‘‘SUBCHAPTER V—SUPPLEMENTAL MORTGAGE
PROTECTION LIFE INSURANCE FOR CER-
TAIN VETERANS
‘‘§ 1991. Purchase of insurance
‘‘(a) The Secretary may, without regard to section
3709 of the Revised Statutes (41 U.S.C. 5), purchase
from one or more life insurance companies a policy or poli-
cies of mortgage protection life insurance on a group basis
to provide the benefits specified in this subchapter.
‘‘(b) A veteran (other than a veteran eligible for in-
surance under section 2106 of this title) who establishes
to the satisfaction of the Secretary that the veteran is un-
able to obtain commercial life insurance because of a serv-
ice-connected disability shall, upon application made in
such form as the Secretary shall prescribe, be granted in-
surance under this subchapter.
‘‘§ 1992. Amount of insurance
‘‘(a) The initial amount of insurance provided to a
veteran under this subchapter may not exceed the lowest
of the following amounts:
‘‘(1) $40,000.
‘‘(2) The amount of the loan outstanding on a
dwelling (and necessary land therefor) owned or oc-
cupied by the veteran as a home on the date insur-
ance under this subchapter is placed in effect.
‘‘(3) In the case of a veteran who purchases or
constructs a dwelling (including necessary land
therefor) to be occupied by the veteran as a home
on or after the effective date of this section, the
amount of the original loan on that dwelling (and
land).
‘‘(b) The amount of such insurance shall be reduced
according to the amortization schedule of the loan and at
no time shall exceed the amount of the outstanding loan
with interest.
‘‘§ 1993. Premiums
‘‘(a) The premiums charged a veteran for insurance
under this subchapter shall be paid at such times and in
such manner as the Secretary shall prescribe. Those pre-
miums shall be based on such mortality data as the Sec-
retary considers appropriate to cover only the mortality
cost of insuring veterans with service-connected disabilities
who are unable to obtain commercial mortgage protection
life insurance.
‘‘(b) The Secretary shall deduct the premiums
charged a veteran for insurance under this subchapter
from any compensation or other cash benefits payable to
the veteran by the Secretary and shall pay such premiums
to the insurer or insurers for such insurance. A veteran
insured under this subchapter who is not eligible for cash
benefits from the Secretary may pay the amount of such
premiums directly to the insurer or insurers.
‘‘§ 1994. Payment of insurance
‘‘An amount of insurance in force under this sub-
chapter on the date of death of a veteran insured under
this subchapter shall be paid only to the holder of the
mortgage loan, the payment of which such insurance was
granted, for credit on the loan indebtedness, and the liabil-
ity of the insurer under such insurance shall be satisfied
when such payment is made. If the Secretary is the holder
of the mortgage loan, the insurance proceeds shall be cred-
ited to the loan indebtedness and, as appropriate, depos-
ited in the direct loan or loan guaranty revolving fund es-
tablished by section 3723 or 3724 of this title, respec-
tively.
‘‘§ 1995. Insurance policy provisions
‘‘(a) Each policy purchased under section 1991 of
this title shall provide, in terms approved by the Secretary,
for the following:
‘‘(1) Reinsurance, to the extent and in a man-
ner to be determined by the Secretary to be in the
best interest of the veterans or the Government,
with such other insurers which meet qualifying cri-
teria established by the Secretary as may elect to
participate in such reinsurance.
‘‘(2) That at any time the Secretary determines
such action to be in the best interest of veterans or
the Government, the Secretary may (A) discontinue
the entire policy, or (B) at the Secretary’s option,
exclude from coverage under the policy loans made
after a date fixed by the Secretary for that purpose.
Any insurance previously issued to a veteran under
such policy may not be canceled by the insurer solely
because of termination of the policy by the Secretary
with respect to new loans. If the entire policy is dis-
continued, the Secretary shall have the right to re-
quire the transfer, to the extent and in a manner to
be determined by the Secretary, to any new company
or companies with which the Secretary has nego-
tiated a new policy or policies, the amounts, as de-
termined by the existing insurer or insurers with the
concurrence of the Secretary, of any policy or con-
tingency reserves with respect to insurance pre-
viously in force.
‘‘(3) Issuance to each veteran insured under
this subchapter of a uniform type of certificate set-
ting forth the benefits to which the veteran is enti-
tled under the insurance.
‘‘(4) Any other provisions which are reasonably
necessary or appropriate to carry out the provisions
of this subchapter.
‘‘(b)(1) Any such policy shall also provide that the
insurer under the policy shall provide to the Secretary an
accounting not later than 90 days after the end of each
policy year which shall set forth, in a form approved by
the Secretary, the following:
‘‘(A) The amount of premiums paid by veterans
accrued under the contract or agreement from its
date of issue to the end of such contract year.
‘‘(B) The total of all mortality and other claim
charges incurred for that period.
‘‘(C) The amount of the insurer’s expense and
risk charges, if any, for that period.
‘‘(2) If the amount under paragraph (1)(A) is greater
than the sum of the amounts under paragraph (1)(B) and
(1)(C), the amount of the difference shall be held by the
insurer as a contingency reserve to be used by that insurer
for charges under the contract or agreement only. The
contingency reserve shall bear interest at a rate to be de-
termined in advance of each contract year by the insurer,
which rate shall be approved by the Secretary if consistent
with the rates generally used by the insurer for similar
funds held under other plans of group life insurance.
‘‘(3) If the Secretary determines that such contin-
gency reserve has attained an amount estimated by the
Secretary to make satisfactory provision for adverse fluc-
tuations in future charges under the contract, the Sec-
retary shall require the insurer to adjust the premium
rates and contributions so as to prevent any further sub-
stantial accretions to the contingency reserve.
‘‘(4) If the contract or agreement is discontinued and
if after all charges have been made there is any positive
balance remaining in the contingency reserve, the insurer
shall pay such balance to the Secretary. Any such payment
shall be credited to the appropriation ‘Compensation and
Pensions, Department of Veterans Affairs,’. The insurer
shall be allowed to make any such payment in equal
monthly installments over a period of not more than two
years.
‘‘(c) With respect to insurance contracted for under
this subchapter, the Secretary may adopt such regulations
relating to eligibility of the veteran for insurance, the max-
imum amount of insurance, the maximum duration of in-
surance, and other pertinent factors not specifically pro-
vided for in this subchapter, as in the Secretary’s judg-
ment are in the best interest of veterans or the Govern-
ment.
‘‘(d) Insurance contracted for under this subchapter
shall take effect as to any veteran on a date determined
by the Secretary.
‘‘(e) The amount of the insurance at any time shall
be the amount necessary to pay the mortgage indebtedness
in full, except as otherwise limited by the policy.
‘‘§ 1996. Termination of insurance
‘‘(a) Insurance contracted for under this subchapter
shall terminate upon whichever of the following first oc-
curs:
‘‘(1) Satisfaction of the veteran’s indebtedness
under the loan upon which the insurance is based.
‘‘(2) The veteran’s 70th birthday.
‘‘(3) Termination of the veteran’s ownership of
the property securing the loan.
‘‘(4) Discontinuance of payment of premiums
by the veteran.
‘‘(5) Discontinuance of the entire contract or
agreement.
‘‘(b) Termination of insurance under this subchapter
shall not affect the guaranty or insurance of the loan by
the Secretary under any other provision of this chapter.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of such chapter is amended by adding
at the end thereof the following:
‘‘SUBCHAPTER V—SUPPLEMENTAL MORTGAGE PROTECTION LIFE INSURANCE
FOR CERTAIN VETERANS
‘‘Sec.
‘‘1991. Purchase of insurance.
‘‘1992. Amount of insurance.
‘‘1993. Premium.
‘‘1994. Payment of insurance.
‘‘1995. Insurance policy provisions.
‘‘1996. Termination of insurance.’’.
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