reasonably with
relationship to those occupations for which the

insured\'s prior vocational or professional experience and background
equip him. If there are occupations which

one is able to perform in his own or other professions for which his
education, experience, and background would

fit him he would not necessarily be considered totally disabled.
However, in the face of facts demonstrating his

incapacity to perform his previous or similar occupations, mere
speculation as to what work he might be able to

perform should be avoided.

31.11 AVERAGE HOURS AND WAGES

The words continuously and substantially gainful in the definition of
total disability are to be construed with

regard to the particular work or position in which the insured has been
customarily employed. It is not necessary

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M29-1, Part I August 31,1971

Change 2

\`that\' he work the maximum number of hours or receive the maximum rate
of pay for the job. If he works an

extensive period without excessive loss of time due to illness and
receives income within the range usually paid

for similar work, the employment should be considered continuous and
substantially gainful. A brief period of

employment, however, should not be too readily accepted as proof of
continuous and substantially gainful work,

for an unsuccessful attempt in this connection is more persuasive of
continuing disability than is a negative work

record.

31.12 SPORADIC AND PART-TIME EMPLOYMENT

if it is found that the work record of an insured reflects only
part-time employment; or, if full time, that such

work was of a sporadic nature, the medical aspects of the case must be
carefully considered to ascertain if the

insured is able to carry on steadily on a full-time basis. If not, the
work record should be disregarded.

31.13 ABILITY TO PERFORM COMPETITIVE EMPLOYMENT

a\. An insured\'s capacity to perform continuously any substantially
gainful work is to be judged under the

conditions usually prevailing in the employment market; i.e., it must be
determined whether the insured is able to

perform in competition with others. Working under sheltered conditions
does not meet the test in this

connection. For instances, if the insured requires a considerably higher
degree of supervision than his fellow

workers, or if there is always someone present to fill in for him when
he doesn\'t have the urge to carry on his

duties, it may not be said that he is engaged continuously in
substantially gainful employment. However, the

question of working under sheltered conditions is one of fact. Such
question can be resolved only on the basis of

evidence reflecting the day-to-day details of the work.

b\. There are cases where an insured is continuously following a
substantially gainful occupation, but is

injuring his physical or mental health by so doing. In such cases, the
insured is considered to be totally disabled

despite the work record, because he is working to the detriment of his
health. The test to be used in such cases is

whether the insured has the ability to work without serious peril to his
life or health, or without the risk of

substantially aggravating the ailment with which he is afflicted.
However, this principle cannot be used to grant

benefits indefinitely. If the insured, does in fact, continuously follow
a substantially gainful occupation for an

extended period of time, and if there is no evidence that his physical
or mental health has been impaired,

disability benefits should be stopped because the evidence shows in fact
that the insured was not working to his

detriment.

31.14 MEMBER EMPLOYEE OF VA DOMICILIARY

A member employee is a person who is a resident of a VA Domiciliary who
can perform some degree of work

under close supervision as a form of rehabilitation therapy, not in
competition with able bodied persons, and who

receives a nominal salary for his services. This nominal remuneration is
interpreted to mean a token grant of

money in the nature of a gratuity or an award payable by the VA to the
patient or member as a part of the

expense of the therapeutic and rehabilitative program as distinguished
from salary or wages, earnings or an

additional monetary benefit to the veteran. Payments for incentive
therapy programs are not intended as a

consideration for the services rendered but rather as an inducement to
selected patients and members to enter

into activities which will assist them in regaining self-reliance and
aid in their return to normal life. Such

employment is to be disregarded in determining the total disability of
the insured.

31.15 SELF-EMPLOYMENT

Where the insured is engaged in the operation of his own business, care
must be taken in determining whether

the operation is in fact substantially gainful for purposes of granting
total disability insurance benefits. In such

instances the total amount of income earned is an unreliable guide with
respect to the insured\'s capacity for

31-4

October 16, 1972 M29-1,Part 1

Change 4

work. Accordingly, any income earned in such cases from invested capital
must be distinguished from that which

results from personal services rendered. The important factors to be
considered in these cases are those related to

physical and mental participation in the business; the number of hours
worked per day, the number of days per

week the insured is so engaged, and the nature of the duties performed,
etc.

SUBCHAPTER 2. DISABILITY WAIVER OF PREMIUMS (NSLI)

31.16 REQUIREMENTS

Written application by the insured or a person acting in his behalf with
proof of total disability of 6 or more

consecutive months, except in statutory cases, which commenced:

a\. On or subsequent to the effective date of insurance or date of
application, whichever is later, except in the

case of insurance issued under 38 U.S.C. 704(d), 722, or permanent plans
of insurance issued or reinstated under

38 U.S.C. 781.

b\. While the insurance was in force on a premium-paying basis.

c\. Prior to the insured\'s 65th birthday; provided that if the
disability commenced on or after the insured\'s

60th birthday, no premiums which became due prior to January I, 1965,
will be waived. (Prior to January l,

1965, a waiver could be granted only if total disability began before
the insured\'s 60th birthday.\]

d\. In the event of death of the insured without filing application for
waiver, such application may be filed by

the beneficiary, with evidence of the insured\'s right to waiver, within
l year after death of insured; or, if the

beneficiary is insane or a minor, such beneficiary may file application,
with evidence of insured\'s right to waiver,

within l year after removal of the legal disability.

e\. Public Law 86-497 approved June 8, 1960, amended 38 U.S.C. 712 by
adding subsection (d). Upon proper

application, this section grants retroactive premium waiver to insureds
who become totally disabled between the

date of their application for NSLI and the subsequent effective date.
The insured must have become totally

disabled in line of duty between October 8, 1940, and July 31, 1946,
inclusive, or June 27,1950, and April 30,

l95l, inclusive. He must have remained continuously so totally disabled
to the date of death or June 8, 1960,

whichever is the earlier. Application for waiver under 38 U.S.C. 712(d)
must be filed by the insured within 2

years after June 8,1960. If insured be insane within such 2 year period,
application may be filed within 2 years

after removal of such disability, or if the insane insured shall die
before removal of the disability, application may

be filed by the beneficiary within 2 years after the insured\'s death.
If the insured is insane, we will accept a claim

for waiver of premiums from any one acting in his behalf. Where the
insured died prior to June 8, 1960, the

beneficiary may file claim for premium waiver within 2 years after that
date. If the beneficiary be insane or a

minor within such period, application may be filed within 2 years after
the removal of the legal disability.

f\. When premiums are waived due to total disability on J, JR and JS
policies, the administrative cost is waived

also and will be included in any refund of premiums. On a JS policy with
a flat-extra premium, the flat-extra

premium is also waived. When accounting action is taken for premiums
waived, the administrative cost and the

flat-extra premium will be included.

\[g. When an insured purchased a J, JR or JS policy and was totally
disabled on the effective date, a waiver of

premiums may not be granted as long as that total disability continues.
Where the disability was not considered

total in degree on the effective date but, at a later date, is
considered total disability, a waiver of premiums may be

granted. Care must be exercised to avoid granting waiver of premiums to
insureds who were totally disabled at the

time of application for insurance

3l .17 INSURANCE DEEMED IN FORCE (PREMIUM-PAYING BASIS)

a\. The term premium-paying basis, as used in paragraph 31 .16b, will
not be applied to any period prior to the

date of application for insurance or the effective date of the contract,
whichever is later, except insurance issued

under 38 U.S.C. 704(d), 722, or permanent plans issued or reinstated
under 38 U.S.C. 781.

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M29-l, Part l October 16, 1972

Change 4

b\. Insurance will be deemed to be in force on a premium-paying basis in
any instance where information from

the service department shows that an allotment for payment of premiums
was established for the contract, even

though deductions from pay for such purpose were not made.

c\. Insurance of aviation students and aviation cadets, for which
premiums were paid by the Government

because of participation in regular and frequent aerial flights, will be
deemed to be in force on a premium-paying

basis. Similarly, aviation students and cadets commissioned as second
lieutenants or flight officers will be so

covered when required to participate in regular and frequent aerial
flights, even though premium information is

not available.

d\. Where deduction of premiums was discontinued because the insured was
discharged to accept commission,

absent without leave, or sentenced by court-martial, and he was later
restored to active duty or required to engage

in combat and became totally disabled without restoration of allotment,
such disability will be deemed to have

commenced while the insurance was in force on a premium-paying basis so
long as he remained in active service

prior to August -l, 1946, and became totally disabled prior to that
date.

e\. Extended insurance will not be considered as insurance in force on a
premium-paying basis as the wording

of the contract of insurance itself provides for extended insurance only
after the policy has lapsed.

31.18 NECESSITY FOR A CLAIM

An NSLI policy is a contract between the U.S. Government and the
insured. It sets the rights, responsibilities,

and liabilities of both under the contract. In the event of disagreement
as to claim, an action on the claim may be

brought against the United States under the provisions of 38 U.S.C. 784.
The purpose of requiring the filing of a

claim as prerequisite to suit on the policy is to give the Government
notice that claim is being made so it may

make investigation and award any benefits due without being subjected to
the expense of litigation. The filing of

a claim is a prerequisite to obtaining benefits thereunder. A claim
after death for insurance benefits is a claim for

waiver of premiums, if necessary, to mature the insurance.

31.19 DEFINITION OF CLAIM

a\. Any letter or any other writing from the insured or any person on
his behalf which indicates an intent or

desire to file claim for disability insurance benefits under NSLI will
be accepted as a claim therefor; and any such

writing will be so considered in resolving question as to the timeliness
of filing claim. However, the claimant may

be required to furnish a formal claim for the pertinent information
needed.

b\. If the insured prepared or caused to be prepared, or adopted papers
for the application for disability

insurance benefits, and sent in, or authorized the sending thereof, to
the VA, it constitutes his written application

as required by the statute and this is true, irrespective of whether he
physically-signed it at the bottom thereof or

elsewhere. If there is doubt as to the insured\'s authorization of the
paper, appropriate inquiry should be made of

him to learn whether he did authorize the action.

c\. A mere inquiry as to the status of insurance will not be considered
as a claim for disability insurance

benefits. In instances where claim is filed by someone on behalf of the
insured, and it appears that the latter may

be incompetent or otherwise incapable of filing on his own behalf, such
claim will be accepted for purpose of

establishing a filing date in the absence of evidence showing that such
action could be detrimental to the insured\'s

best interests. VA Form 29-178, Request for Insurance Status-Government
Life Insurance, or VA Form

27-4358. Request by Chief Attorney for Insurance Information, may be
considered as an informal claim for

disability insurance benefits. It must be apparent that the form is for
the purpose of developing information as to

whether a claim for disability insurance benefits is of record, with
intent to file such claim if one is not of record.

Claims for compensation, pension, or educational benefits are not to be
considered claims for disability insurance

benefits.

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October 16,1972 M29-1, Part I

Change 4

d\. if the insured dies without filing claim for waiver, such claim may
be filed by the beneficiary within l year

after the death of the insured. If the beneficiary be insane or a minor,
claim may be filed within l year after

removal of legal disability.

e\. if there is more than one insurance contract in effect at the time
claim for total or total and permanent

disability insurance benefits is filed, such claim will be valid for all
insurance contracts under which it world be to

the insured\'s advantage to have filed claim even though he has claimed
only under one contract. For example, if

the insured has a V contract and an RH contract and only shows the V
number as being claimed against and

obviously it would be to his advantage to receive waiver under the RH
contract, consideration will be given to his

entitlement under the RH contract at the time the case is adjudicated.
Of course, caution should be exercised in

those cases where permanent K policies are paid up. If in doubt, the
wishes of the insured should be ascertained

prior to final adjudication of the claim.

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December 22, 1978 M29-1, Part I

Change 8

31.20 TIMELINESS OF FILING CLAIM

a\. When a claim is filed subsequent to August 1, 1947, waiver of
premiums becoming due more than I year

prior to the receipt of claim there for in the VA may not be granted in
the absence of satisfactory evidence of cir-

cumstances beyond the insured\'s control which prevented his or her
making timely claim.

b\. Similarly, with timely applications filed by beneficiaries after the
death of an insured, waiver of premiums becoming due more than l year
prior to death may not be waived unless the insured\'s failure to timely
file claim was due to circumstances beyond his or her control.
Circumstances or conditions which may permit, although not

necessarily require, a finding that the insured was prevented by
circumstances beyond his or her control from

filing a timely claim, may include mental or physical disability of such
severe degree as to render the insured incapable of taking care of his
or her affairs with reasonable prudence; beleaguerment; besiegement and
involuntary isolation; or when there are other unusual and extenuating
circumstances which are a reasonable cause of the insured\'s failure to
make timely application. Generally, the lack of knowledge of the nature
of his or her disability

is not to be regarded as a circumstance beyond \[the insured\'s\]
control. However, there are exceptions to this

general rule. If the insured did not know that he or she was suffering
from a deadly insidious disease until the

terminal phase became apparent, the failure to timely file claim will be
excused. If the insured lacks knowledge

of the nature of his or her disability and does not realize how disabled
he or she is, but tries unsuccessfully to

work, or, if he or she lacks knowledge of the nature of his or her
disability and continues in substantially gainful

work at a detriment to his or her health, the failure to timely file
claim will be excused. If any VA Insurance ac-

tivity receives information in writing that discloses the existence of
severe disabilities and potential entitlement

to disability insurance benefits and fails to apprise the insured of his
or her probable rights to the benefits, such

failure is deemed an incomplete action by the VA and, as such,
constitutes extenuating circumstances that will

excuse the failure to timely file claim. When circumstances beyond the
control of the insured excusing the failure

to file timely are found, waiver of premiums will be effective during
the period of 1 year prior to the filing date

plus the period during which he or she was prevented from filing.

c\. The appointment of a guardian does not change the problem with
respect to timely filing of claim. Even

though the guardian may neglect for years to file a claim on behalf of
the insured, the test remains whether or not

the insured was prevented from filing claim on time due to circumstances
beyond his or her control.

31.21 DEFINITION OF EVIDENCE

\~. Evidence is any species of proof or probative matter which is
legally presented at a trial of an issue through

the medium of witnesses, records, documents, concrete objects, for the
purpose of inducing belief in the minds of

the court or jury as to their contention. It is that which tends to
prove or disprove any matter in question, or to

influence the belief respecting it. Belief is produced by the
consideration of something which is presented to the

mind. The matter thus presented, in whatever shape it may come, and
through whatever material organ it is de-

rived, is evidence. Evidence is that which demonstrates or makes clear,
or ascertains the truth or the very fact or

point in issue, either on the one side or on the other.

b\. Evidence is to be distinguished from its synonyms, proof and
testimony. Proof is the logically sufficient

reason for assenting to the truth of a proposition advanced. Testimony
is a still more restricted form and it means

only such evidence as is delivered by a witness on a trial of a cause,
either orally or in the form of affidavits or

depositions. Belief is a subjective condition resulting from proof. It
is conviction of the truth of a proposition

existing in the mind and induced by persuasion, proof or argument. There
are many different types of evidence.

31.22 EVIDENCE IN SUPPORT OF CLAIM

a\. Evidence to substantiate all aspects of the claim must be filed
before any final action thereon may be

taken. Such evidence will consist not only of sufficiently detailed
medical and industrial matter, but will include

also such material as will establish, when necessary, that the
insured\'s failure to file a timely claim was in fact due

to circumstances beyond his or her control. Similarly, when the facts of
a particular case raise a question as to the

possibility of fraud in obtaining or reinstating insurance, all
obtainable evidence necessary to resolve such ques-

tion must be of record in the VA before decision is rendered on the
contracts in question. If evidence pertinent

31-7

M29-I, Part I December 22, 1978

Change 8

to the claim suggests a possibility of incompetency, suds further
development as is necessary to make a determi-

nation in this connection must be undertaken. Such independent
determination will not be necessary, however,

if the insured has been adjudged incompetent by a court or has been
rated in this-connection by a regional office,

and the court finding or regional office rating is not rebutted by later
evidence indicating a changed condition.

When the disability alleged by the claimant seems to involve two or more
members or otherwise indicates possible

entitlement under 38 U.S.C. 714, all evidence bearing upon such possible
entitlement must be recorded before

final action on the claim is taken. Such evidence must include a
complete report of the insured\'s industrial status,

embracing data to indicate the manner in which he or she accomplishes
his or her work (if any) notwithstanding

his or her impaired condition. In all instances, medical diagnoses must
be supported by appropriate findings set

forth in the records; and such findings must indicate the degree of
severity of the impairment. In like manner, the

industrial evidence should include the exact dates of employment insofar
as possible; the nature of the work in-

volved must appear in evidence; the amount of time lost from work on
account of illness or injury must be appar-

ent; the insured\'s reason for terminating his or her employment must be
shown; and all other facts necessary in

determining the scope of flee employment and the duties and
responsibilities of the insured must be presented.

The educational and vocational background of the claimant should be
ascertained.

b\. Lay affidavits nay be submitted when private medical statements or
employer statements are not avail-

able or to supplement such statements. The weight to be given lay
affidavits must depend entirely on facts and

circumstances in the individual case. In each case, the merits of the
claim must be determined on the basis of

the best evidence. The best evidence as to nature and extent of
disability is the official clinical records, VA medi-

cal reports, or statements of reputable private physicians, and the best
evidence of employment is the official

report of the employer. Lay affidavits in conflict with such records
cannot as a general rule be accorded much

weight. On the other hand, if such records are not obtainable, lay
affidavits should be considered for what they are worth. There may be
cases in which the insured, because of religious beliefs, personal
idiosyncrasies, mental impairments, etc., will refuse to undergo medical
treatment. Therefore, lay affidavits may be the only evidence

obtainable.

31.23 PERIODS OF TOTAL DISABILITY

Six-Month Disability-Entitlement to NSLI benefits is predicated, among
other things, upon the existence of

total disability for a minimum period of 6 consecutive months which must
be established in fact by the evidence

of record. The mere passage of time is not enough. Accordingly, the
evidence must show that the insured, from

some definite date, remained thereafter continuously totally disabled
for a period of 6 or more months. Neither

the date on which the insured\'s disability first became total in
degree, nor the continuation of the totally dis-

abling condition for a period of 6 months may be presumed.

NOTE: There is one exception: \[The 6-month rule does not apply to newly
issued RH policies when a\] statu-

tory disability exists.

31.24 BEGINNING AND ENDING DATES OF TOTAL DISABILITY

The beginning date of total disability will be that date on which,
according to the evidence of record, the

insured was first shown to be suffering from an impairment of mind or
body which continuously thereafter

rendered it impossible for him or her to follow any substantially
gainful occupation. When the beginning date

is based on some event, such as medical treatment or cessation of
employment, which occurred in a certain

month, but the exact date is not known, the last day of the month will
be presumed to be the date in question.

If the period of total disability does not continue beyond the date of
adjudication of claim, but has terminated

because of the insured\'s return to work or because of evidence showing
his or her ability to again engage in con-

tinuous and substantially gainful employment, the ending date of flu
period of disability will be either the date

prior to the date of return to work or the date on which the medical
evidence first showed that the insured\'s

disability was no longer total in degree.

31-8

August 31,1971 M29-1, Part 1

Change 2

31.25 MULTIPLE PERIODS OF TOTAL DISABILITY

If all the evidence reflects two or more periods of total disability,
but 6 months have not elapsed since

beginning date of the last period, the claim will be accepted for all
periods, but action with respect to the last period will be withheld
pending the expiration of the necessary 6 months. Discretion may be
exercised as to

omission of periods of total disability so short as to be negligible.

31.26 BEGINNING DATES OF AWARDS

The general rule is that in instances where failure to file timely claim
does not limit the award, the effective

date of waiver of premiums will be the first premium due date on or
after the beginning of total disability. In

instances where failure to file timely claim partially limits the award,
the effective date of waiver of premiums

will be computed by first determining the date which was l year prior to
that on which claim was filed, and then

computing a period of time prior thereto equivalent to that during which
the insured was prevented from filing

claim because of circumstances beyond his control. The premium due date
on or after the beginning date of the

period thus computed will be the effective date of waiver. In instances
where no circumstances beyond the

insured\'s control which prevented him from filing timely claim can be
found, the award will commence on the

premium due date on or after the date which was l year prior to that on
which claim was filed.

a\. Where the insurance has been converted or changed to a permanent
plan during the period in which the

insured was totally disabled, the award will show waiver under the plan
in effect prior to conversion or change

terminating as of the date prior to the date of conversion or change and
waiver on the converted or changed

policy from the date of conversion or change.

b\. Waiver of premiums on permanent plans of insurance issued or
reinstated under 38 U.S.C. 781 will be

effective as of the premium due date in the month in which application
for insurance is made, or commencing

with the effective date of issue or reinstatement, whichever is later.

c\. Waiver of premiums on insurance issued under 38 U.S.C. 722(a) may be
granted pursuant to the provisions

of 38 U.S.C. 7 l 2 and such waiver may not be denied on the ground that
the service-connected disability became

total prior to the effective date of the insurance. However, in order
that there may be entitlement to waiver of

premiums under 38 U.S.C. 712, total disability must be found to exist
for 6 or more consecutive months after the

date of application for, or the effective date of the insurance
whichever is later. Waiver of premiums on statutory awards are exempt
from this 6-month rule. Where the insurance under this section is
granted with a retroactive effective date, the total disability must
exist for 6 or more months from the premium due date in the month in
which application is made.

d\. Where RH insurance is issued with an effective date subsequent to
the insured\'s 65th birthday, waiver of

premiums under 38 U.S.C. 7l2 is in order commencing with the effective
date so long as his total disability

commenced prior to his 65th birthday and has continued for 6 or more
consecutive months.

e\. Where a totally disabled insured drops RS insurance to procure RH
insurance, his rights to waiver of

premiums on the RH insurance will be determined as follows:

If his total disability is service-connected and has continued for 6 or
more months, he will be immediately

entitled to waiver under the RH insurance. In such a case, continuance
of total disability for 6 or more months

from the time he is granted \~e RH insurance is not required. Two types
of cases will fall in this category:

\(1\) Where waiver is in effect on RH insurance at the time the RH
insurance is granted.

\(2\) Where waiver was denied under the RS insurance because total
disability commenced prior to the date of

application or the date the RS insurance became effective, whichever is
later.

31-9

M29-1,Part I August 31, 1971

Change 2

31.27 ENDING DATES OF AWARDS

a\. Where total disability is found to have existed for a limited period
only, the ending date of waiver will be

the last day of the premium month in which total disability ceases.

b\. Where a review decision is rendered terminating a continuing award\'
on the basis of evidence showing a

change in condition or in industrial status, waiver will be discontinued
as of the ending date of the premium

month in which the finding of recovery from total disability is made.

c\. The fixing of the ending date of a limited period of waiver to
accord with the ending of the period of total

disability, as in subparagraph a above, is permissible notwithstanding
that a continuing award of waiver

previously granted under another contract in the same case may have been
terminated, in accordance with

subparagraph b above, as of a date subsequent to the insurance month in
which total disability ceased. An

exception to this rule will exist where there is specific claim under
two contracts and the insured has reason to

believe that he would be entitled to the waiver of both contracts but
where action on one contract was delayed

because the insurance records pertaining to such contract were not
available. When necessary, a supplemental

decision will be written to show the exact ending date of total
disability.

d\. Where NSLI was made effective on the 31st day of a month, the last
day of each succeeding month is the

premium due date for such month, regardless of whether it be a 28-, 29-,
30-, or 31 day month. Accordingly, if it

is found that the insured\'s final day of total disability in such
instance is the last day of a month, the final day of

waiver will be the day preceding the last day of the succeeding month.

e\. Where waiver of premiums is discontinued on insurance issued under
38 U.S.C. 722(a) because of severance

of service-connection of a total disability which preexisted the
issuance of the policy, the waiver should be

discontinued as of the current effective date, and the insured given the
opportunity to pay future premiums as set \_\_\_\_

forth in VA Regulation 3442(A).

31.28 FAILURE TO COOPERATE OR TO PROSECUTE NEW CLAIMS

Any competent claimant who, after having been sent two successive
requests for necessary evidence at 30-day

intervals, has failed without reasonable explanation to comply with the
requests, will after 30 days following

second request be considered as having failed to prosecute his claim.
Similarly, a claimant, who refuses after two

such requests to appear for an examination which is indispensable to a
determination as to the existence or

continuation of total disability, will be considered as having failed to
prosecute his claim. In such instances, if

there is no evidence of total disability of record, the claim will be
denied. If there is evidence of total disability, a

decision will be rendered relative to such period as is reflected by the
evidence. If the original request for evidence

or for the insured to appear for examination is returned as
undeliverable, every effort will be made to determine

the correct address. Nevertheless, the insured\'s failure to keep the VA
advised of his correct address will be

sufficient basis for denying the claim on grounds of failure to
prosecute. Final action in this respect, however, will

not be taken until the end of 60 days from the date of the original
request or upon the receipt of replies to all

inquiries regarding correct address, whichever is later.

31.29 FAILURE TO COOPERATE ON REVIEW ACTIONS

The rules stated above with respect to an insured\'s failure to
prosecute his claim for disability insurance

benefits, apply generally to the failure of an insured to cooperate with
the VA relative to requests for evidence or

for appearance for examination in connection with necessary periodic
reviews of continuing awards. However,

such an award may not be terminated solely because of an insured\'s
failure to comply with two requests for

evidence. The only basis upon which a continuing award may be terminated
for failure to cooperate is an

insured\'s failure, in the absence of incompetency or extenuating
circumstances, to submit to necessary medical

examination. In all such instances, irrespective of an insured\'s
failure thus to cooperate, termination of an award, if at all possible,
should be based on an assessment of current medical and employment
evidence. Where,

31-10

August 31,1971 M29-1, Part 1

Change 2

subsequent to the termination of an award because of an insured\'s
failure to cooperate, there is received medical

and/or employment evidence to confirm the termination of benefits, a
supplemental decision will be prepared

changing the basis of the action from failure to cooperate to a
termination on the merits of the case. Such change

of basis for termination does not enlarge the appeal period allowed the
claimant.

31.30 SUPPLEMENTAL ACTIONS AND REVIEWS

Cases wherein action adverse to the claimant\'s or Government\'s
interests have been taken will be reconsidered

on the basis of new and material evidence at any time such evidence is
received. When received within the period

during which an appeal may be filed, all action appropriate to a
supplemental decision will be taken. All rights of

the claimant with respect to the filing of a claim for disability
benefits are reserved after the filing of new and

material evidence. However, such filing does not extend the period
within which appeal may be filed. When such

evidence is received subsequent to the appeal period, it will be treated
as an informal new claim; and the question

of timeliness of filing can be involved in such instance. In any case in
which clear and unmistakable error appears

in a decision, review will be made at any time, and corrective action
taken by supplemental decision.

31.31 ROUTINE REVIEWS

a\. Except in cases where statutory total disability is involved, a
finding of recovery from total disability will

be made on the basis of any competent evidence which establishes that
the insured has in fact recovered the

ability to continuously follow substantially gainful employment. Such
evidence may be medical in nature, or it

may relate to employment. It may pertain to both. If there is current
evidence showing continuous and

substantially gainful employment, the award may generally be terminated
on the basis of such evidence, except

where there is of record evidence indicating a possibility of statutory
disability or the nature of the disability is

such as would indicate a possibility of the employment being detrimental
to the insured\'s health or under

sheltered conditions. In these latter instances further evidence will be
obtained to resolve the question involved. If there is a record of
unemployment or of employment which is not continuous or substantially
gainful, the waiver

will be continued only upon the presence of evidence showing that the
physical or mental condition of the

insured has not improved since the last review of the case to a point
where he is able to carry on continuously in

substantially gainful employment. In weighing the evidence every
reasonable doubt should be resolved in favor of

the insured. Of course, if the medical evidence of record, even though
not current, would under sound medical

judgment indicate the continued existence of total disability, there is
no need to update or obtain new medical

evidence. If there is doubt as to whether the medical evidence of record
is sufficient for current evaluation, advice

from the Medical Consultant should be sought.

b\. If the insured is receiving vocational rehabilitation under the
provisions of 38 U.S.C. 1502, his waiver of

premiums may be continued so long as he remains in training even though
his disabilities have improved. Upon his

rehabilitation or termination of training, his entitlement to
continuation of waiver of premiums will be

determined on the basis of the facts of his individual case.

31.32 TWENTY-YEAR CASES (38 U.S.C. 110)

Twenty-Year Cases-Waiver of premiums in effect on the basis of findings
of total disability which have been

continuously in force for 20 or more years may not, in accordance with
38 U.S.C. 110, be terminated except

upon evidence showing that such finding resulted from the perpetration
of fraud. The 20-year period of disability

will commence on such date as is determined by the appropriate
Adjudication activity or Federal court,

whichever is applicable. Where all the evidence in a given case reflects
more than 1 period of total disability, the

20 years referred to will commence as of the beginning date of the
current period of such disability.

31-11

M29-I, Part I August 31,1971

change 2

SUBCHAPTER 3. TOTAL DISABILITY INCOME BENEFITS

31.33 REQUIREMENTS

a\. Written application by the insured accompanied by proof of the
existence of total disability for 6 or more

consecutive months which commenced before; the anniversary of the policy
nearest the insured\'s 60th birthday

in instances where the disability provision was issued pursuant to the
NSLI Act of 1940, as amended August l,

1946; the insured\'s 60th birthday in instances where such provision was
issued pursuant to Public Law 85-678 or

38\' U.S.C. 715 prior to January l, l965; and the insured\'s 65th
birthday in instances where the provision was

issued pursuant to 38 U.S.C. 715, as amended by Public Law 88-355,
effective January I, 1965.

b\. The total disability referred to in subparagraph a above must also
have commenced after the date the

income provisory was applied for, or the effective date of same,
whichever was later.

c\. The provision must have been in force at time of commencement of
total disability.

d\. The required proof must be filed while the provision is in force, or
within l year after the provision has

ceased to be effective.

31.34 DEFINITION OF REQUIRED PROOF

Required proof is a showing by acceptable evidence, medical or
otherwise, that a condition of total disability

has existed for a period of at least 6 consecutive months. A mere
allegation or statement of such conditions, if

unverified and unsupported by substantial evidence, will not constitute
proof.

31.35 DATE OF RECEIPT OF REQUIRED PROOF

a\. The date of the required proof is the earliest date of receipt of
such evidence in the VA. Required proof

cannot be considered as received in any case prior to the date of
receipt of claim for disability insurance benefits.

b\. If a claim and required proof are filed more than l year after the
rider has ceased to be in effect, the

provisions 6f VA Regulation 3499(C) requiring that proof of total
disability must be filed while this provision is

in force or within 1 year after this provision has ceased to be in
effect will generally be a bar to payment of rider

benefits. However, if the total disability commenced while the policy
and rider were in effect and a retroactive

waiver of premiums is granted, such waiver continues the policy and TDIP
in force so as to comply with the

provisions of VA Regulation 3499(C) but such waiver does not remove the
limitation based on the date of

submission of required proof of total disability restricting the
beginning date of monthly benefits to 6 months

prior to receipt of required proof.

c\. If the insured was prevented from filing a claim at an earlier date
due to his mental incompetency and

provided a claim is filed during the period of mental incompetency or
within 6 months thereafter, the date of

receipt of required proof will be determined on the same basis as though
the claim had been filed at the time the

insured first became mentally incapable of filing claim. If required
proof was already of record at the time the

insured first became unable to file claim, the payment of benefits may
not relate back more than 6 months prior

to the date he became unable to file claim. If required proof was not
then of record, payment of benefits may not

relate back more than 6 months prior to date of receipt of required
proof. If the claim is not filed until more than

6 months after recovery from the mental incapacity, the failure to file
claim at an earlier date will not be excused

and the strict limitation of the required proof rule will apply. Where
required proof of continuous total disability

for 6 or more months is contained in the records of a VA hospital or
service hospital (or a nonservice hospital

where the insured was admitted as a VA patient), required proof of total
disability will be regarded as having been

received as of the date the claim for disability insurance benefits was
filed, provided such records show existence

of the statutory requirement of total disability for a period of at
least 6 months as of the date of the claim.

31-12

August 31,1971 M29-1, Part 1

Change 2

d\. In the event the insured dies without filing a claim, and
circumstances beyond his control are found to have caused his/her
failure to do so, the claim and required proof may be filed by the
beneficiary within l year after the insured\'s death. In such cases,
excluding those involving statutory disabilities as listed in paragraph
31.02, the monthly income payments may relate back to a date not
exceeding 6 months prior to the insured\'s death.

e\. The length of time during which the insured must have been incapable
of timely filing claim so as to make the beneficiary\'s claim of monthly
benefits acceptable is any determinable period of time immediately
preceding his/her death, excluding the extreme hour of life or terminal
episode.

31.36 COMMENCING DATE OF TDIP AWARDS

Disability income payments will be paid from the first day of the
seventh consecutive month of continuous

total disability; but excluding cases wherein statutory disabilities are
involved or under paragraph 3 l .35d such

payments may not relate back to any date more than 6 months prior to
receipt in the VA of the required proof.

Waiver of premiums on the income provision will be the same as on the
basic policy (effective as of the first monthly premium due date on or
after the beginning date of total disability; excepting where untimely
filing is not excused).

31.37 ENDING DATE OF TDIP AWARDS

a\. The date of discontinuance of monthly installments will be the day
prior to the due date of the next

monthly installment following the action of discontinuance. The date of
discontinuance of waiver of premiums

on the total disability income provision will be the same as for the
premiums on basic policy (the day prior to the

due date of the next premium following the day discontinuance action is
taken).

b\. The criteria applicable to findings of total disability for purposes
of determining entitlement or

termination of entitlement to waiver of premiums shall likewise be
applicable to findings for determining

entitlement or cessation of entitlement to monthly disability income
benefits.

c\. When the disability insurance benefits are effective on the 31st day
of the month, the last day of each

succeeding month will be the due date of the installment for that month
regardless of whether it is a 28-, 29-, 30-,

or 31-day month.\'

d\. Where it is determined that the insured became totally disabled on a
date prior to the effective date of

issue or reinstatement of total disability income provision under 38
U.S.C. 781; further, that such disability has

continued for 6 consecutive months; and the insured is otherwise
entitled; payments will commence on the first

monthly anniversary date of total disability following the date of issue
or reinstatement, but in no event more

than 6 months prior to receipt of required proof if statutory disability
is not involved.

SUBCHAPTER 4. CLAIMS AFTER DEATH OF INSURED

31.38 CONDITIONS APPLICABLE

a\. Determinations on questions of total disability in connection with
awards of disability benefits, will not be

rendered except upon the basis of a valid claim filed by or on behalf of
the insured during his lifetime, or by the

beneficiary, administrator of the estate, or next of kin, after death. A
claim for death insurance benefits, will,

however, if filed timely, be considered as a claim for waiver of
premiums if such waiver is necessary to mature the

insurance. Inasmuch as unpaid premiums are a lien against the proceeds
of death benefits in instances where 38

U.S.C. 713 is involved, excepting statutory cases, no claim is necessary
in such cases, excepting those instances

where, in order to avoid the bar to payment of dependency and indemnity
compensation, 38 U.S.C. 417, a

specific request is filed by the beneficiary requesting a specific
request is filed by the beneficiary requesting a determination as to
entitlement under the provisions of 38

n lieu of waiver of premiums under 38 U.S.C. 724, which was in effect at
time of insured\'s

31-13

M29-l ,Part 1 August 31,1971

Change 2 .\~

death. In these instances VA Form 29-357c, Claim for Disability
Insurance Benefits, will be used as a convenience

by the beneficiary in making such request. The criteria applicable to
findings of total disability herein before set

forth and the provisions of paragraph 31 .38b will govern the
adjudication of all such cases. Extra hazard

determination will likewise be made.

\(I\) Claims by persons not entitled to insurance will be disallowed
without decision.

\(2\) In other instances, the name and relationship of the claimant must
be set out in decision in order to

establish validity of the claim.

b\. Where claim for waiver of premiums or claim for death insurance
benefits which embraces a claim for

waiver necessary to mature the insurance is made after the death of the
insured, it is required that adequate proof

of total disability of at least 6 months duration be of record or filed
within l year of the date of insured\'s death.

The date of the receipt of such proof will be fixed and shown in the
decision in the case, unless the decision is

made within l year of veteran\'s death. The time limit for filing such
proof may under no circumstances be

waived. However, obtaining confirmation after the l year, of evidence of
record prior thereto, will not be

considered as a breach of this rule. The question of whether such
additional material is actually proof or merely

confirmatory in nature must be settled in each individual case on the
basis of the facts involved. Where the person

entitled to the insurance is insane or a minor, claim for waiver with
proof of entitlement may be filed within the

l-year period following removal of the legal disability.

c\. 38 U.S.C. 713 cases-Whenever premiums may not be waived solely
because of death of the insured

occurring prior to the expiration of 6 months total disability, the
insurance involved will be deemed to be in force

at date of death. Adequate proof of the facts necessary to establish
such entitlement must be of record or filed

within l year of the date of veteran\'s death. If the person entitled to
the insurance is insane or a minor, proof of

such facts may be filed within the l-year period following removal of
the legal disability.

d\. Insurance benefits under section 602(cX3) of the National Service
Life Insurance Act of 1940, as

amended-No rights, benefits, or privileges, except the privilege of
designating or changing the beneficiary, will

accrue under this section to any person during his lifetime; no policy
or certificate of insurance is issued. Such

insurance is effective from the date the serviceman applied for
insurance and will be deemed to have been

continued in force. until his death. A written determination as to
entitlement under this section will be made, but

only after death, and, no award, other than of death benefits will be
made. There shall be deducted from the

proceeds of such insurance the premiums payable thereon from the date of
application to the date of incurrence

of total and permanent disability in line of duty or to the date of
death, if permanent and total disability was not

incurred.

SUBCHAPTER 5. COMPETENCY

31.39 DECISIONS AS TO COMPETENCY

All decisions on claims for total disability insurance benefits where
severe mental disability is involved will

include a determination as to whether the insured is competent or
incompetent.

a\. Incompetency is a social and legal rather than a medical term and
implies mental disorder resulting in

inability to manage one\'s affairs and perform one\'s duties. The test
of incompetency for the determination of

legal responsibility or capacity differs from that by which incompetency
is determined for medical purposes. The

result is that various conditions which are medically recognized as
insanity or psychotic are not considered as

legal insanity which imputes irresponsibility and incapacity to perform
certain acts. The nature and degree of

insanity required to affect a person\'s civil capacity varies with the
nature of the case, the general test being as to

whether with respect to the matter in hand the person can act
rationally, understanding the nature of his act and

the natural consequence of it in affecting his rights, obligations and
liabilities.

31-14

August 31,1971 M29-I, Part 1

Change 2

b\. Where a previous finding, based on evidence which remains current,
has been made by another VA

institution, which determination will be followed in the absence of
clear error. Where current evidence is

necessary, same will be obtained beneficiary rendition of decision.

SUBCHAPTER 6. FRAUD

31.40 STATUTORY PROVISIONS FOR INCONTESTABILITY

Title 38 U.S.C. 7l0 and 747 provide that ail contracts or policies of
insurance heretofore or hereafter issued,

reinstated, or converted shall be incontestable from the date of issue,
reinstatement, or conversion except for

fraud, nonpayment of premium, or on the ground that the applicant was
not a member of the military or naval

forces of the United States. The above sections refer to NSLI and USGLI;
however, the same incontestability

provision as above applies to War Risk Term Insurance effective as of
April 6, l9l7, as provided in section 307,

World War Veterans Act of l924, as amended July 3, 1930.

31 4l ELEMENTS OF FRAUD

a\. A false representation;

b\. In reference to a material fact;

c\. Made with knowledge of its falsity;

d\. With intent to deceive; and

e\. With action taken in reliance upon the representation.

31.42 THE GOVERNMENT\'S ROLE

a\. The Government in asserting the defense of fraud must do more than
establish that the policy was issued,

reinstated or converted because of false representations. lt. must
establish that all of the above elements are

present by clear and convincing evidence.

b\. A finding of fraud should be made only when the evidence is such
that the Government in a suit on the

policy or total disability income provision could, with reasonable
expectation of success, assert the defense of

fraud.

31.43 APPLICABLE CRITERIA

a\. Misrepresentation-Fraud consists in the misrepresentation of a
material fact by one who, knowing the

falsity of his statement, intends to induce the person with whom he is
dealing to act in reliance thereon, if by so

doing the second person suffers a detriment. Obviously, then the first
question to answer in making the

determination as to the existence of fraud is whether there has been a
misrepresentation. in addition to any

obvious misrepresentation that appears from a review of the evidence,
the conditions forming the basis for the

claim must be considered. These conditions may be such that, considering
the time when the application for

insurance, reinstatement, or conversion was made, some manifestations of
health impairment, subjective or

objective could have been apparent before the application was filed. In
cases where a definite date of onset of a

disability is established, no problem is presented in this connection.
Where such definite date is not established,

doctor and claimant should be questioned as to treatment prior to
application for reinstatement or conversion.

..

31-15

M29-I, Part l August 31, 1971 31, l\~7 l

Change 2

b Material Fact Secondly to make a an affirmative finding of fraud, it
must be established that the misrepresentation previously referred to
was of material fact; i.e., not of a matter old opinion as contrasted
with

actual fact, not of a trivial matter although factual. The fact in
question must have been sufficiently material to

have induced the VA to act favorably on the applicant\'s request for
issue or reinstatement of the insurance. In

this connection, the withholding of information, under circumstances
which call for a full disclosure of pertinent

facts, constitutes misrepresentation. In other words, the applicant who
is under a legal duty to make a full

disclosure of facts relative to his condition of health, has
misrepresented a material fact when he answers no to a

question which, under the true facts, he should have answered yes. The
test to apply here is to ask whether the

application would have been accepted had the true facts been known.

c\. Knowledge-The perpetration of fraud consists of a willful act.
Accordingly, where the applicant has made

a false statement of a material fact in connection with his application,
or has failed to disclose certain material

information relative to his health at such time, no fraud may be found
where the\' circumstances disclose that the

applicant was without knowledge of the falsity of his statement or of
the true facts with respect to which he

failed to make disclosure. The third question or answer therefore is
whether the applicant, under all reasonable

circumstances, had knowledge of the pertinent facts.

d\. Intent-This fourth element of fraud is difficult to establish. To do
so it must be clear that the applicant

knew the VA needed the specific information requested on the form, and
that he either furnished misleading

information or withheld the truth knowing, or at least suspecting, that
if the true information were brought out

his application would have been denied. In this connection, attention
must be accorded the fact that the average

lay person is not acquainted with medical terminology. At the same time,
full cognizance must be given the

doctrine that a reasonably prudent person is presumed to intend the
reasonable consequences which flow from

his acts and words.

e\. Detriment-This fifth element of fraud will usually present no
problem in resolving the question. Insofar as

the making of an affirmative finding in connection with the issuance or
reinstatement of insurance, it invariably

suffices that the application in question was accepted by the VA.

31.44 DOCTRINES OF NOTICE AND WAIVER

a\. The VA is on notice with respect to all information the applicant
furnished or. his application and all

pertinent data in the Insurance and Disability Insurance folders, or in
the Insurance office when the claim is

adjudicated. Likewise, everything in the claims folder is deemed to be
in this same category if the insured

furnished any indication that he has filed claim for compensation or
pension benefits or medical treatment based

on disability. If any such information could have led to further
explanation relative to a possible impairment of

health and the VA failed to avail itself of such opportunity, its
negligence in failing to have done so is deemed to

be a contributory factor in the perpetration of what would otherwise be
fraud. Under such circumstances the VA

is barred from cancellation of the policy on grounds of fraud.

b\. In instances where a case has been adjudicated and benefits awarded
it would be improper thereafter to

find fraud on the basis of evidence which was available at time of
adjudication. Under such circumstances the VA

is deemed to have waived its right to make a contest as to the validity
of the contract. Adjudicative action as

referred to here includes review actions as well as original
adjudication. The application of this rule has its

limitations. Actions by personnel in the Insurance Division other than
those involved in the adjudication of

insurance claims, which can result in a bar to a later fraud finding,
are limited to actions where the issue involved

embraces required determination as to the applicant\'s health as it
affects his insurability.

31.45 APPLICATION OF PRINCIPLES OF EQUITY

It is well settled that the general principles of equity are applicable
in regard to action by the United States to

rescind a contract, so long as their application will not frustrate the
purpose of its laws or thwart public policy.

Of course, it neither frustrates the purpose of the insurance laws
administered by the VA nor thwarts public

31-16

May is, 1972 M29-1, Part 1

Change 3

policy to apply general principles of insurance law relative to
rescission for fraud and waiver of rights in regard

thereto to Government life insurance contracts. Certainly the VA is
justified in the light of general principles of

law referred to above in not canceling policies of insurance or TDIP
riders in some categories of cases iii which

such action would clearly be inequitable. There is no statute,
regulation, or principle of Law requiring that the VA assert a right of
rescission in any case in which such action would appear inequitable in
the light of all the facts and circumstances of the case.

31 .46. SUBMISSION OF CASES FOR POSSIBLE PROSECUTION

a\. Generally, in instances where contracts of insurance (including
disability rider cases) have been canceled on

account of fraud, the cases should be referred to the General Counsel
for transmittal to the appropriate United

States Attorney, under VA Regulation 5560, for possible prosecution.

b\. exceptions to general rule

\(l\) Cases in which the statute of limitations (5 years) has run since
filing of fraudulent document.

\(2\) Cases in which a veteran under severe physical handicap is
involved.

abettor, unless several veterans are also involved.

\(3\) Cases in which a doctor is involved as an aider or abettor, unless
several veterans are involved.

\(4\) Cases involving incompetent veterans.

\(5\) Cases involving veterans with terminal illnesses.

\(6\) Cases where the veteran himself has disclosed his fraudulent
action.

SUBCHAPTER 7 EXTRA HAZARD OF MILITARY SERVICE

31.47 NECESSITY FOR DECISION

a\. \[ \] Whenever \[ \] benefits \[under insurance become \] payable
because of (the death of the insured as the

result of disease or (injury) traceable to the extra hazard of military
service, \[the liability for payment of such

benefits shall be borne by the United States in an amount which, when
added to the policy reserve at maturity,

will equal the then value of such benefits. The amount shall be
,transferred from the NSLI appropriation to the

NSLI fund.

b\. \[Whenever insurance premiums are waived because of the total
disability of the insured as the result of

disease or injury traceable to the extra hazard of military service,
there shall be transferred from time to time an

amount equal to the amount of such premiums from the NSLI appropriation
to the NSLI fund.

c\. Whenever benefits under TDIP become payable because of total
disability of the insured as a result of

disease or injury traceable to the extra hazard of military service,
there shall be transferred from the NSLI

appropriation to the NSLI fund from time to time any amounts which
become, or have become, payable to the

insured on account of such total disability. There shall be transferred
from the NSLI fund to the NSLI

appropriation the amount of the reserve held on account of the total
disability benefit. When the insured recovers

and is entitled to continue protection under the TDIP, there will be
transferred to the NSLI fund a sum sufficient

to set up the then required reserve on such total disability benefit.

d\. When insurance benefits are awarded for death of the insured, or a
waiver of premiums is granted, or TDIP

benefits are awarded because of total disability of the insured, a
determination must be made as to whether the

injury or disease is traceable to the extra hazard of military service.
In the NSLI program, determination of extra

hazard is applicable to V policies only.

\-\--.. 31-17

M29-l, Part May 15, l\~72

Change 3

c\. Applicable Criteria

\(l\) \[General\] An affirmative finding of fact as to the extra hazard
of military service in a given case requires that there be a reasonably
clear showing that the insured would not have been exposed to the
particular hazard involved but for his/her military service. It was not
intended that there be charged to the extra hazard of service the cost
of any claim arising from disease or injury to which the insured would
ordinarily have been exposed in civilian life.

\(2\) Effect of Line of Duty or Service Connection. A finding as to the
extra hazard of service is not the same as

either line of duty or service-connected findings. All affirmative
findings as to extra hazard have to be based on

injury or disease incurred in service and in line of duty; however, the
reverse is not true. The test, with respect to

extra hazard findings, is whether or not the particular disease or
injury involved In traceable to the performance

of duty.

\(3\) Determining the Facts of the Particular Case. No claim will be
found due to the extra hazard of service on

the basis of speculation or in the absence of affirmative evidence; and
all evidence must be carefully weighed. If

any fact (or circumstance creates a reasonable doubt that the disease or
injury is traceable to the performance of

duty, the loss involved will not be held due to the extra hazard of
service.

\(4\) Matters of Common Knowledge. Although exhaustive efforts must be
made to obtain all necessary

evidence, it must be remembered that in reaching decisions it will be
necessary to take into consideration matters

of common knowledge regarding which little, if any, information will be
available.

\(5\) Circumstances Usually Indicating Extra Hazard. Injuries sustained
as the result of enemy action, as well as

conditions which result from such injuries, will be deemed to be due to
the extra hazard of military service.

Likewise, death or injury suffered as the result of the performance of
military duty will be so held; as will injury

or death suffered as the result of airplane crash or motor vehicle
accident while performing official duty, in the \_\_\_\_

.absence of willful misconduct or substantial negligence. In this last
mentioned respect, however, there will be

excepted those instances where injury or death results from travel as a
passenger on a regular flight of a scheduled

airline in the United States or as the result of motor vehicle travel in
vehicles substantially similar to ordinary

passenger and commercial vehicles under conditions usually experienced
in civilian travel. Death or disability

resulting from tropical or oriental diseases or conditions which arise
as the result of confinement as a prisoner of

war will likewise be generally held to be due to the extra hazard of
service. So, also, will diseases originating or

aggravated as the result of exposure to the elements or adverse climatic
conditions.

\(6\) Circumstances Usually Precluding Extra Hazard. Disease or injury
arising while the insured is on leave,

furlough, liberty pass, or is absent without leave, is not held due to
the extra hazard of military service. So it is,

also, with diseases or injuries resulting from the insured\'s willful
misconduct or substantial negligence. Congenital

defects and certain organic diseases, although they may arise during
military service, cannot, under sound medical

judgment, be held to have been caused by such service. However, if it is
quit. clear from the record, the latter

conditions may be held due to extra hazard on the basis of aggravation.

\(7\) Skin Conditions. Many skin conditions are the result of insect
bites or irritation through contact with

vegetation, particularly in tropical areas, and existing skin conditions
are aggravated by heat and dampness of the

tropics. Under either circumstance, it is proper to hold the condition
due to the extra hazard of military service.

\(8\) Accidents. Injury resulting from accident while performing
military duty is traceable to the extra hazard

of service (In the absence of willful misconduct or substantial
negligence). This rule also applies to accidents

occurring while one is traveling under orders, except in instances cited
in subparagraph (5) above. In cases of

insured\'s traveling under orders and voluntarily using civilian motor
vehicles, injury arising from accident should

not be held due to extra hazard of service unless military urgency or
similar circumstance contributed to the

accident. Injury from aircraft accident is not due to extra hazard of
service if the insured voluntarily participates

as passenger or otherwise in a flight in a privately owned or rented
airplane. Other accidents may, under some

circumstances, be held to be due to the extra hazard of service if the
insured, although not performing official

31-18 i\'

May 15,1972 M29-l, Part 1

Chant 3

duty, was present at his/her post, ship, or station and available for
duty. Death or disability from recreational activity should not be
considered as traceable to the extra hazard of service unless such
activity was compulsory or was a part of the military training.

\(9\) Contagious or Infectious Diseases. Although contagious and
infectious diseases are contact diseases, the

mere fact that such a disease is contracted while in the military
service is not of itself sufficient to warrant a

finding that it is due to the extra hazard of service. Such diseases
contracted in the continental United States

should be held to be due to the extra hazard of service only if it is
shown that the insured was stationed in an area

where the disease was epidemic. When such a disability is contracted
outside the continental limits of the United

States, it should be taken into consideration that the insured is
exposed because the performance of his military

duties requires his presence In that locality. Under such circumstances
it is reasonable to hold that a disability so

contracted is traceable to the performance of duty.

\(10\) Pulmonary Tuberculosis. Pulmonary tuberculosis may be held to be
traceable to the performance of

duty when it is shown that the insured Gas exposed while performing duty
through contact with persons

31-18a

August 31,1971 M29-l, Part l

Change 2

suffering from the disease or when his duties were of such an arduous
nature that it may be presumed that the

onset of the disability was due to the resulting lowering of his
vitality. In determining whether disability or death

from tuberculosis is based on contact with the disease is due to the
extra hazards of service, consideration should be given to service in
certain overseas areas where the incidence of the disease was markedly
higher among certain types of troops. For instance, the incidence of
tuberculosis among nonwhite in port areas of North Africa, Italy,
France, the Islands of the Pacific, Philippine Islands and Japan during
World War II, was such as to afford a basis for presuming that the
disease was due to extra hazards of military service. Also, duties
involving attendance of those who were ill give rise to a similar
presumption. In determining whether the disability or death from
tuberculosis to be deemed to have arisen from the arduous nature of the
insured\'s duties, consideration should be given to long periods of
imprisonment by the enemy as well as to sustained periods of exposure to
the elements or service of considerable duration under combat
conditions.

\(11\) Mental and Nervous Conditions. In considering mental and nervous
conditions consideration must be given to the history of mental or
nervous trouble prior to service; the length of service prior to the
onset of the condition; the degree of adjustment to military life
following induction; the kind of service, that is, whether the insured
was subject to any unusual stress such as combat, trauma, bombing,
isolation, protracted stay in jungle; also, if he had a preexisting
disability, whether this service was such as to aggravate it beyond its
natural progress.

\(12\) suicide. Suicide will be held due to extra hazard of service if
it is done while in a severe abnormal mental state resulting from
pressures of compulsions arising in or aggravated by the performance of
duty in the military or naval service, and there are not apparent any
other reasons. Generally, suicide following substantial periods of
apparent remission should not be held due to the extra hazard of
service.

\(13\) Considerations of Age and the elapse of Time. Insureds whose
injury or disease was at one time held due to the extra hazard of
service and who subsequently regained the ability to engage in
substantially gainful employment present an unusual problem. Although
when later in life death or disability occurs and the disease or injury
held due to extra hazard may still be present as a contributing cause,
great care should be exercised in holding the second claim due to the
extra hazard of service. Where long periods of time intervene, the
insured has engaged in or had the ability to engage in employment, the
insured has reached the later years of life and incurred additional
disabilities due to age, the second claim should not ordinarily be held
due to the extra hazard of service unless the evidence clearly shows
that the disease or injury which was due to the extra hazards of service
is also the principle cause of the present period of total disability.

\(14\) Disease or injury preexisting the issue of TDIP will not bar
extra hazard determination. The language of the statute is clear and
specific that the Government shall bear the cost of the benefits under
the total disability income provision whenever such benefits become
payable because \~e total disability of the insured resulted from
disease or injury traceable to the extra hazard of the military or naval
service. There is no restriction in the law or the legislative history
which limits such liability to diseases or injuries which occur after
the issuance of the total disability provision. Obviously there will be
cases in which health conditions originating in earlier military or
naval service are not manifest at the time of application. In other
cases, even though detected and disclosed, the disease or injury will
not be considered serious enough at the time of application to warrant
rejection under the

good health criteria. There is nothing in the language of the statute or
the legislative history which justifies a conclusion that the extra
hazard provision would be rendered inapplicable, if a disease or injury
,traceable to performance of duty, which was undiscovered, overlooked or
considered minimal at the time of application, later caused total
disability.

(l 5) A determination concerning the extra hazards of military or naval
service will not be reversed except on the basis that such determination
was clearly and unmistakably erroneous.\]

31-19