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51–870 2010

LEGISLATIVE HEARING ON H.R. 2379, H.R. 2713, 

H.R. 2774, AND H.R. 2968 

HEARING 

BEFORE THE

SUBCOMMITTEE ON DISABILITY ASSISTANCE AND 

MEMORIAL AFFAIRS 

OF THE

COMMITTEE ON ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JUNE 24, 2009 

Serial No. 111–31 

Printed for the use of the Committee on Veterans’ Affairs 

( 


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COMMITTEE ON VETERANS’ AFFAIRS 

BOB FILNER, California, Chairman 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

MICHAEL H. MICHAUD, Maine 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

HARRY E. MITCHELL, Arizona 

JOHN J. HALL, New York 

DEBORAH L. HALVORSON, Illinois 

THOMAS S.P. PERRIELLO, Virginia 

HARRY TEAGUE, New Mexico 

CIRO D. RODRIGUEZ, Texas 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

JOHN H. ADLER, New Jersey 

ANN KIRKPATRICK, Arizona 

GLENN C. NYE, Virginia 

STEVE BUYER, Indiana, Ranking 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

BRIAN P. BILBRAY, California 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida 

VERN BUCHANAN, Florida 

DAVID P. ROE, Tennessee 

Malcom A. Shorter, Staff Director 

SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS 

JOHN J. HALL, New York, Chairman 

DEBORAH L. HALVORSON, Illinois 

JOE DONNELLY, Indiana 

CIRO D. RODRIGUEZ, Texas 

ANN KIRKPATRICK, Arizona 

DOUG LAMBORN, Colorado, Ranking 

JEFF MILLER, Florida 

BRIAN P. BILBRAY, California 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Veterans’ Affairs are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 


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C O N T E N T S 

June 24, 2009 

Page 

Legislative Hearing on H.R. 2379, H.R. 2713, H.R. 2774, and H.R. 2968 .......... 1 

OPENING STATEMENTS 

Chairman John J. Hall ............................................................................................ 1 

Prepared statement of Chairman Hall ........................................................... 17 

Hon. Doug Lamborn, Ranking Republican Member ............................................. 5 

Prepared statement of Congressman Lamborn .............................................. 17 

WITNESSES 

U.S. Department of Veterans Affairs, Thomas M. Lastowka, Director, Philadelphia Regional Office and Insurance Center, Veterans Benefits Administration ................................................................................................................... 12 

Prepared statement of Mr. Lastowka ............................................................. 23 

Disabled American Veterans, John Wilson, Associate National Legislative 

Director ................................................................................................................. 9 

Prepared statement of Mr. Wilson .................................................................. 21 

Donnelly, Hon. Joe, a Representative in Congress from the State of Indiana ... 1 

Prepared statement of Congressman Donnelly .............................................. 18 

Halvorson, Hon. Deborah L., a Representative in Congress from the State 

of Illinois ............................................................................................................... 6 

Prepared statement of Congresswoman Halvorson ....................................... 19 

Kirkpatrick, Hon. Ann, a Representative in Congress from the State of Arizona ....................................................................................................................... 11 

Prepared statement of Congresswoman Kirkpatrick ..................................... 20 

Tragedy Assistance Program for Survivors, Inc., Washington, DC, Bonnie 

Carroll, Chairman and Executive Director ........................................................ 7 

Prepared statement of Ms. Carroll ................................................................. 20 

SUBMISSIONS FOR THE RECORD 

Buyer, Hon. Steve, a Representative in Congress from the State of Indiana, 

statement .............................................................................................................. 25 

Paralyzed Veterans of America, statement ........................................................... 25 

MATERIAL SUBMITTED FOR THE RECORD 

Post-Hearing Questions and Responses for the Record: 

Hon. John J. Hall, Chairman, Subcommittee on Disability Assistance 

and Memorial Affairs, Committee on Veterans’ Affairs, to Bonnie Carroll, Chairman and Executive Director, Tragedy Assistance Program 

for Survivors, letter dated July 15, 2009, and response letter dated 

August 20, 2009 ............................................................................................ 27 

Hon. John J. Hall, Chairman, Subcommittee on Disability Assistance 

and Memorial Affairs, Committee on Veterans’ Affairs, to Thomas M. 

Lastowka, Director, Philadelphia Regional Office and Insurance Center, 

U.S. Department of Veterans Affairs, letter dated July 15, 2009, and 

VA responses ................................................................................................. 29 


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LEGISLATIVE HEARING ON H.R. 2379, H.R. 

2713, H.R. 2774, AND H.R. 2968 

WEDNESDAY, JUNE 24, 2009 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON VETERANS’ AFFAIRS, 

SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL

AFFAIRS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 3:27 p.m., in Room 

334, Cannon House Office Building, Hon. John Hall [Chairman of 

the Subcommittee] presiding. 

Present: Representatives Hall, Halvorson, Donnelly, Kirkpatrick, 

and Lamborn. 

OPENING STATEMENT OF CHAIRMAN HALL 

Mr. HALL. Good afternoon, ladies and gentlemen. The Committee 

on Veterans’ Affairs, Subcommittee on Disability Assistance and 

Memorial Affairs, Legislative Hearing on H.R. 2379, H.R. 2713, 

H.R. 2774, and H.R. 2968 will now come to order. 

I would ask you to please rise for the Pledge of Allegiance. Flags 

are at both ends of the room. 

[Pledge of Allegiance.] 

Mr. HALL. Thank you. 

Today we will have testimony on these four pieces of legislation. 

As a courtesy to Congressman Donnelly, I will ask him first to 

speak on H.R. 2713, the ‘‘Disabled Veterans Life Insurance Enhancement Act,’’ which he sponsored, then I will give my opening 

statement and then we’ll proceed to the rest of the bills. 

Mr. Donnelly, you are recognized. 

STATEMENT OF HON. JOE DONNELLY, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF INDIANA

Mr. DONNELLY. Thank you, Mr. Chairman. I greatly appreciate 

it. 

And to Chairman Hall and to Ranking Member Lamborn, who I 

am sure will be here a little bit later, I want to thank you for calling this legislative hearing and for the opportunity to speak on the 

need to enhance and update the Service-Disabled Veterans Insurance (S–DVI) Program. The life insurance policy offered to disabled 

veterans is badly out of date and, as a result, less than four percent of eligible veterans participate. 

I believe that life insurance speaks directly to President Lincoln’s 

promise, to care for him who shall have borne the battle and for 


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his widow and his orphan by providing financial assistance to families in the event of a veteran’s death. 

However, Congress must recognize the importance of enhancing 

and updating life insurance for our service-connected disabled veterans and ensure that this policy better provides for the needs of 

participating veterans’ families. 

The ‘‘Disabled Veterans Life Insurance Enhancement Act’’ would 

make long overdue changes to an existing life insurance program 

that covers veterans with service-connected disabilities. We have a 

responsibility to care for our veterans and their surviving loved 

ones, which is why I want to update the outdated life insurance 

program that currently covers our disabled servicemen and women. 

S–DVI was created in 1951 to provide life insurance to disabled 

veterans who, because of their service-connected disabilities, would 

be unable to obtain life insurance on the commercial market or 

would be required to pay especially high premiums. 

Veterans’ groups have argued for years that the coverage is not 

enough, but efforts to increase the amount have not gained traction. 

In their annual Independent Budget, major veterans’ groups support the idea of cutting premiums for the insurance and updating 

the mortality tables. 

The program started in 1951, but it used a 1941 mortality chart 

to set premiums and as a result, S–DVI is no longer competitive 

with commercial insurance. 

Currently, the policies are issued for a maximum face value of 

only $10,000, an amount that has not been updated for 58 years. 

Additionally, the current mortality tables are almost 70 years 

old. Tables now are based on the assumption that disabled vets die 

at an average of 58, which is no longer true given today’s record. 

As life expectancy has significantly improved over the past 60 

years, commercial insurance companies have used up-to-date mortality tables. The newest table in general used by the insurance industry has premium rates roughly 50 percent lower than S–DVI 

rates. 

According to the veterans service officer from Elkhart County in 

my district, the average burial is about $6,500. If the disabled vet 

only has $10,000, that does not leave much for his loved ones. 

Mr. Chairman, veterans expect the same thing each of us do 

when we pay into a life insurance policy: the promise that when 

we pass, during that difficult time, our surviving loved ones are not 

burdened with not only the cost of the memorial and burial but 

other costs, day-to-day expenses, and the fear of how they will provide in the future. 

Unfortunately, that opportunity hardly exists with the current 

structure of S–DVI because the payment is capped at $10,000. Participating veterans are also denied the opportunity to purchase additional coverage through the program. 

This Act would enhance the S–DVI by increasing the maximum 

under base policies from $10,000 to $100,000 and offers an open period for eligible service-connected disabled veterans to apply if they 

are not currently enrolled. 


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And while the $10,000 maximum coverage was part of the program from its 1951 start, the amount actually has not changed 

since the government first offered this kind of insurance in 1917. 

Put in perspective, according to the National Association of Insurance Commissioners, the average life insurance policy purchased in 2007 was $176,000. 

My legislation would direct the U.S. Department of Veterans Affairs (VA) to revise its premium schedule to reflect current mortality tables and increase the supplemental coverage for vets who 

have been rated 100-percent service-connected from $20,000 to 

$50,000. This bill has the support of the Disabled American Veterans (DAV). 

Since the S–DVI Program is not a fully self-supporting fund, it 

does require appropriations and, therefore, subsidies are expected 

to increase. Even though there are standard premium rates, for example, our 100-percent disabled veterans’ base premiums are 

waived if they apply and are granted supplemental insurance. Keep 

in mind that these great American veterans have service-connected 

disabilities and are unable to obtain life insurance due to their conditions. 

I am aware expenses for this program will increase. But as Members of the Committee are aware, we must also increase our commitment to our disabled veterans who pay the price for their service and sacrifice. 

I am committed to fiscal responsibility and understand the necessary hurdles with Pay-As-You-Go rules. We are dedicated to pursuing the goal of updating S–DVI. We seek the support of my colleagues in doing something to bring this policy into the 21st century, and we will work together to try and find the offsets for this 

program. 

Thank you very much for this chance to address the Subcommittee, Ranking Member Lamborn, Chairman Hall, and I want 

to thank you very much for your time. 

[The prepared statement of Congressman Donnelly appears 

on p. 18.] 

Mr. HALL. Thank you, Mr. Donnelly. 

I do have a few questions for you, but I know you are already 

late for another engagement. 

Mr. DONNELLY. Go right ahead. 

Mr. HALL. Okay. Well, I will just briefly ask. The DAV has made 

two suggestions to amend your bill, which would allow an open enrollment and more choices for S–DVI levels of coverage. 

What do you think of those recommendations? 

Mr. DONNELLY. We would be more than happy to work with the 

DAV and also with the Committee. We view this as a starting 

point, Mr. Chairman, and want to work with you and the Ranking 

Member in producing the best possible legislation. 

Mr. HALL. How did you determine the maximum benefit of 

$150,000 including base and supplemental coverage would be appropriate? 

Mr. DONNELLY. What we tried to do is be reflective of the initial 

intention of the program adjusted for where we are in today’s economy. Obviously, in 1951, it was $10,000. And what we tried to do 

is be reflective of the average life insurance policy today, which is 


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at $176,000 and tried to have consideration of the costs as well 

that we face. 

And so that was the number we came up with. And, again, that 

is a number that we are more than happy to work with the Committee to find the most appropriate place. 

Mr. HALL. Lastly, the 3.5 percent participation rate is shockingly 

small. If Congress made the rates more equitable with the private 

sector, do you think more veterans would participate? 

Mr. DONNELLY. We think we would see a significant increase. With a policy that is at $10,000, people just do not see it as really 

part of the solution of taking care of their family. 

Mr. HALL. Ranking Member Lamborn, would you like to ask 

some questions? 

Mr. LAMBORN. No. But I do want to say that I support this legislation. I think that it is well-formed and I certainly look forward 

to tweaking it a little bit. I certainly support the thrust behind it 

and look forward to working together on it. 

Mr. DONNELLY. Thank you, Ranking Member. 

And I will tell you what. We feel that the legislation can only become better as we work with you and the Chairman and the Committee. 

Mr. HALL. Thank you, Mr. Donnelly. 

Mr. DONNELLY. Yes, sir. Thank you for your consideration as 

well. 

Mr. HALL. You are very welcome. 

I believe our other witnesses are, some of them are here and 

some of them will be here. I am sorry we were late once again. Procedural votes on the floor delayed us as you probably know. 

So we are considering H.R. 2379, H.R. 2713, H.R. 2774, and H.R. 

2968. These measures are all critical and common-sense bills intended to ensure that our veterans and their families who have insurance related needs while they are living receive the full measure of benefit and that their survivors have ample replacement income to meet their needs. 

Additionally, these bills would allow veterans to make the necessary plans to ensure that their loved ones are provided for adequately and have financial security. 

All the bills are relatively noncontroversial. They would give veterans greater flexibility in their insurance choices and, consequently, greater peace of mind. I am happy to have them under 

consideration today. 

Specifically, H.R. 2379, the ‘‘Veterans’ Group Life Insurance Improvement Act of 2009,’’ sponsored by Mr. Buyer, would allow veterans to purchase up to $400,000 of Veterans’ Group Life Insurance 

(VGLI) coverage in $25,000 increments every 5 years until the age 

of 60, giving veterans greater options in their life insurance 

choices. 

Mr. Donnelly’s bill, which we just heard about, would make long 

overdue updates and changes to the VA’s Service-Disabled Veterans’ Insurance Program, including increasing basic and supplemental coverage and updating the 1941 rate tables. 

The ‘‘Families of Veterans Financial Security Act,’’ H.R. 2774, 

sponsored by Mrs. Halvorson, a freshman Member on this Committee, would make permanent the 2-year extension of the free 


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Servicemembers’ Group Life Insurance (SGLI) coverage period for 

servicemembers who are totally disabled on the date of their separation from active duty or Reserve status. 

And, lastly, H.R. 2968, sponsored by Mrs. Kirkpatrick, another 

freshman Member on this Committee, would amend the provision 

that allows a servicemember with SGLI or a veteran with VGLI 

who is terminally ill to get half of their SGLI or VGLI coverage 

while they are still alive by eliminating the discount rate that VA 

applies to this payment. 

This bill would make the policies consistent with the commercial 

insurance industry and provide significant benefit to servicemembers and veterans by not discounting and, hence, lowering 

these payments. 

I commend the Members for sponsoring these thoughtful measures and look forward to hearing from all of our witnesses on these 

bills. And I thank you for being here today. 

I now yield to Ranking Member Lamborn for his opening statement. 

[The prepared statement of Chairman Hall appears on p. 17.] 

OPENING STATEMENT OF HON. DOUG LAMBORN 

Mr. LAMBORN. Thank you, Mr. Chairman, for holding this hearing to discuss the legislation before us. 

H.R. 2379, the ‘‘Veterans’ Group Life Insurance Improvement Act 

of 2009,’’ was introduced by full Committee Ranking Member Steve 

Buyer and it would increase the amount of life insurance available 

to veterans. 

Veterans’ Group Life Insurance provides veterans the ability to 

obtain a competitive life insurance policy for them and their family 

in post-military life. 

Under current law, separated servicemembers have up to 1 year 

from discharge to convert their Servicemembers’ Group Life Insurance policies to VGLI. And whatever level of coverage they select 

at that time is unchangeable. 

Many are young and do not see the need to carry a large amount 

of life insurance coverage. However, as they get older and have 

families, the need for additional coverage grows. 

This bill would allow veterans to purchase up to $400,000 of 

VGLI coverage in $25,000 increments every 5 years until the age 

of 60. The cost of such increases in coverage will be offset by premiums veterans pay, so there is no direct cost to the government. 

The opportunity to allow our veterans greater flexibility in their 

life insurance choices without increasing the burden on taxpayers 

leaves little doubt as to whether H.R. 2379 is a worthy measure. 

I urge all members to cosponsor and support this legislation. 

I also want to thank my colleagues, Mrs. Halvorson and Mrs. 

Kirkpatrick and Mr. Donnelly, for introducing the other measures 

before us today. These bills would also make improvements to insurance benefits for veterans, and I want to note my support for 

them. 

I thank the Chair and the witnesses for their testimony and I 

yield back. 

[The prepared statement of Congressman Lamborn appears on 

p. 17.] 


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Mr. HALL. Thank you, Congressman Lamborn. 

I would remind all panelists that your complete written statements have been made a part of the hearing record. Please limit 

your remarks so that we may have sufficient time for follow-up 

questions once everyone has heard the testimony. 

And since Mr. Buyer is not here, I do not believe he will be able 

to attend. I understand that he is otherwise tied up. 

But I am sure, Mr. Lamborn, if we need more description of the 

legislation, we can get it from our Ranking Member. 

Mr. Donnelly, we already heard from. 

Mrs. Halvorson, you are next and recognized for 5 minutes. 

STATEMENT OF HON. DEBORAH L. HALVORSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mrs. HALVORSON. Thank you, Mr. Chairman, and good afternoon. 

Thank you so much for holding this hearing. 

And Ranking Member, Mr. Lamborn, and Members of the Subcommittee, thank you for allowing me to speak. 

I am excited to be here to discuss H.R. 2774, the ‘‘Families of 

Veterans Financial Security Act.’’ H.R. 2774 would make permanent the extension that totally disabled veterans currently receive 

from the Servicemembers’ Group Life Insurance. 

SGLI is operated by the Department of Veterans Affairs and provides low-cost group life insurance to Members of the uniformed 

services. 

It was originally developed to make insurance benefits available 

for veterans and servicemembers who were not able to secure insurance from private companies due to the extra risk involved in 

military service or because of service-connected disability. 

Currently the SGLI disability extension allows servicemembers 

who are totally disabled at the time they are discharged to retain 

their SGLI coverage at no cost for up to 2 years. This extension has 

guaranteed that the veterans that are in most need, the ones that 

are seriously disabled as a result of their service, are fully covered 

under the SGLI Program and will not lose their life insurance coverage. 

It has given military families the peace of mind that their financial security is strong so that they can worry about their loved ones 

and not the worst case scenario. 

Furthermore, the extension has provided additional time for VA 

to contact veterans and assist them with making informed decisions about what life insurance options are available after they are 

no longer eligible for the SGLI Program. 

Unfortunately, the SGLI extension is set to expire, potentially 

costing disabled veterans thousands of dollars. If allowed to expire, 

the extension would fall to only 18 months of coverage as opposed 

to the 24 that veterans currently receive. 

H.R. 2774 would make permanent the 24-month extension and 

allow veterans to continue to focus on what is most important, 

their rehabilitation and recovery. 

My bill maximizes the opportunity for disabled veterans who 

have limited or no opportunity of obtaining commercial insurance 

to obtain insurance coverage, insurance coverage that will provide 

financial security to the families of our wounded warriors. 


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There is no cost to the government that is associated with this 

legislation as the SGLI Program will assume all costs. 

Thank you, Mr. Chairman and Members of the Subcommittee. I 

would be happy to address any questions that you or any of the 

other Members of the Committee would have for me. 

[The prepared statement of Congresswoman Halvorson appears 

on p. 19.] 

Mr. HALL. Thank you, Mrs. Halvorson. 

Mrs. HALVORSON. I yield back. 

Mr. HALL. We do have some questions. I would like to ask, while 

it seems to make a lot of sense, of course, to permanently extend 

the coverage period for SGLI for 2 years, since servicemembers who 

are disabled are going through a very difficult and trying time, 

have you had any feedback from servicemembers or their families 

who have benefited from this coverage and what did they think? 

Mrs. HALVORSON. Well, what I have heard, and we are talking 

here about service-related totally disabled veterans, and these are 

the veterans that often cannot find any other commercially offered 

insurance, and I have a Veterans Advisory Committee, and this is 

one of the things that came to my attention as something that they 

find very, very important as they are making these informed decisions with their family. 

Mr. HALL. Thank you. 

Mr. Lamborn, would you like to ask a question? 

Mr. LAMBORN. No. Thank you for the opportunity. But I do want 

to just reiterate my support for this good measure and I am happy 

that I can support it. I commend the gentlelady for offering it. 

Mrs. HALVORSON. Thank you, Mr. Lamborn. 

Mr. HALL. Thank you, Mr. Lamborn and Mrs. Halvorson. 

Since Mrs. Kirkpatrick is delayed, we will wait to hear from her 

and ask panel two to join us at the witness table. 

Bonnie Carroll, the Founder of the Tragedy Assistance Program 

for Survivors (TAPS), and John Wilson, the Associate National Legislative Director of Disabled American Veterans. 

Welcome, both of you. You know the routine by now. Your full 

statements, written statements are entered in the record and you 

may amend them or abridge them as you see fit. 

Ms. Carroll, you are now recognized for 5 minutes. 

STATEMENTS OF BONNIE CARROLL, CHAIRMAN AND EXECUTIVE DIRECTOR, TRAGEDY ASSISTANCE PROGRAM FOR SURVIVORS, INC., WASHINGTON, DC; AND JOHN WILSON, ASSOCIATE NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS 

STATEMENT OF BONNIE CARROLL 

Ms. CARROLL. Thank you, Mr. Chairman and distinguished Members of the Subcommittee. 

On behalf of the Tragedy Assistance Program for Survivors and 

the families of those who have died while serving in the Armed 

Forces, I am honored to have the opportunity to testify today. 

Thank you for the compassionate care this Committee has given 

our veterans and the surviving family members of our fallen warriors. Through your vigilance and prompt action on key legislation, 


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you have ensured America is honoring those who have served and 

sacrificed for freedom. 

As the widow of a soldier killed in the Army National Guard, a 

Reserve officer of 26 years myself, former White House liaison for 

the Department of Veterans Affairs, Department of the Army Civilians Serving in Iraq, and member of the Department of Veterans 

Affairs Advisory Committee on Disability Compensation, and as 

the Executive Director of TAPS, I have seen the best of the services 

provided to our surviving families both in the public and private 

sectors. It is a privilege to offer my insight today. 

H.R. 2379, the ‘‘Veterans’ Group Life Insurance Improvement Act 

of 2009,’’ brings parity to VGLI, matching the maximum benefit of 

$400,000 from the Servicemen’s Group Life Insurance from which 

they are transferring this important benefit upon leaving military 

service and transitioning to veteran status. 

This is an important change to the VGLI because it gives additional flexibility to the veterans and increases their ability to provide for their families. 

As it currently stands, the S–DVI, the Service-Disabled Veterans 

Insurance, which offers a benefit to those who survive the death of 

a service-disabled veteran, is outdated and in dire need of improvement. 

As noted in honoring the call to duty, veterans’ disability benefits 

in the 21st century, Congress explicitly intended to have S–DVI 

premiums hover close to the private sector’s premiums for nondisabled individuals. 

The current $10,000 limit is far from the 2007 average life insur- ance policy of $176,000. Today, $10,000 barely covers the cost of 

the average funeral. 

By increasing the life insurance premium and life insurance maximum to $100,000, veterans are better able to provide financial 

support for their families after their death. 

When S–DVI was created in 1951, it based premiums on a mortality chart that was already a decade old. In the years following, 

the premiums have not been adjusted to incorporate changes in life 

expectancy, making premiums unnecessarily high for our veterans. 

We support the adjustment proposed in H.R. 2713, the ‘‘Families 

of Veterans Financial Security Act,’’ which increases the time after 

separation from active duty from 18 months to 2 years during 

which a servicemember can receive SGLI coverage, it is an important improvement to SGLI. 

TAPS supports this legislation and applauds the Committee’s 

compassionate understanding of the challenges facing service-disabled veterans and their families during this critical time. 

The greatness of a nation and its moral progress can be judged 

by the way its veterans and those who serve them are treated. 

Today’s hearing and the legislation proposed makes strides toward improving the financial security of the surviving family members of our warriors. 

On behalf of the families of our fallen heroes and TAPS, I appreciate the dedication and commitment of the distinguished Members 

of the Subcommittee to protect, defend, restore, and improve the 

services provided to those who have served our Nation in peace and 

war and their families. 


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Thank you for the opportunity to submit testimony on behalf of 

the surviving families. 

[The prepared statement of Ms. Carroll appears on p. 20.] 

Mr. HALL. Thank you, Ms. Carroll. 

Mr. Wilson, you are now recognized for 5 minutes. 

STATEMENT OF JOHN WILSON 

Mr. WILSON. Thank you, Mr. Chairman. 

Mr. Chairman, Members of the Subcommittee, on behalf of the 

DAV, I am pleased to address the ‘‘Disabled Veterans’ Life Insurance Enhancement Act,’’ H.R. 2713, which would amend Title 38 

U.S. Code to make certain improvements in the Service-Disabled 

Veterans’ Insurance Program of the VA. 

Specifically, this bill would provide for a 2-year period, beginning 

on the date of its enactment, during which a qualified veteran may 

submit an application for insurance despite the fact that such 

claimant’s time limit for filing an application for service-disabled 

insurance may have expired. 

Further, H.R. 2713 would increase the maximum amount of pro- tection from $10,000 to $100,000 and would increase the supplemental insurance for totally disabled veterans from $20,000 to 

$50,000. 

Finally, the bill would replace the Commissioner’s 1941 standard 

ordinary table of mortality with an appropriate and a current mortality table as selected by the Secretary. 

The four veterans service organizations (VSOs) of The Independent Budget have consistently stood behind the need to lower 

the premium schedule for Service-Disabled Veterans’ Insurance or 

S–DVI, specifically advocating that the VA be authorized to charge 

lower premiums for S–DVI policies based on improved life expectancy under current mortality tables. 

Congress created the S–DVI Program to furnish disabled veterans’ life insurance at standard rates because the service-connected disabilities veterans have make it difficult for them to obtain commercial life insurance. If they obtain commercial life insurance, they are charged higher premiums. 

When this program began in 1951, its rates were based on mortality tables of that time and were competitive with commercial insurance. Commercial rates have since been lowered to reflect improved life expectancy. 

However, the VA has continued to base its rates on mortality tables from 1941. Consequently, S–DVI premiums are no longer competitive for the commercial insurance and, therefore, no longer provide the intended benefit. 

The current $10,000 maximum for life insurance under S–DVI 

does not adequately provide for the needs of survivors. When life 

insurance for veterans had its beginnings in the War Risk Insurance Program first made available to members of the Armed Forces 

in October 1917, coverage was limited to $10,000. A $10,000 life insurance policy that provided sufficiently for loss of income from the 

death of an insured in 1917 certainly does not do so in 2009. 

We would, however, propose two amendments for the Subcommittee’s consideration. First, we would suggest the legislation 

be modified to provide an open-ended period for veterans to apply 


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for Service-Disabled Veterans’ Insurance which is consistent with 

the DAV’s resolution number 16. 

Under the current program, service-connected disabled veterans 

are entitled to apply for S–DVI within 2 years from the date the 

VA grants service connection for any disability. Many eligible veterans, due to financial difficulties and problems associated with the 

adjustment to civilian life, do not apply for this insurance within 

the eligibility period. 

Many of the same disabled veterans are now prepared and can 

afford to purchase insurance, but are not able to purchase comparable insurance coverage in the private sector. The DAV seeks 

the enactment of legislation that would authorize an open period 

for eligible service-connected disabled veterans to apply for coverage under the S–DVI Program. 

Second, we would suggest legislative language be modified to 

allow veterans to choose the amounts of S–DVI coverage in increments of $10,000, up to a $100,000 maximum. This level of flexibility would allow them to structure the insurance coverage that 

best suits their financial and personal needs. 

Given the aforementioned references in The Independent Budget 

and DAV’s resolution on this subject, we fully support this long 

overdue and beneficial legislation. 

We also extend our appreciation to Mr. Donnelly for introducing 

this important legislation that, if adopted, will ease the burden 

faced by so many that, up until now, have had no prospect for adequately providing for their families. 

We also applaud the efforts of every Member of this Subcommittee for their advocacy in this critical area. 

Regarding the ‘‘Veterans’ Group Life Insurance Improvement Act 

of 2009,’’ H.R. 2379, the ‘‘Families of Veterans Financial Security 

Act,’’ H.R. 2774, and requiring the reduction in the amount of accelerated death benefits payable to certain terminally ill persons 

under ‘‘Servicemembers’ Group Life Insurance, Veterans’ Group 

Life Insurance,’’ H.R. 2968, the DAV has no resolutions on these 

issues. However, we have no opposition to their favorable consideration. 

This concludes my testimony, and I will be happy to answer any 

questions the Subcommittee may have. 

[The prepared statement of Mr. Wilson appears on p. 21.] 

Mr. HALL. Thank you, Mr. Wilson. 

Ms. CARROLL, recognizing that hindsight is 20/20, what could VA 

do better or what could VA do to better ensure that veterans and 

their families understand their insurance program options before it 

is too late? How could or how should VA use its newly instituted 

Office of Survivors Assistance, established in Public Law 110–389, 

in this regard? 

Ms. CARROLL. The Office of Survivors Assistance has become a 

primarily policy focused shop. There is an Office of Survivors Assistance in Veterans Benefits Administration (VBA) which is extremely active and is a day-to-day boots-on-the-ground of the families. 

And I want to applaud the VA for that office in VBA which our 

organization works with on a daily basis. I really feel that the VA 

has done an outstanding job in providing assistance to our families 


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and that office has done a tremendous job to support and educate 

families and handle any issues that have arisen. 

Mr. HALL. Mr. Wilson, currently, service-connected disabled vets 

are entitled to apply for service-disabled insurance, S–DVI, within 

2 years from the date that VA grants service-connection. 

In your testimony on H.R. 2713, you recommend modifying the 

legislation to provide for an open-ended period for veterans to apply 

for S–DVI. 

How long would your proposed open-ended period be effective? 

Do you see it as truly open-ended or are you just thinking about 

a longer time? 

Mr. WILSON. We would see that as truly open-ended, yes, sir. As 

long as a veteran has the opportunity, would have the means and 

the financial wherewithal to apply, they should be able to do so. 

Circumstances may change over time. Employment may improve. 

Family situations may improve. We do not know. 

The concern we also have is in asking for an amendment to the 

proposed legislation, which, as I said before, we think this is excellent, an excellent bill, is that we understand there are some veterans who are in rural areas, perhaps urban areas who just do not 

have the income to manage the small premiums as they are right 

now for the $10,000 policy. 

We anticipate when these new mortality tables are reviewed and 

updated, then, in fact, premiums may go down, which will be a 

benefit. And we also believe that with lower premiums, the veterans should then be able to apply for larger amounts of insurance, 

but up to various increments to the $100,000 level and for an openended period. 

Mr. HALL. Thank you. 

Mrs. Kirkpatrick, would you like to ask questions of our second 

panel? 

Mrs. KIRKPATRICK. Thank you, Chairman. I do not have any 

questions of this panel. Thank you. 

Mr. HALL. Well, I thank you both for your testimony and for your 

patience. You are excused. Our second panel is excused. Thank you 

for your patience and have a good day. 

Now, Mrs. Kirkpatrick, I would recognize you to speak on your 

legislation. 

STATEMENT OF HON. ANN KIRKPATRICK, A REPRESENTATIVE 

IN CONGRESS FROM THE STATE OF ARIZONA

Mrs. KIRKPATRICK. Thank you, Mr. Chairman. I appreciate this 

opportunity to put my comments on the record regarding my bill, 

H.R. 2968, which will be named the ‘‘VGLI SGLI Accelerated Benefits Option Equity Act of 2009.’’ 

I introduced this bill with Republican Walter Jones of North 

Carolina to do just one thing: to make the group life insurance offered to veterans and servicemembers both fairer and more consistent with commercial life insurance. 

Under both Veterans’ Groups Life Insurance and Servicemembers’ Group Life Insurance, when a veteran or a servicemember is terminally ill, they can elect to receive up to half of 

their coverage while they are still alive. They can use this accelerVerDate Nov 24 2008 08:52 Jan 11, 2010 Jkt 051870 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 C:\SAVES\BJ\51870.XXX JEFF PsN: 51870

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ated benefits option (ABO) to pay medical bills, improve their quality of life, or in any way they see it. 

However, current regulations require VGLI and SGLI to decrease 

the payout these veterans and servicemembers collect by a percentage based on the prevailing interest rates. In recent years, this has 

amounted to a decrease of as much as $6,000. 

By contrast, most commercial life insurance policies that allow 

ABO withdrawals do not decrease this payout to claimants. We can 

and must do better for our veterans. 

This simple, common-sense bipartisan bill removes this deduction so that we might better serve terminally ill veterans and 

servicemembers at the most financially vulnerable time for them 

and their families. 

Removing this deduction can be accomplished using the life insurance premiums veterans and servicemembers currently pay. 

This means that we can accomplish this important change without 

any additional cost to veterans, servicemembers, or taxpayers, and 

without PAYGO implications. 

Mr. Chairman, I appreciate again this opportunity to speak 

about H.R. 2968 and thank you for your consideration. 

[The prepared statement of Congresswoman Kirkpatrick appears 

on 20.] 

Mr. HALL. Thank you, Mrs. Kirkpatrick. I have two questions for 

you if you could answer them, please. 

First, have you had any feedback on how VA would go about determining eligibility for this benefit and, second, would a veteran 

have to be admitted to a hospice program, for instance? 

Mrs. KIRKPATRICK. You know, I do not have information about either one of those questions, but we will research that and get an 

answer back to you. 

Mr. HALL. Okay. Thanks. And perhaps we will hear from our 

next panel about that as well. Thank you very much for being here 

and for this legislation which I believe would do a great service to 

our veterans. 

Mrs. KIRKPATRICK. Thank you, Mr. Chairman. 

Mr. HALL. Now I would ask our third panel to join us at the witness table. Thomas M. Lastowka, Director of the VA Regional Office and Insurance Center, Veterans Benefits Administration, U.S. 

Department of Veterans Affairs, and Richard J. Hipolit, Assistant 

General Counsel of the Department of Veterans Affairs. 

Gentlemen, thank you for being here and thank you for your patience this afternoon. I would remind you as always that your written testimony is in the record, so feel free to deviate from it if you 

wish. 

Mr. Lastowka, you are recognized for 5 minutes, sir. 

STATEMENT OF THOMAS M. LASTOWKA, DIRECTOR, PHILADELPHIA REGIONAL OFFICE AND INSURANCE CENTER, VETERANS BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF 

VETERANS AFFAIRS; ACCOMPANIED BY RICHARD J. 

HIPOLIT, ASSISTANT GENERAL COUNSEL, OFFICE OF GENERAL COUNSEL, U.S. DEPARTMENT OF VETERANS AFFAIRS 

Mr. LASTOWKA. Thank you very much, Mr. Chairman. 


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Mr. Chairman and Members of the Subcommittee, I appreciate 

the opportunity to appear before you today to discuss various legislative proposals pending in the 111th Congress that would impact 

the VA Life Insurance Programs. 

We are pleased to support much of the legislation that is part of 

the Subcommittee’s agenda today. 

H.R. 2774 would make permanent the extension of the duration 

of the free coverage for totally disabled veterans in the Servicemembers’ Group Life Insurance Program. 

At the end of the 2-year disability extension period, the individual’s SGLI is automatically converted to VGLI, Veterans’ Group 

Life Insurance, providing financial security for disabled-veterans 

and their families. 

Under current law, the extension period will be decreased to 18 

months in 2011. Any costs associated with keeping the extension 

period at 2 years permanently would be absorbed by the SGLI Program. VA strongly supports H.R. 2774. 

H.R. 2379 would improve the VGLI Program by making a greater 

amount of life insurance available to the program’s insured veterans. 

Currently, veterans can convert only the amount of SGLI they 

had at the time of their separation. This bill would permit veterans, including those with service-connected disabilities, to increase their VGLI by $25,000 every 5 years until age 60. Veterans 

could buy up to whatever the new existing SGLI coverage is, currently $400,000. 

Currently, 96 percent of those insured under VGLI have less 

than $400,000 coverage. Insured veterans in the VGLI program 

have expressed interest in obtaining more coverage. There is no 

cost to the government. The cost would be absorbed by the VGLI 

Program. VA strongly supports the enactment of H.R. 2379. 

H.R. 2968, would positively impact the benefit known as the accelerated benefit option or ABO. ABO allows terminally ill servicemembers insured by SGLI or VGLI to receive up to 50 percent of 

the life insurance coverage prior to their death to use at their discretion. 

Unlike commercial versions of this benefit, the statute covering 

the ABO requires us to discount the amount of the payment that 

is reduced by the time value of money. This amendment would 

eliminate that requirement. Any cost would be absorbed by the program. VA strongly supports this proposal. 

H.R. 2713, Mr. Chairman, in our discussion with your staff, we 

understand what this legislation is intended to do. In our review, 

we think we have discovered some technical difficulties which 

would require some changes to do what the sponsor wants it to do, 

and we are prepared to discuss those with Committee staff. 

Nonetheless, though, we are prepared to testify on what we believe the legislation is trying to do. The legislation would provide 

for a 2-year open season to veterans who are otherwise eligible for 

S–DVI, but did not submit an application or premium payment 

within the current 2-year statutory period. 

The bill would require that S–DVI premiums be based on an updated mortality table. The maximum amount of S–DVI would be 


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increased from $10,000 to $100,000 and the maximum supplemental S–DVI would increase from $20,000 to $50,000. 

VA opposes H.R. 2713 because it goes far beyond the appropriate 

and the legitimate policy goals normally associated with the VA life 

insurance programs the foremost which is to enable veterans to regain the opportunities to purchase life insurance they may have 

lost due to their military service. 

This bill would create a new and expensive program offering insurance policies far beyond what would be normally available to 

similarly situated civilians. Under this bill, many older veterans 

who are now totally disabled due to their service-connected disabilities would be eligible for $100,000 of basic S–DVI and for the 

$50,000 S–DVI supplemental coverage. Because of the cost of this 

program, of these policies, and the disproportionate number of policyholders who would be in poor health when they apply, there 

would be a substantial annual appropriation needed to fund this 

program. 

We believe the combination of eligibility criteria and advancing 

age of the veterans covered by the legislation would create an expensive benefit and would be available to veterans in a rather haphazard fashion depending on their age, their employability status, 

decisions they made on insurance needs over the past 58 years, and 

on the sequencing of the veterans in developing getting service-connected and nonservice-connected disabilities. 

We are unable to provide cost estimates at this time. We would 

like to submit them later in writing. But so far, we have determined that there would be substantial cost, quite possibly billions 

of dollars. 

For these reasons, VA opposes enactment of H.R. 2713. 

[The VA provided the cost estimate for H.R. 2713 in response to 

question #7 of the Post-Hearing Questions and Responses for the 

Record, which appear on p. 27.] 

Thank you, Mr. Chairman. I am open for questions. 

[The prepared statement of Mr. Lastowka appears on p. 23.] 

Mr. HALL. Thank you, Mr. Lastowka. 

H.R. 2379 would permit veterans with Veterans’ Group Life Insurance coverage to increase their VGLI coverage once every 5 

years in increments up to $25,000. 

You mentioned that VA would prefer that each increase be in a 

single increment of 25,000. Why does VA prefer that the level of 

VGLI coverage be in those increments? 

Mr. LASTOWKA. We prefer that it be in those increments, Mr. 

Chairman, basically to keep down the administrative costs of the 

program. If our contractor, Prudential, can administer a simpler 

program, we believe we can keep the costs down, and that can be 

accomplished by insurance increases generally being issued in larger amounts rather than smaller amounts. 

Mr. HALL. Ms. Carroll noted during her testimony that premiums under VGLI increase every 5 years, unlike commercial policies available to veterans. 

Does this legislation then allow VGLI to compete with the private sector? Is it enough, in other words, to bring parity to the 

VGLI and SGLI programs? 


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Mr. LASTOWKA. Mr. Chairman, VGLI is very competitive with 

commercial policies. In commercial insurance where you are selling 

a 5-year term product, all commercial insurers raise their premiums every 5 years. 

There are permanent plans of insurance offered which will have 

a single premium over the lifetime of the product, but those are 

generally much more expensive than term insurance. 

The concept in today’s insurance industry is you buy insurance 

and you invest the rest. And term policies have become much more 

popular. 

Mr. HALL. What are the participation levels for the VGLI and 

SGLI programs? 

Mr. LASTOWKA. Right now, Mr. Chairman, for SGLI, it is close 

to 99 percent for active-duty servicemembers. For VGLI, I believe 

our conversion rate is in the 35 percent area. In the commercial 

equivalent where people are converting group policies to individual 

policies, that is generally under 2 percent. 

I would like to confirm in writing the 35 percent figure I am giving you because I would not want to give you bad data, sir. 

Mr. HALL. Okay. Maybe you could do that, if you would get back 

to us in writing. Also, include whether you think that there is a 

disparity between the two, and would more parity between VGLI 

and SGLI be enough to decrease the attrition rate of SGLI/VGLI 

transfer. 

Mr. LASTOWKA. That is—— 

Mr. HALL. You can respond to that in writing. 

Mr. LASTOWKA [continuing]. That in writing, okay. 

[The VA provided the information in the post-hearing questions 

and responses for the record, which appear on p. 29.] 

Mr. HALL. Ms. Carroll also mentioned that the VGLI price tag for a 75-year-old veteran is $20,520 per year. 

How could VA reduce this premium price? Would VGLI be more 

viable and self-sustaining if it had fixed premiums similar to some 

commercial insurance policies? 

Mr. LASTOWKA. Mr. Chairman, if we had a fixed premium, those 

fixed premiums at the younger age would be much higher. And I 

believe we would lose participation if we moved to a fixed premium. 

Generally, at older ages, insurance needs decrease as children 

have grown and have completed college already. And the best option at the higher ages is to reduce the amount of coverage which 

is generally consistent with the insurance needs of most Americans. 

Mr. HALL. The VSOs and Veterans Disability Benefits Commission express concerns over VA using a 1941 mortality table. 

Is there a reason why that has been continued all these years? 

Mr. LASTOWKA. If you were to design a new insurance program, 

Mr. Chairman, you would not use that table. Introducing it into a 

program that is now 58 years old becomes much more problematic 

and generally it is a much higher cost to the government if you 

would try to change that table at this point in time. 

Mr. HALL. Last, I would like to ask—we have more questions, 

but we will submit them in writing to you and ask you to get back 

to us—but according to your calculations, what would the cost be 

of enacting H.R. 2774? Do you have an estimate of that? 


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Mr. LASTOWKA. H.R. 2774 is the change to the S–DVI Disability 

Extension? 

Mr. HALL. No, H.R. 2774. 

Mr. LASTOWKA. We have not finalized—oh, I am sorry, Mr. 

Chair. We do not believe there would be a cost to the government 

in doing that. That feature of the extension is already priced into 

the premiums for SGLI and so it would be no cost. 

Mr. HALL. How could or how should the VA use its newly instituted Office of Survivors Assistance, established in Public Law 

110–389, in this regard? 

Mr. LASTOWKA. Mr. Chairman, first you have to let me brag a 

little bit about the VA’s service to veterans. 

Mr. HALL. Go ahead. Yes, sir. 

Mr. LASTOWKA. Whenever a servicemember gets out of the service with a service-connected disability of 50 percent or more or if 

they soon receive a service connection of 50 percent or more by the 

VA, the insurance program contacts each individual personally. We 

generally try to do this by telephone and point out to them the advantage of switching to the VGLI. 

We have had a very high success rate with close to 100 percent 

of those rated at 100 percent taking the VGLI coverage and over 

60 percent overall. And so we are doing quite a good job. 

I think the VA’s Office of Survivors Assistance by raising general 

awareness of what VA benefits are available will further increase 

those outreach efforts. 

Mr. HALL. We thank you. We will submit more questions in writing to you, sir. But thank you for being here today and testifying. 

Mr. Hipolit, I am sorry we did not have any questions directly 

for you. 

But also, we would like to thank the Paralyzed Veterans of 

America for submitting a statement for the record on these important bills. 

Thanks to our Members and Ranking Member Lamborn and Minority Counsel and everyone who is here today for your patience 

and your statements this afternoon. We value your insight and 

opinions and we will be moving ahead with tweaks, as Mr. 

Lamborn said, or amendments to some or all of these pieces of legislation and marking them up in the future. 

So thank you again, and this hearing stands adjourned. 

[Whereupon, at 4:14 p.m., the Subcommittee was adjourned.] 


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A P P E N D I X 

Prepared Statement of Hon. John J. Hall, Chairman, 

Subcommittee on Disability Assistance and Memorial Affairs 

Please rise for the Pledge of Allegiance. 

Good Afternoon. Today the Disability Assistance and Memorial Affairs Subcommittee of the House Committee on Veterans’ Affairs will address four bills relating to insurance benefits for our veterans and servicemembers, H.R. 2379, H.R. 

2713, H.R. 2774, and H.R. 2968. 

These measures are all critical and common sense bills intended to ensure that 

our veterans and their families who have insurance-related needs while they are living receive the full measure of the benefit—and, that their survivors have ample 

replacement income to meet their needs. Additionally, these bills would allow veterans to make the necessary plans to ensure that their loved ones are provided for 

adequately and have financial security. All of the bills are relatively non-controversial, would give veterans greater flexibility in their insurance choices, and consequently greater peace of mind. I am happy to have them under consideration 

today. 

Specifically, the Veterans’ Group life Insurance Improvement Act of 2009, H.R. 

2379, sponsored by Mr. Buyer, would allow veterans to purchase up to $400,000 of 

VGLI coverage in $25,000 increments every 5 years until the age of 60—giving veterans greater options in their life insurance choices. 

The Disabled Veterans Life Insurance Enhancement Act, H.R. 2713, sponsored by 

Mr. Donnelly, would make long overdue updates and changes to the VA’s Service 

Disabled Veterans’ Insurance program, including increasing basic and supplemental 

coverage amounts and updating the 1941 rate tables. 

The Families of Veterans Financial Security Act, H.R. 2774, sponsored by Ms. 

Halvorson, a freshman Member on this Committee, would make permanent the 2- 

year extension of the free SGLI coverage period for servicemembers who are totally 

disabled on the date of their separation from active duty or reserve status. 

Last, H.R. 2968, sponsored by Ms. Kirkpatrick, another freshman Member on this 

Committee, would amend the provision that allows a servicemember with SGLI or 

a veteran with VGLI who is terminally ill to get half of their SGLI or VGLI coverage 

while they are alive, by eliminating the discount rate that VA applies to this payment. This bill would make VA policies consistent with the commercial insurance 

industry and provide significant benefit to servicemembers and veterans by not discounting, hence lowering these payments. 

I commend the members for sponsoring these thoughtful measures. I look forward 

to hearing from all of our witnesses on these bills and I thank you all for being here 

today. 

I now yield to Ranking Member Lamborn for his opening statement. 

f 

Prepared Statement of Hon. Doug Lamborn, Ranking Republican Member, 

Subcommittee on Disability Assistance and Memorial Affairs 

Thank you Mr. Chairman for holding this hearing to discuss the legislation before 

us. 

H.R. 2379, the Veterans Group Life Insurance Improvement Act of 2009, was introduced by full Committee Ranking Member Steve Buyer, and it would increase the 

amount of life insurance available to veterans. 

Veterans Group Life Insurance (VGLI) provides veterans the ability to obtain a 

competitive life insurance policy for them and their family in post-military life. 

Under current law, separating servicemembers have up to 1 year from discharge 

to convert their Servicemembers Group Life Insurance policies to VGLI, and whatever level of coverage they select at that time is unchangeable. 


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Many are young and don’t see the need to carry a large amount of life insurance 

coverage. 

However, as they get older and acquire families, the need for additional coverage 

grows. 

This bill would allow veterans to purchase up to $400,000 of VGLI coverage in 

$25,000 increments, every 5 years, until the age of 60. 

The costs of such increases in coverage will be offset by premiums veterans pay, 

so there is no direct cost to the government. 

The opportunity to allow our veterans greater flexibility in their life insurance 

choices, without increasing the burden on taxpayers, leaves little doubt as to whether H.R. 2379 is a worthy measure. 

I urge all members to cosponsor and support this legislation. 

I thank my colleagues Ms. Halvorson, Ms. Kirkpatrick and Mr. Donnelly for introducing the other measures before us today. 

These bills would also make improvements to insurance benefits for veterans and 

I want to note my support for them. 

I thank the chair and the witnesses for their testimony, and I yield back. 

f 

Prepared Statement of Hon. Joe Donnelly, 

a Representative in Congress from the State of Indiana 

Chairman Hall and Ranking Member Lamborn, thank you for calling this legislative hearing today and I thank you for this opportunity to speak on the need to enhance and update the Service-Disabled Veterans Insurance (S–DVI) program. The 

life insurance policy offered to disabled veterans is badly out of date and as a result 

less than 4 percent of eligible veterans participate. 

I believe that life insurance speaks directly to President Lincoln’s promise—‘‘to 

care for him who shall have borne the battle and for his widow, and his orphan’’— 

by providing financial assistance to families in the event of a veteran’s death. However, Congress must recognize the importance of enhancing and updating life insurance for our service connected disabled veterans and ensure that this policy better 

provides for the needs of participating veteran’s families. 

The Disabled Veterans Life Insurance Enhancement Act would make long overdue 

changes to an existing life insurance program that covers veterans with service-connected disabilities. We have a responsibility to care for our veterans and their surviving loved ones, which is why I want to update the outdated life insurance program that currently covers our disabled servicemen and women. 

S–DVI was created in 1951 to provide life insurance to disabled veterans who, because of their service-connected disabilities, would be unable to obtain life insurance 

on the commercial market or would be required to pay especially high premiums. 

Veterans groups have argued for years that the coverage isn’t enough, but efforts 

to increase the amount have not gained traction in Congress. In their annual independent budget, major veterans groups support the idea of cutting premiums for the 

insurance and updating the mortality tables. The insurance program started in 1951 

but used a 1941 mortality chart to set premiums and, as a result, S–DVI is no 

longer competitive with commercial insurance. 

Currently, S–DVI policies are issued for a maximum face amount of only $10,000, 

an amount that has not been updated for 58 years. Additionally, the current mortality tables are almost 70 years old. Tables now are based on the assumption that 

disabled vets die, on average, at age 58, which is no longer true given improvements 

in medicine, treatment and rehabilitation. Disabled veterans now are expected to 

live an average of 70 years. As life expectancy has significantly improved over the 

past sixty years, commercial insurance companies have begun utilizing more up-todate mortality tables and are therefore able to offer lower premiums. The newest 

table in general use by the insurance industry has premium rates that are roughly 

50 percent lower than the S–DVI rates. 

According to the Veterans Service Officer from Elkhart County in my district, Mr 

Gary Whitehead, ‘‘The average burial is about $6,500. If that disabled vet only has 

$10,000, that doesn’t leave much for his loved ones.’’ 

Mr. Chairman, veterans expect the same thing each of us do when we pay into 

a life insurance policy, the promise that when we pass, during that difficult time, 

our surviving loved ones are not burdened with not only the cost of a dignified memorial and burial, but also other costs, day-to-day expenses, and the fear of how 

they will provide for themselves in the future. Unfortunately, that opportunity hardly exists with the current structure of S–DVI because the maximum payment is 


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capped at $10,000 and participating veterans are denied the opportunity to purchase additional coverage through the program. 

The Disabled Veterans Life Insurance Enhancement Act would enhance the S–DVI 

by increasing the maximum protection under base policies from $10,000 to $100,000 

and offers an open period for eligible service-connected disabled veterans to apply 

for coverage if they are not currently enrolled in the life insurance program. And 

while the $10,000 maximum coverage was part of the S–DVI program from its 1951 

start, the amount actually has not changed since the government first offered this 

kind of insurance in 1917. Put in perspective, according to the National Association 

of Insurance Commissioners, the average face amount of life insurance policies purchased in 2007 was $176,000. 

In addition, my legislation would direct the Department of Veterans Affairs to revise its premium schedule to reflect current mortality tables, and it would increase 

the supplemental coverage for veterans who have been rated 100 percent serviceconnected disabled from $20,000 to $50,000. This bill has the support of the Disabled American Veterans. 

Since the S–DVI program is not a fully self-supporting fund it requires appropriations and therefore subsidies for the S–DVI are expected to increase. Even though 

there are standard premium rates—there are certain conditions under which those 

premiums are waived—for example, our 100 percent disabled veteran’s base premiums are waived if they apply and are granted supplemental insurance. Keep in 

mind that these great American veterans have service-connected disabilities and are 

unable to obtain life insurance due to their condition. 

I am aware that expenses for this program will increase, but as the Members of 

this Committee are aware, we must also increase our commitment to our disabled 

veterans who paid a hefty price with their service and sacrifice. As a Blue Dog, I 

am committed to fiscal responsibility, and I understand the necessary hurdles with 

pay-as-you-go rules. But I am dedicated to pursuing the goal of updating S–DVI, 

and I seek support of my colleagues in doing something to bring this policy into the 

21st century. 

Thank you very much for this chance to address the Subcommittee on this very 

important subject, and I am pleased to answer any questions you may have. 

f 

Prepared Statement of Hon. Deborah L. Halvorson, 

a Representative in Congress from the State of Illinois 

Good afternoon. Chairman Hall: thank you for holding this hearing, Ranking 

Lamborn and Members of the Subcommittee: thank you for allowing me some time 

to speak. 

I am excited to be here to discuss H.R. 2774, the ‘‘Families of Veterans Financial 

Security Act’’. H.R. 2774 would make permanent the extension that totally disabled 

veterans currently receive from the Servicemembers’ Group Life Insurance (SGLI). 

SGLI is operated by the Department of Veterans Affairs and provides low cost 

group life insurance to members of the Uniformed Services. It was originally developed to make insurance benefits available for veterans and servicemembers who 

weren’t able to secure insurance from private companies due to the extra risks involved in military service, or because of a service connected disability. 

Currently, the SGLI Disability Extension allows servicemembers who are totally 

disabled at the time they are discharged to retain their SGLI coverage at no cost 

for up to 2 years. This extension has guaranteed that the veterans that are in most 

need, the ones that are seriously disabled as a result of their service, are fully covered under the SGLI program and won’t lose their life insurance coverage. It has 

given military families the peace of mind that their financial security is still strong, 

so they can worry about their loved ones, and not the worst case scenario. 

Furthermore, the extension has provided additional time for VA to contact veterans and assist them with making informed decisions about what life insurance options are available after the SGLI program is no longer available to them. 

Unfortunately, the SGLI extension is set to expire—potentially costing disabled 

veterans thousands of dollars. If allowed to expire, the extension would fall to only 

18 months of coverage, opposed to the 24 that veterans currently receive. 

H.R. 2774 would make permanent the 24 month extension and allow veterans to 

continue to focus on what’s most important, their rehabilitation and recovery. My 

bill maximizes the opportunity for disabled veterans, who have limited or no opportunity of obtaining commercial insurance, to obtain insurance coverage. Insurance 

coverage that will provide financial security to the families of our wounded warriors. 


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There is no cost to the government that is associated with this legislation as the 

SGLI program will assume all costs. 

Thank you, Mr. Chairman and Members of the Subcommittee. I would be happy 

to address any questions you may have for me. 

f 

Prepared Statement of Hon. Ann Kirkpatrick, 

a Representative in Congress from the State of Arizona 

Thank you Chairman Hall and Ranking Member Lamborn for the opportunity to 

address the Subcommittee on my bill—H.R. 2968, the VGLI/SGLI Accelerated Benefits Option Equity Act of 2009. 

I introduced this bill with Republican Walter Jones of North Carolina to do just 

one thing: to make the group life insurance offered to Veterans and servicemembers 

both fairer and more consistent with commercial life insurance. 

Under both Veterans Group Life Insurance and Servicemembers Group Life Insurance, when a Veteran or servicemember is terminally ill, they can elect to receive 

up to half of their coverage while they are still alive. They can use this accelerated 

benefits option (ABO) to pay medical bills, improve their quality of life, or in any 

way they see fit. 

However, current regulation requires VGLI and SGLI to decrease the payout 

these Veterans and servicemembers collect by a percentage based on prevailing interest rates. In recent years, this has amounted to a decrease of as much as $6,000. 

By contrast, most commercial life insurance policies that allow ABO withdrawals 

do not decrease this payout to claimants. 

We can and must do better. 

This simple, common sense, bi-partisan bill removes this deduction, so that we 

might better serve terminally ill Veterans and servicemembers at the most financially vulnerable time for them and their families. 

Removing this deduction can be accomplished using the life insurance premiums 

Veterans and servicemembers currently pay. This means that we can accomplish 

this important change without any additional cost to Veterans, servicemembers, or 

taxpayers, and without PAYGO implications. 

Mister Chairman and Ranking Member Lamborn, thank you again for the opportunity to speak about H.R. 2968 and thank you for your leadership. I stand ready 

to answer your questions. 

f 

Prepared Statement of Bonnie Carroll, 

Chairman and Executive Director, 

Tragedy Assistance Program for Survivors, Inc., Washington, DC 

Mr. Chairman and distinguished Members of the Subcommittee: 

On behalf of the Tragedy Assistance Program for Survivors (TAPS) and the families of those who have died while serving in the Armed Forces, I am honored to have 

this opportunity to speak about H.R. 2379, the Veterans’ Group Life Insurance Improvement Act of 2009; H.R. 2713, the Disabled Veterans Life Insurance Enhancement Act; and H.R. 2774, the Families of Veterans Financial Security Act, all of 

which address very important insurance issues to veterans and their families. 

Thank you for the compassionate care this Committee has given our veterans and 

the surviving military families of our fallen warriors. Through your vigilance and 

prompt action on key legislation, you have ensured America is honoring those who 

have served and sacrificed for freedom. 

When a servicemember joins the military community, not only does the member 

become part of the Armed Forces, but so does their family. If they are killed, the 

grieving spouse thus loses twice: her immediate loss of life partner, and also the extended military family and way of life which they have shared, regardless of the circumstances surrounding the death, whether in combat or in a peacetime duty status. It is the duty of all of us to ensure that they are well cared for. 

As the widow of a soldier killed in the Army National Guard, a Reserve commander who lost two of my airmen, Chief of Casualty Operations at HQ USAF Casualty Affairs, White House Liaison for the Department of Veterans Affairs, a Department of the Army civilian serving in Iraq, a member of the Department of Veterans’ Affairs Advisory Committee on Disability Compensation and as the Executive 

Director of TAPS, I have seen the best of the services provided to our surviving families both in the public and private sectors. It is a privilege to offer my insight today. 

H.R. 2379 The Veterans’ Group Life Insurance Improvement Act of 2009 


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1 Veterans’ Group Life Insurance Rate Chart, SGL–75 Ed. 07/2008 106–430–0508–200M 

2The National Association of Insurance Commissioners 

H.R. 2379, The Veterans’ Group Life Insurance Improvement Act of 2009, brings 

parity to the Veterans’ Group Life Insurance (VGLI), matching the maximum benefit from the Serviceman’s Group Life Insurance (SGLI) of $400,000 from which they 

are transferring this important benefit upon leaving military service and 

transitioning to veteran status. This is an important change to the VGLI because 

it gives additional flexibility to the veterans and increases their ability to provide 

for their families. Unlike some commercial policies available to military retirees that 

hold a fixed premium over the course of the policy, the premium for VGLI increases 

every 5 years. The Committee should take note that VGLI is expensive; the premium to be paid for VGLI should a veteran reach age 75 and still wish to maintain 

their VGLI coverage would be $20,520 per year.1

H.R. 2713 The Disabled Veterans Life Insurance Enhancement Act 

In discussing H.R. 2713, I would like to begin by thanking Rep. Donnelly not only 

for his work on this legislation and his continued care for our Nation’s warriors, but 

also recognize the tremendous support he has given one of our TAPS survivors, 

Nicholle McLochlin, and her children. Nicholle lost her husband, Sergeant Major 

Jeffrey McLochlin, a soldier in the Indiana Army National Guard and an Indiana 

State Trooper, on July 5, 2006, in Afghanistan. Your personal involvement in this 

family’s tragedy has been a comfort to them, and we thank you for that. 

It is surviving family members and caregivers like Nicholle who deserve the best 

care our Nation can offer. As it currently stands, the Service-Disabled Veterans’ Insurance (SDVI), which offers a benefit to those who survive the death of a servicedisabled veteran, is outdated and in dire need of improvement. The changes proposed in H.R. 2713, the Disabled Veterans Life Insurance Enhancement Act, to 

SDVI include the following: increasing the maximum protection offered to $100,000; 

increasing the supplemental for totally disabled veterans to $50,000; providing an 

open enrollment season of 2 years for eligible veterans; and premiums based on current mortality tables. We support these improvements. 

As noted in Honoring the Call to Duty: Veterans’ Disability Benefits in the 21st 

Century, ‘‘Congress explicitly intended to have SDVI premiums hover close to the private sector’s premiums for nondisabled individuals.’’ The current $10,000 limit is 

far from the 2007 average life insurance policy of $176,000 2. Today, $10,000 barely 

covers the cost of the average funeral. By increasing the life insurance maximum 

to $100,000 veterans are better able to provide financial support for their families 

after their death. 

When SDVI was created in 1951, it based premiums on a mortality chart that was 

already a decade old. In the years following, the premiums have not been readjusted 

to incorporate changes in life expectancy, making premiums unnecessarily high for 

our veterans. We support these adjustments. 

H.R. 2774 The Families of Veterans Financial Security Act 

The Families of Veterans Financial Security Act, which increases the time after 

separation from active duty from eighteen months to 2 years during which a servicemember can receive Servicemembers’ Group Life Insurance (SGLI) coverage, is an 

important improvement to SGLI. TAPS supports this legislation and applauds the 

Committee’s compassionate understanding of the challenges facing service-disabled 

veterans and their families during this critical time. 

To adapt from Ghandi, the greatness of a nation and its moral progress can be 

judged by the way its veterans, and those who survive them, are treated. Today’s 

hearing, and the legislation proposed, make strides toward improving the financial 

security of the surviving family members of our warriors. 

On behalf of the families of our fallen heroes and TAPS, I appreciate the dedication and commitment of the distinguished Members of the Subcommittee to protect, 

defend, restore, and improve the services provided to those who have served our Nation in peace and war and their families. Thank you for the opportunity to submit 

testimony on behalf of the surviving families of TAPS. 

f 

Prepared Statement of John Wilson, 

Associate National Legislative Director, Disabled American Veterans 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to submit the views of the Disabled American Veterans (DAV) on 

the various bills under consideration today. In accordance with its congressional 

charter, the DAV’s legislative mission is focused on benefits and services provided 


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to veterans because of service-connected disabilities. We are therefore, pleased to 

support the bills insofar as they fall within that scope. 

H.R. 2713 

The ‘‘Disabled Veterans Life Insurance Enhancement Act’’ (H.R. 2713) would 

amend title 38, United States Code, to make certain improvements in the servicedisabled veterans’ insurance program of the Department of Veterans Affairs. Specifically, this bill would provide for a 2-year period beginning on the date of its enactment during which a qualified veteran may submit an application for insurance, despite that fact that such claimant’s time limit for filing an application for servicedisabled insurance may have expired under current law. 

Further, H.R. 2713 would also increase the maximum amount of protection from 

$10,000 to $100,000, and would increase the supplemental insurance for totally disabled veterans from $20,000 to $50,000. Finally, the bill would replace the ‘‘Commissioner’s 1941 Standard Ordinary Table of Mortality’’ with an ‘‘appropriate and current mortality table as selected by the Secretary.’’ 

The four veterans service organizations who coauthored The Independent Budget 

(IB), have consistently stood behind the need to lower the premium schedule for 

Service-Disabled Veterans’ Insurance (SDVI), specifically advocating that the VA be 

authorized to charge lower premiums for SDVI policies based on improved life expectancy under current mortality tables. Because of service-connected disabilities, 

disabled veterans have difficulty getting, or are charged, higher premiums for life 

insurance on the commercial market, Congress created the SDVI program to furnish 

disabled veterans life insurance at standard rates. When this program began in 

1951, its rates, based on mortality tables then in use, were competitive with commercial insurance. Commercial rates have since been lowered to reflect improved 

life expectancy shown by current mortality tables. However, the VA has continued 

to base its rates on mortality tables from 1941. Consequently, SDVI premiums are 

no longer competitive with commercial insurance and therefore, no longer provide 

the intended benefit for eligible veterans. 

The current $10,000 maximum for life insurance under SDVI does not adequately 

provide for the needs of survivors. When life insurance for veterans had its beginnings in the War Risk Insurance program, first made available to members of the 

armed forces in October 1917, coverage was limited to $10,000. At that time, the 

law authorized an annual salary of $5,000 for the director of the Bureau of War 

Risk Insurance. Obviously, the average annual wages of servicemembers in 1917 

was considerably less than $5,000. A $10,000 life insurance policy provided sufficiently for the loss of income from the death of an insured in 1917. 

Today, more than 88 years later, maximum coverage under the base SDVI policy 

is still $10,000. Given that the annual cost of living is many times what it was in 

1917, the same maximum coverage, well more than three-quarters of a century 

later, clearly does not provide meaningful income replacement for the survivors of 

service-disabled veterans. A May 2001 report from an SDVI program evaluation conducted for VA recommended that basic SDVI coverage be increased to $50,000 maximum. The Independent Budget veterans’ service organizations (IBVSOs) recommended that the maximum protection available under SDVI be increased to at 

least $50,000. This bill mandates a maximum of $100,000 in coverage. 

The DAV has carried forward resolutions at our National conventions on this 

same subject for years. This year, the issue is addressed in Resolution No. 102, 

which seeks to increase the face value of service-disabled veterans’ insurance for eligible veterans suffering from a disability or disabilities for which a compensable rating would be payable. 

Since this legislation does not modify the waiver of premiums for totally disabled 

veterans, it is also in agreement with DAV’s Resolution No. 103, which supports legislation to provide for waiver of premiums for supplemental service-disabled veterans’ insurance. This legislation also coincides with Resolution No. 136, in that it 

seeks to reduce premiums for service-disabled veterans’ insurance consistent with 

current life expectancy based on updated mortality tables. 

We would however, propose two amendments for the Subcommittees’ consideration. First, we would suggest the legislation be modified to provide for open-ended 

period for veterans to apply for service-disabled veterans’ insurance, which is consistent with DAV’s Resolution No. 016. Under the current program, service-connected disabled veterans are entitled to apply for SDVI within 2 years from the date 

the VA grants service-connection for any disability. Many eligible veterans, due to 

financial difficulties and problems associated with readjustment to civilian life, did 

not apply for this insurance within the 2-year eligibility period. Many of these service-connected disabled veterans are now prepared and can afford to purchase this 


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insurance, but are not able to purchase comparable insurance coverage in the private sector. Precedent has been established to extend previously closed ‘‘eligibility 

periods’’ for certain other VA benefits and services, including insurance. The DAV 

seeks the enactment of legislation that would authorize an ‘‘open period’’ for eligible 

service connected disabled veterans to apply for coverage under the Service-Disabled 

Veterans’ Insurance Program. 

Second, we would suggest legislative language be restructured to allow veterans to choose the amounts of SDVI coverage they wish, in increments of $10,000 up to 

the $100,000 amount. This level of flexibility would allow them to structure the insurance coverage that best suits their financial and personnel needs. 

Given the aforementioned references in The IB and DAV’s resolutions on this subject, we fully support this long overdue and beneficial legislation. We also extend 

our appreciation to Mr. Donnelly for constructing this important legislation that, if 

adopted, will ease the burden faced by so many that up until now, had no prospect 

for adequately providing for their families. We also applaud the efforts of every 

Member of this Subcommittee for their advocacy in this critical area. 

H.R. 2379 

The ‘‘Veterans Group Life Insurance Improvement Act of 2009’’ (H.R. 2379) would 

provide certain veterans an opportunity to increase the amount of Veterans’ Group 

Life Insurance (VGLI). This legislation a VGLI recipient to request in writing, not 

more the once in each 5-year period, an increase in the amount of VGLI as long 

as the applicant is under the age of 60 and the requested increase is not more than 

$25,000. The DAV has no resolution on this issue; however, we have no opposition 

to its favorable consideration. 

H.R. 2774 

The ‘‘Families of Veterans Financial Security Act’’ (H.R. 2774) would permanently 

extend the duration of Servicemembers’ Group Life Insurance (SGLI) coverage for 

totally disabled veterans. The DAV has no resolution on this issue; however, we 

have no opposition to its favorable consideration. 

H.R. 2968 

This legislation (H.R. 2968) would limit the required reduction in the amount of 

the accelerated death benefit payable to certain terminally ill persons insured under 

Servicemembers’ Group Life Insurance or Veterans’ Group Life Insurance. The DAV 

has no resolution on this issue; however, we have no opposition to its favorable consideration. 

Conclusion 

We hope the Committee will review these recommendations and give them consideration for inclusion in The ‘‘Disabled Veterans Life Insurance Enhancement Act’’ 

(H.R. 2713). Mr. Chairman, thank you for inviting the DAV to testify before you 

today. 

f 

Prepared Statement of Thomas M. Lastowka, 

Director, Philadelphia Regional Office and Insurance Center, 

Veterans Benefits Administration, U.S. Department of Veterans Affairs 

Mr. Chairman and Members of the Subcommittee, I am pleased to be here today 

to provide the Department of Veterans Affairs’ (VA) views on three bills and one 

draft bill that would affect VA’s insurance programs. 

H.R. 2379 

Veterans’ Group Life Insurance (VGLI), established in 1974, permits the conversion of Servicemembers’ Group Life Insurance (SGLI) coverage to a lifetime renewable term policy of insurance protection after a servicemember separates from service. Under current law, the amount of VGLI coverage available is limited to the 

amount of SGLI coverage a servicemember had when the member separated from 

service. This means that veterans, many of whom are disabled, who separated from 

service in past years when the maximum SGLI coverage was considerably less than 

the $400,000 it currently is, cannot increase their VGLI coverage to meet their families’ current needs. 


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H.R. 2379, the ‘‘Veterans’ Group Life Insurance Improvement Act of 2009,’’ would 

permit VGLI-insured veterans, including those with service-connected disabilities, to 

increase their VGLI coverage once every 5 years beginning on the date of commencement of their VGLI coverage, in increments up to $25,000, until they reach 

the age of 60. VA would prefer that each increase be in a single increment of 

$25,000. The maximum amount of coverage available would be the current maximum SGLI amount, $400,000, regardless of what the maximum SGLI amount was 

when the veteran separated from service. 

VA strongly supports H.R. 2379. It would permit VGLI-insured veterans, including service-disabled veterans, to purchase amounts of life insurance adequate to protect their families. It would also help VGLI maintain a competitive level of coverage. 

Ninety-six percent of veterans insured under VGLI have less than $400,000 in coverage and, therefore, could potentially benefit from this change. VGLI policyholders 

have for several years expressed an interest through inquiries to VA, as well as customer surveys, in increasing their coverage. The bill would introduce much-needed 

flexibility to the program by enabling VGLI insureds to purchase more life insurance as their needs change. 

There would be no mandatory cost to the government from enactment of H.R. 

2379. Any cost of the optional increase in coverage would be offset by the premiums 

paid by the veterans who choose to buy extra VGLI coverage. Hence, VA strongly 

supports its enactment. 

H.R. 2713 

Service Disabled Veterans’ Insurance (SDVI) is available to veterans with a service-connected disability that would be compensable if rated at 10 percent or higher 

who apply within 2 years from the date on which VA notifies them that their disability is service connected. SDVI provides up to $10,000 in coverage, as either a 

permanent or term insurance plan, and premiums are based the Commissioners 

1941 Standard Ordinary Table of Mortality. SDVI insureds who are totally disabled 

before reaching age 65 may have their premium payments waived on the basic 

SDVI coverage of $10,000. Waiver of premiums permits them to apply for additional 

insurance, Supplemental SDVI, for which the maximum coverage amount is 

$20,000. However, premiums cannot be waived on the supplemental coverage. 

H.R. 2713, the ‘‘Disabled Veterans Life Insurance Enhancement Act,’’ would make 

several changes to the program. It would provide a 2-year open season, beginning 

on the date of enactment, during which certain veterans who did not submit a SDVI 

application and pay premiums within the current 2-year statutory application period 

could obtain SDVI by applying for it and paying premiums. The veterans eligible 

for this open season would be veterans who are otherwise eligible for SDVI but 

failed to apply or pay premiums during the 2-year period beginning when VA notified them of the service connection of their disabilities. 

The bill would also require that SDVI premiums be based on ‘‘an appropriate and 

current mortality table selected by the Secretary’’ rather than the 1941 mortality 

table, increase the maximum amount of SDVI to $100,000, and increase the maximum amount of Supplemental SDVI to $50,000. These changes would apply to insurance policies issued on or after the date of enactment. 

Although the VA Insurance Service wishes to honor and aid all veterans, especially disabled veterans who have lost access to commercial insurance due to their 

service, oppose H.R. 2713 because it would go far beyond the appropriate and legitimate policy goals normally associated with VA life insurance programs. It would 

create a new and expensive program offering insurance policies far beyond what is 

normally available to average Americans. Under the bill, many elderly veterans who 

are now totally disabled would be eligible for free SDVI coverage, as well as $50,000 

of Supplemental SDVI, even though they did not obtain life insurance at a younger 

age when they were insurable and when most people purchase life insurance. Because a disproportionate number of SDVI insureds would be veterans who are in 

poor health, the cost of the SDVI program would be greatly increased. Furthermore, 

although VA did not have sufficient time to finalize our cost estimates, we are confident that mandatory costs associated with enactment of H.R. 2713 would be in the 

billions of dollars. With your permission, Mr. Chairman, we would like to submit 

our finalized estimates in writing for the record. 

H.R. 2774 

The SGLI program provides low-cost term insurance protection for active duty 

servicemembers and eligible reservists. Under current law, totally disabled servicemembers are entitled to free SGLI coverage for a period of 2 years after they separate from active duty or reserve status, provided they separate from service before 


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October 1, 2011. For totally disabled servicemembers who separate after that date, 

coverage will extend for only 18 months after separation. 

H.R. 2774, the ‘‘Families of Veterans Financial Security Act,’’ would eliminate the 

sunset date for the period of extended coverage. Totally disabled servicemembers 

separating after September 30, 2011, would be entitled to a 2-year extension of free 

SGLI coverage. 

VA supports H.R. 2774. The bill would eliminate an inequity for totally disabled 

SGLI insureds discharged after September 30, 2011. It would also guarantee that 

the servicemembers who are most seriously disabled when separated or released 

would have life insurance coverage during a period when they are likely undergoing 

medical treatment and rehabilitation. This bill would provide financial reassurance 

to disabled servicemembers and their families. 

Any costs associated with enactment of H.R. 2774 would be absorbed by the SGLI 

fund. 

Draft Bill to Eliminate Interest Deduction from Accelerated Benefit 

Payment 

Under current law, an accelerated benefit is available under SGLI and VGLI. The 

one-time accelerated benefit payable to a terminally ill SGLI or VGLI insured is the 

amount requested by the insured, up to 50 percent of his or her insurance coverage, 

minus an interest deduction, which is the amount that the Office of Servicemembers’ Group Life Insurance actuarially determines to be the amount of interest 

lost due to early payment of the insurance proceeds. This draft bill would eliminate 

the interest deduction for accelerated benefit payments made after the date of enactment of the bill. 

VA supports the draft bill because it would provide additional financial resources 

to terminally ill insureds and their families at a critical time when they are most 

likely in need of financial assistance. Eliminating the interest deduction would also 

be consistent with the accelerated benefit offered in the commercial insurance industry. 

Any costs associated with enactment of the draft bill would be absorbed by the 

SGLI or VGLI fund. 

f 

Statement of Hon. Steve Buyer, 

a Representative in Congress from the State of Indiana 

Mr. Chairman, I appreciate the opportunity to discuss H.R. 2379 the Veterans 

Group Life Insurance Improvement Act of 2009, which would increase the amount 

of life insurance available to veterans. 

Veterans Group Life Insurance (VGLI), administered by the Department of Veterans Affairs (VA), provides veterans the opportunity to convert their active duty 

Servicemembers Group Life Insurance (SGLI) coverage to a competitive life insurance product for them and their family in post-military life. 

Under current law, veterans have up to 1 year to convert the amount of SGLI 

coverage they carry to VGLI, and the amount they select cannot be altered. Many 

separating servicemembers are young and don’t see the need to carry a large 

amount of life insurance coverage; however, as they grow older and have a family, 

many of them require additional coverage. 

The Veterans’ Group Life Insurance Improvement Act of 2009 allows veterans to 

purchase up to $400,000 of VGLI coverage in $25,000 increments, every 5 years, 

until the age of 60. The costs of such increases would be offset by premiums veterans pay, so there is no direct cost to the government. This bill gives our veterans 

greater flexibility in their life insurance choices and I urge all members to cosponsor 

and support this legislation. I thank the chair and I yield back. 

f 

Statement of Paralyzed Veterans of America 

Mr. Chairman and Members of the Subcommittee, on behalf of Paralyzed Veterans of America (PVA), we would like to thank you for the opportunity to submit 

a statement for the record regarding the proposed legislation. We appreciate the fact 

that you continue to address the broadest range of issues with the intention of improving benefits for veterans. We particularly support any focus placed on meeting 

the complex needs of the newest generation of veterans, even as we continue to improve services for those who have served in the past. 


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H.R. 2713, the ‘‘Disabled Veterans Life Insurance Enhancement Act’’ 

Paralyzed Veterans of America supports H.R. 2713, a bill to amend title 38, 

United States Code, to create certain improvements in the service-disabled veterans’ 

insurance program under the Department of Veterans Affairs. This bill would provide for a 2 year period beginning on the date of its enactment which a qualified 

veteran may submit an application for insurance, regardless of the fact the claimant’s time limit may have expired for filing an application for service-disabled insurance under current law. 

Additionally, H.R. 2713 would also increase the maximum amount of protection 

from $10,000 to $100,000, and would increase the supplemental insurance for totally 

disabled veterans from $20,000 to $50,000. PVA would like to recommend adding 

open enrollment to the supplemental insurance as stated in the regular insurance 

protection plan. This would create an equal opportunity for both disabled veterans 

and regular applicants. 

H.R. 2379, the ‘‘Veterans Group Life Insurance Improvements Act of 2009’’ 

Paralyzed Veterans of America supports H.R. 2379, the ‘‘Veterans Group Life Insurance Improvements Act of 2009.’’ This legislation would provide certain veterans 

an opportunity to increase the amount of Veterans’ Group Life Insurance (VGLI). 

The VGLI recipient requests an increase, in writing, of no more than $25,000 in the 

amount of VGLI, and as long as the applicant is under 60 years of age. 

H.R. 2774, the ‘‘Families of Veterans Financial Security Act of 2009’’ 

PVA supports H.R. 2774, the ‘‘Families of Veterans Financial Security Act of 

2009.’’ This legislation would permanently extend the period of Servicemembers’ 

Group Life Insurance (SGLI) coverage for totally disabled veterans. PVA is an advocate of disabled veterans and applauds the extended period of 2 years after the date 

of separation for servicemembers on active duty or active duty for training on or 

after June 15, 2005. 

H.R. 2968 

PVA supports H.R. 2968, to amend Title 38, United States Code, to eliminate the 

required reduction in the amount of the accelerated death benefit payable to certain 

terminally ill persons insured under Servicemembers’ Group Life Insurance or Veterans’ Group Life Insurance. PVA views this bill as a benefit to severely ill servicemembers by taking away the current method of calculation and adding a set payout 

rate. 

f 


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MATERIAL SUBMITTED FOR THE RECORD 

Committee on Veterans’ Affairs 

Subcommittee on Disability Assistance and Memorial Affairs 

Washington, DC. 

July 15, 2009 

Bonnie Carroll 

Chairman and Executive Director 

Tragedy Assistance Program for Survivors 

1777 F Street, NW, 6th Floor 

Washington, DC 20006 

Dear Ms. Carroll: 

Thank you for testifying at the House Committee on Veterans’ Affairs’ Subcommittee on Disability Assistance and Memorial Affairs legislative hearing on H.R. 

2379, H.R. 2713, H.R. 2774 and H.R. 2968, held on June 24, 2009. I would greatly 

appreciate if you would provide answers to the enclosed follow-up hearing questions 

by Monday, August 17, 2009. 

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is implementing some formatting 

changes for material for all Full Committee and subcommittee hearings. Therefore, 

it would be appreciated if you could provide your answers consecutively on letter 

size paper, single-spaced. In addition, please restate the question in its entirety before the answer. 

Due to the delay in receiving mail, please provide your responses to Ms. Megan 

Williams by fax at (202) 225–2034. If you have any questions, please call (202) 225– 

3608. 

Sincerely, 

John J. Hall 

Chairman 

Tragedy Assistance Program for Survivors 

Washington, DC. 

August 20, 2009 

Hon. John J. Hall 

Chairman, Subcommittee on Disability and Memorial Affairs 

335 Cannon House Office Building 

Washington, DC 20515 

Dear Mr. Chairman, 

Thank you for the opportunity to address questions from the Department of Veterans Affairs following my testimony before your Subcommittee on June 24, 2009. 

The following are my responses to questions received on July 15, 2009. 

Question 1: How involved are spouses in selecting a VA insurance benefit? Is 

there any VA requirement to notify them about available benefits and inform them 

of their beneficiary status? 

Answer: I respectfully defer the response to those at the VA who set the requirements, with encouragement to fully inform both veteran and spouse/beneficiary of 

the benefits to which they are eligible. 

Question 2: The VA disagreed with the position you took regarding increases to 

premiums every 5 years and the impact this has particularly on older veterans. Do 

you have a response to VA’s contention that their program is competitive with the 

private sector and that older veterans have more income so can better afford the 

premiums than younger veterans? 

Answer: According to the VA Web site (www.insurance.va.gov) and VA form 

SGL–75 Ed. 07/2008 106430–0508–200M, premiums for the Veterans Group Life Insurance increase in cost at age 30, 35, 40, 45, 50, 55, 60, 65, 70, and 75. These appear to be 5-year increments, at which time premium costs rise significantly. For 

instance, $400K coverage costs $88 a month at age 45, the age at which a veteran 

may leave the service after a 20-year career. Five years later, at age 50, the veteran 

has a 64-percent increase in premium to $144 a month. Another five years later, 

now at age 55, the veteran experiences an increase of 86 percent to $268. The total 


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increase from what the veteran pays at age 45 and what the veteran would pay at 

age 55 is a 205-percent increase in premium payments. 

The following is a comparison with an insurance policy commonly selected by veterans, both of which go up every 5 years: 

• VGLI: 45 yr old, non smoker, 5 yr renewable term is $88.00 per month or 

$1,056 per year. 

• AAFMAA: 45 yr old, non smoker, 5 yr renewable term is $45.90 per month or 

$550.80 per year. 

For further comparison, the following are the monthly rates for 20 or 30 year level 

term policies: 

• Navy Mutual Aid: $400k, 20 year term policy rate: $52.20 per month—Rates 

stay the same thru the 30 yrs 

• ING: $400K, 30 YR TERM, $72 per month—Rates stay the same thru the 30 

yrs 

• Prudential: $400K, 30 YR TERM, $76, Rates stay the same thru the 30 yrs 

• Transamerica: $400K, 30 YR TERM, $82, Rates stay the same thru the 30 yrs 

Regarding older veterans having more income and therefore being better able to 

afford higher premiums, I would offer that our Nation’s veterans deserve the very 

best life insurance options at the most competitive rates possible. 

Respectfully, 

Bonnie Carroll 


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f 

Committee on Veterans’ Affairs 

Subcommittee on Disability Assistance and Memorial Affairs 

Washington, DC. 

July 15, 2009 

Thomas M. Lastowka 

Director, Philadelphia Regional Office and Insurance Center 

U.S. Department of Veterans Affairs 

810 Vermont Ave., NW 

Washington, DC 20420 

Dear Mr. Lastowka: 

Thank you for testifying at the House Committee on Veterans’ Affairs’ Subcommittee on Disability Assistance and Memorial Affairs legislative hearing on H.R. 

2379, H.R. 2713, H.R. 2774 and H.R. 2968, held on June 24, 2009. I would greatly 


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30 

appreciate if you would provide answers to the enclosed follow-up hearing questions 

by Monday, August 17, 2009. 

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is implementing some formatting 

changes for material for all full Committee and Subcommittee hearings. Therefore, 

it would be appreciated if you could provide your answers consecutively on letter 

size paper, single-spaced. In addition, please restate the question in its entirety before the answer. 

Due to the delay in receiving mail, please provide your responses to Ms. Megan 

Williams by fax at (202) 225–2034. If you have any questions, please call (202) 225– 

3608. 

Sincerely, 

John J. Hall 

Chairman 

Questions for the Record 

The Honorable John J. Hall, Chairman 

Subcommittee on Disability Assistance and Memorial Affairs 

House Committee on Veterans’ Affairs 

June 24, 2009 

Legislative Hearing on H.R. 2379, H.R. 2713, H.R. 2774, and H.R. 2968 

Question 1: Do increments up to $25,000 give veterans enough flexibility, or 

would the ability to select smaller increments work better for the veteran? What 

challenges might this approach present for the VA Insurance Center? 

Response: We believe the $25,000 increment provides adequate flexibility for 

Veterans. Typically, Veterans do not purchase Veterans group life insurance (VGLI) 

in increments smaller than $25,000. The insurance industry generally does not offer 

supplemental insurance in smaller increments because purchasers generally opt for 

larger amounts. Implementation and administration costs would be significantly 

higher if multiple increments were available. Communicating a single amount of 

coverage and a single rate will help Veterans understand and take advantage of the 

benefit. 

Another factor is premium cost. The monthly premium for the $25,000 increment 

is competitively priced and relatively low. The two most populated age groups in the 

VGLI program are the ages of 40–44 and 45–49, which together account for nearly 

50 percent of all VGLI participants. The monthly cost for the $25,000 increment is 

shown below: 

Age-Group Rate per $1,000 

Monthly Cost for a 

$25,000 

Increment 

40–44 $.17 $4.25 

45–49 $.22 $5.50 

Question 2(a): If the VGLI price tag for a 75-year-old veteran is $20,520 per 

year, how could VA reduce this premium price? 

Response: The premium quoted—$20,520 per year for a 75-year-old Veteran—is 

for $400,000 of coverage, the maximum amount available through VGLI. The 

amount of VGLI may not exceed the amount of an insured’s Servicemembers’ group 

life insurance (SGLI) coverage at the time of separation from service. Congress increased the maximum amount of SGLI to $400,000 effective September 30, 2005. 

As a result, there are no Veterans with VGLI age 75 or older who have $400,000 

of coverage. 

The Department of Veterans Affairs (VA) takes measures to keep costs as low as 

possible for Veterans, such as capping VGLI premiums at the rate charged to 75- 

year old Veterans. However, the VGLI program is self-supporting, and premiums 

must reflect the mortality experience of each age group. 

There are, however, actions that VGLI insureds can take to reduce life-insurance 

costs. As is true in the commercial insurance industry, term life insurance becomes 

quite costly at advanced ages. However, the need for life insurance diminishes at 

older ages because financial responsibilities are reduced; mortgages are fully paid, 


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children are grown, and savings have accumulated. People often reduce their life insurance coverage to defray increased premium costs. For example, a 75-year old 

with $100,000 of VGLI coverage may switch to $50,000 of coverage to lower the annual premium from $5,130 to $2,565. VGLI insureds who want to maintain a high 

amount of coverage for their lifetime can convert to a permanent plan at a young 

age. VA regularly informs insureds that VGLI premiums will get more expensive 

as Veterans age and advises them to consider alternatives, such as reducing their 

coverage or converting to a permanent plan. 

Question 2(b): Would VGLI be more viable and self-sustaining with fixed premiums, similar to some commercial insurance policies? 

Response: If VGLI offered permanent rather than term insurance, premiums 

would have to be increased more than current VGLI premiums for term insurance 

in order for the program to be self-supporting. ‘‘Whole life’’ polices have fixed premiums; however, the premiums are more expensive at older ages. For example, a 

typical whole life policy in the commercial industry with $400,000 coverage has the 

following monthly premium rates: approximately $540 at age 45, $940 at age 55 and 

$1,688 at age 65. In comparison, the monthly rates for the same coverage under 

VGLI are $88 at age 45, $268 at age 55 and $600 at age 65. Because higher premiums would be required, we do not believe that VGLI would be more viable if it 

provided permanent rather than term insurance. Also, if VGLI offered permanent 

plans directly, the program’s administrative costs would significantly increase. 

Question 3: VA testified that 96 percent of veterans insured under VGLI have 

less than $400,000 in coverage. Can you provide the percent of veterans insured 

under the VGLI program for every $25,000 increment up to the $400,000 maximum 

amount? 

Response: The percentage of Veterans enrolled in VGLI for every $25,000 increment in July 2009 is shown below: 

Coverage Amount Percentage of Veterans 

Enrolled in VGLI 

Less than $25,000 6 

$25,000— 49,999 4 

$75,000— 99,999 26 

$50,000— 74,999 1 

$100,000—124,999 26 

$125,000— 149,999 0 

$150,000— 174,999 4 

$175,000— 199,999 0 

$200,000— 224,999 16 

$225,000— 249,999 0 

$250,000— 274,999 11 

$275,000— 299,999 0 

$300,000— 324,999 1 

$325,000— 349,999 0 

$350,000— 399,999 0 

$400,000 5 

Total 100 


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Question 4(a): VA testified that the cost of the optional increase in coverage 

would be offset by the premiums paid by the veterans who choose to buy extra VGLI 

coverage. How did VA make this calculation? 

Response: VA used an actuarial model to project future reserve requirements for 

this proposal as well as the overall financial feasibility of this proposal. New insurance issued under VGLI would require the establishment of a financial reserve 

worth approximately 2.5 percent of the face value to provide for the difference between expected future claims and expenses and the expected future premiums. 

The participation assumptions varied by age bracket because younger Veterans 

are more inclined to purchase optional coverage. Hence, we applied a 30 percent 

participation rate for Veterans up to age 39, a 20 percent participation rate for Veterans ages 40 to 49, and a 10 percent participation rate for Veterans ages 50 to 59. 

To minimize adverse selection and costs, coverage would be restricted to Veterans 

under age 60 and limited to increments of $25,000. 

The increased premiums collected for higher coverage amounts would fund the estimated annual program cost of $10 million to establish initial reserves and additional coverage. 

Question 4(b): Are there any variables or hidden costs that may affect this conclusion? 

Response: We do not anticipate any significant variables or hidden costs. 

Question 5: During our discussion at the hearing, the VA witness noted that VA 

continues to use a 1941 mortality table because it would be cost-prohibitive to 

change that practice. Can VA further explain the reasons and bases for that position 

in more detail? 

Response: It is important to clarify that the VA witness did not state that it 

would be cost-prohibitive to change to the new mortality table, as is stated in this 

question. Rather, the witness stated that ‘‘generally it is a much higher cost to the 

government.’’ 

By law (38 U.S.C. § 1922(a)), service-disabled Veterans’ insurance (S–DVI) premiums are based on the Commissioners 1941 standard ordinary (CSO) table of mortality with 2.25 percent interest. In 1951 when this program began, these premium 

rates were competitive with commercial insurance policy rates. Since life expectancy 

has significantly improved over the past 60 years, a more recent mortality table 

would reflect lower mortality and lower premium rates. The current S–DVI premium rates are no longer representative of ‘‘standard’’ rates, and in fact are more 

than twice as high as the standard rates in the new mortality table at most ages. 

VA supports use of the 2001 CSO table of mortality to reduce S–DVI insured individuals’ premiums and to align with current industry standards. Use of an appropriate and current mortality table would enable S–DVI premiums to correspond to 

life-insurance premiums charged by private companies to nondisabled Veterans, as 

is the original intent of the S–DVI program. The cost of updating premium rates 

to the 2001 CSO mortality table with an interest rate of 4.5 percent (which is the 

current mortality standard in the insurance industry) would result in a 5-year cost 

of $112 million and a 10-year cost of $232.6 million. 

Question 6(a): For H.R. 2713, Congress intended to have the S–DVI coverage 

closely correspond to the private sector’s premiums for nondisabled veterans, in your 

opinion, does this legislation accomplish this goal? Would the use of up-to-date mortality tables reduce the premiums sufficiently for Congress to achieve this goal? 

Response: The provision in H.R. 2713 that would require VA to use an appropriate and current mortality table would enable S–DVI premiums to correspond to 

life-insurance premiums charged by private companies to nondisabled Veterans because the 2001 CSO table of mortality is used by private insurance companies to 

set premiums for policies issued after January 1, 2008. 

Use of an appropriate and current mortality table would significantly decrease 

premium costs for S–DVI policyholders, as noted in the reply to question 5 above. 

The average age of Veterans applying for S–DVI is 56. The table below compares 

S–DVI premium rates at ages 40, 50, and 60 for ordinary life and term policies 

under the 1941 CSO table and the 2001 CSO table. The interest rate also changes 

from 2.25 percent with the current 1941 CSO table to 4.5 percent with the 2001 

CSO table. 


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Comparison of Current S–DVI Premium Rates with Updated Rates Monthly Premiums for $10,000 of Insurance 

5 Year Term Plan Ordinary Life Plan 

Age Current Updated Current Updated 

40 $5.80 $1.60 $21.60 $9.80 

50 $11.90 $3.70 $32.30 $16.20 

60 $26.00 $10.00 $51.00 $27.90 

Question 6(b): While H.R. 2713 will increase the life insurance maximum to 

$100,000, how will disabled veterans be able to satisfy the requirements for maximum coverage? 

Response: H.R. 2713 would simply increase the maximum coverage amount to $100,000 and provide for a 2-year open season only for otherwise eligible Veterans 

who did not submit an application for S–DVI within the 2-year timeframe required 

by statute. It would not mandate any change to the current eligibility rules for obtaining S–DVI. Veterans would still have to meet the current statutory requirements, which include good health requirements for all conditions other than serviceconnected disabilities and (except for those affected by the open season ‘‘retroactive’’ 

portion of the bill) apply within 2 years of notification of a VA award of service connection. Veterans already enrolled in the S–DVI program would therefore not be eligible for the increased coverage. 

Although purchasing S–DVI in excess of the current maximum amount of coverage would be more expensive, ‘‘open season eligible’’ Veterans rated totally disabled prior to age 65 would be eligible to have premiums waived for $100,000 of 

coverage. However, Veterans who already have $10,000 of S–DVI coverage could not 

increase coverage to the maximum allowed under the bill. 

As described above, enactment of H.R. 2713 would create inequities between those 

already insured under S–DVI and those who would be insured as a result of enactment of H.R. 2713. 

Question 6(c): If Congress made the rates more equitable with the private sector 

under the S–DVI program, do you think more veterans would be inclined to participate or does the private sector insurance industry just do a better job? 

Response: Significant differences in premium rates would be unlikely if S–DVI 

used a mortality table as mandated in H.R. 2713 because the private sector uses 

the same mortality table for policies issued after January 1, 2008. However, many 

of the service-connected Veterans insured by S–DVI would either be denied insurance or charged higher rates in the private sector. Therefore, Veterans with serviceconnected disabilities would be more likely to participate in the S–DVI program 

with premium rates based on an appropriate and current mortality table as mandated in H.R. 2713. 

Question 6(d): Please inform whether VA has proposed or is considering any of 

its own initiatives to improve S–DVI? Any of its other insurance programs? 

Response: VA has a systematic process in place to regularly review, identify, and 

assess opportunities for additional improvements and expansion. VA submits legislative proposals in the annual budget request to Congress, and VA recently testified 

regarding the following bill provisions: 

• Section 101 of S. 728 would create a new life insurance program for Veterans 

who are less than 65 years old and have a service-connected disability. The program would target the same disabled Veterans as S–DVI but provide $50,000 

of level premium term insurance using the 2001 CSO mortality table. At age 

70, when insurance needs lessen for most people, the amount of coverage would 

reduce to 20 percent of the original amount, and no further premiums would 

be due. VA supports section 101, subject to appropriate funding. 

• Section 102 of S. 728 would increase the maximum amount of supplemental 

S–DVI coverage to $30,000. VA supports section 102 provided Congress identifies an offsetting source of funding. 

• Section 104 of S. 728 would increase the Veterans’ mortgage life insurance 

maximum coverage amount from $90,000 to $150,000. VA supports section 104 

subject to Congress identifying offsets. 

Question 7: Please provide a cost estimate for H.R. 2713. 


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Response: The costs associated with H.R. 2713 are broken out below. Scenario 

1 assumes participation rates ranging from 25 to 75 percent depending on the service-connected rating. Scenario 2 assumes participation rates ranging from 10 to 50 

percent. 

Cost Elements of Proposal 5–Year Cost 

($ millions) 

10–Year Cost 

($ millions) 

I. New issues only (prospective) $416 $1,500 

II. Open season for current insureds* $1,800 $3,600 

III. Open season for all service-connected 

disabled Veterans who were ever eligible 

for SDVI (retrospective) 

Scenario 1 $5,100 $12,300 

Scenario 2 $2,500 $6,100 

IV. Administrative cost 

Scenario 1 $203 $203 

Scenario 2 $102 $102 

V. Total cost 

Scenario 1 $7,500 $17,600 

Scenario 2 $4,800 $11,300 

*Note: VA believes the legislation as currently drafted would not allow current 

S–DVI policyholders to increase their coverage, which could be considered inequitable. (See response to 6b. above.) However, the cost of including these Veterans is 

shown in row II above. 

Question 8: In testimony, VA contended that H.R. 2713 would go far beyond the 

appropriate legitimate policy goals normally associated with VA life insurance programs since there have been expansions of some of these programs already as well 

as the creation of new ones. Can you further explain why this is the VA’s view? 

Response: H.R. 2713 would exceed the policy goals associated with VA life insurance programs on two bases. First, under the current statute, a Veteran must apply 

for S–DVI within 2 years from the date VA determines that the Veteran’s disability 

is service connected, unless the Veteran is shown to be mentally incompetent. H.R. 

2713 would provide a 2-year open season during which certain service-connected 

Veterans who did not submit a S–DVI application and pay premiums could obtain 

S–DVI. Thus, Veterans who did not comply with the statute, whose disabilities may 

have worsened, and who have aged since being notified that their disabilities are 

service-connected would be allowed to purchase insurance at rates that place these 

disabled Veterans on par with healthy non-Veteran populations, particularly at 

younger ages. 

Second, the amount of government support that would be required for H.R. 2713 

would far exceed the amount of the current subsidy for the S–DVI program. The 

current S–DVI program is not self-supporting because the premiums for 45 percent 

of the policyholders have been waived, and because policyholders, who are disabled, 

pay standard premium rates but have a higher rate of mortality than healthy persons. As explained in VA’s budget submission to Congress, VA has requested $40.1 

million for the S–DVI program for fiscal 2010. 

The proposal would increase costs because more disabled policyholders: (1) would 

enroll, (2) would be eligible for waiver of premiums, (3) would have a higher risk 

of mortality, and (4) would receive higher coverage amounts. We estimate that the 

5-year costs for H.R. 2713 would range from $7.5 billion to $4.8 billion. 

The alternative proposed in S. 728 would assist veterans with greater life insurance needs in a more cost-effective and programmatically sound way. 

Question 9: What is the strategic plan for the Insurance Center to conduct better 

outreach and improve its educational services to veterans, their families and survivors about insurance? 

Response: The insurance program’s strategic plan for outreach efforts beginning 

in fiscal 2010 focuses on three major areas: 

More Precisely Targeting Our ‘‘Special Outreach to Disabled Veterans’’: We individually call and follow-up with Veterans whose disabilities would affect their ability 


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to purchase commercial insurance. We inform them of their insurance benefits and 

explain their value. We are identifying recently separated Veterans with low percentage service-connected ratings who would have difficulty purchasing commercial 

insurance. This group will be added to our special outreach. 

Expanding Customer Access: We provide Veterans with multiple avenues for accessing insurance benefits information and managing coverage for those currently 

insured. 

Improving Communications: We provide Veterans with enhanced communication 

materials, including forms, applications, and program news, which are easy to understand, provide necessary information, and address the needs and concerns of specific demographic groups. 

Additional Insurance outreach initiatives are described below: 

• Expand training for branch of service casualty offices, Veterans service organizations, and other stakeholders; • Enhance the insurance Web site to include additional self-service functions, 

Web chat, guidelines and manuals; • E-mail information such as newsletters to Veterans and servicemembers; • Use Department of Defense military news outlets (TV, newspapers, Web sites); • Remind beneficiaries of the free beneficiary financial counseling service; and • Provide a comprehensive package of information and applications and a series 

mailings regarding eligibility for VGLI upon separation. 

Question 10(a): Currently, in calculating an accelerated benefit payment, VA applies an interest deduction for proceeds. H.R. 2968 would eliminate this. What rate 

is used to determine the interest deduction, how is it calculated? 

Response: The discount rate for the accelerated benefit payment is updated 

monthly and is calculated using the 3-month Treasury bill rate rounded down to the 

nearest 0.25 percent. 

Question 10(b): What would the average increase in accelerated benefit payments to terminally ill insured veterans if interest deductions are eliminated? 

Response: Elimination of the discount increases terminally ill Veterans’ benefit 

payments by varying amounts based on the discount rate and the benefit amount. 

The table below illustrates the discounting effect for someone who requests one-half 

of their $400,000 coverage (i.e., $200,000) at various discount rates. 

ABO Discount Rate Discount for $200,000 Benefit 

0.25% $379 

1.00% $1,513 

1.50% $2,266 

2.00% $3,018 

3.00% $4,516 

Question 11: During the hearing, Ms. Carroll noted that survivors still need to 

go through the VBA for assistance and that the newly instituted Office of Survivors 

Assistance established under P.L. 110–389 is only acting as a policy office. The legislation states that the Survivor Assistance Office shall, ‘‘serve as a resource regarding all benefits and services furnished by the Department to survivors and dependents of deceased veterans and members of the Armed Forces.’’ How is VA meeting 

this portion of the mandate? 

Response: The Office of Survivors Assistance (OSA) meets this portion of the 

mandate by referring survivors and dependants of deceased Veterans and members 

of the armed forces to the appropriate office within VA for action on their claims 

and responses to their inquiries. This effort is consistent with Congress’ expectation, 

expressed in the Joint Explanatory Statement on amendment to Senate Bill, S. 

3023, as amended, that OSA would ‘‘ensure that policies and procedures are such 

that such survivors will receive appropriate referrals to the relevant administrations 

and offices of the Department, so that such survivors may receive all of the benefits 

and services for which they are eligible.’’ Most claims/inquiries from survivors pertain to compensation, and therefore, OSA refers such inquiries to the Veterans Benefit Administration, which has the technical expertise to provide an accurate and 


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full response. In addition, OSA refers survivors to other administrations within VA, 

such as the National Cemetery Administration and the Veterans Health Administration, to address issues within their expertise. 

Question 12(a): Congresswoman Halvorson correctly mentioned that totally disabled veterans have ‘‘limited or no opportunity’’ of obtaining commercial insurance 

and thus H.R. 2774 ‘‘maximizes’’ the opportunity for veterans to secure insurance. 

Has VA done an impact study on uninsured veterans? 

Response: We have not conducted a specific impact study; however, we believe 

H.R. 2774 would be beneficial to totally disabled SGLI insureds and add minimal 

cost to the SGLI program. 

Question 12(b): Does this additional 6-month stopgap measure address the underlying problems for disabled veterans in securing private insurance? 

Response: Totally disabled Veterans are either entirely unable to obtain life insurance or can obtain life insurance only at prohibitively high premium rates due 

to their service-connected disabilities. This provision would extend free coverage 

under SGLI for 6 additional months and provide them automatic entry into VGLI 

without any underwriting. This extra 6-month period gives VA additional time to 

continue outreach and encourage Veterans to purchase VGLI. 

Question 12(c): Can, or should, the proposed 24-month extension be lengthened 

even further? 

Response: VA believes the 24-month extension is the appropriate length of time 

for the following reasons: 

• It takes disabled Veterans 12 to 18 months following separation to adjust to civilian life and address medical concerns. Most Veterans are not ready to address other concerns such as life insurance until this time. • Lengthening the SGLI disability extension would increase claims costs to the 

program and could increase SGLI premiums. The SGLI program is self-supporting, and members would have to cover the cost if death claims exceeds premium income. Commercial insurance companies typically provide a 31-day free 

conversion period for members to convert from a group term policy to an individual policy. The 24-month free conversion period for disabled SGLI insureds 

far exceeds the comparable free coverage period offered in the commercial industry. • The 2-year period is consistent with the application time period for S–DVI. 

Question 13: If inquiries and surveys have shown that veterans have wanted to 

increase their amount of SGLI coverage, then why has VA not been proactive in 

asking Congress to fund this benefit? Does it intend to request funding to support 

this increase? 

Response: VA believes that this question refers to VGLI rather than SGLI based 

on the reference to Veterans in the question. In April 2005, VA took the initiative 

to explore the feasibility and advisability of offering VGLI policyholders an opportunity to increase their coverage. A survey of over 800 VGLI policyholders found 

that 60 percent wanted more coverage. We have been researching, developing, and 

reviewing effective and actuarially sound program designs and recently provided the 

Committee with technical advice regarding this concept. We believe H.R. 2379, the 

‘‘Veterans’ Group Life Insurance Improvement Act of 2009,’’ is the best way to offer 

VGLI policyholders the opportunity to increase coverage. Premiums paid for extra 

VGLI coverage would offset any cost of the optional increase in coverage. 

Question 14: Please confirm the conversion rate/participation levels for the VGLI 

program. Please inform whether there is any disparity between VGLI/SGLI and 

whether more parity between VGLI and SGLI be enough to decrease the attrition 

rate of the SGLI/VGLI transfer? 

Response: The VGLI participation rate was 9.4 percent in 2008. The participation rate for Veterans with disabilities that might have trouble obtaining commercial insurance is 52 percent, and approximately 90 percent of Veterans with a 100 

percent disability rating purchase VGLI. Since we began our special outreach program in 2001, 9,500 seriously disabled Veterans have purchased or been granted insurance coverage. 

Despite extensive outreach efforts, some Veterans do not apply and purchase insurance from companies with similar value and cost to VGLI. The reasons why Veterans may not convert from SGLI to VGLI coverage are listed below: 

• Employers frequently insure Veterans for little or no cost. 


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• The SGLI premium is 6.5 cents per $1,000 of coverage at all ages. VGLI premiums, which increase with age, may deter Veterans. 

• Unmarried Veterans often believe they do not need life insurance. 

• Recently returning Veterans perceive the risk of death to be much lower compared to their risk while in service and may not purchase any life insurance. 

Æ 


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