made by a member under subparagraph (B) of subsection 
(a)(3), the person may thereafter be insured under this 
subchapter upon— 
‘‘(1) written application by the member; 
‘‘(2) proof of good health of the member’ and 
‘‘(3) compliance with such other terms and con-
ditions as may be prescribed by the Secretary. 
‘‘(f) FURNISHING
OF INFORMATION.—Whenever a 
member has the opportunity to make an election under 
subsection (a) not to be insured under this subchapter, 
and at such other times periodically thereafter as the Sec-
retary concerned considers appropriate, the Secretary con-
cerned shall furnish to the member general information 
concerning disability insurance. Such information shall in-
clude— 
‘‘(1) the purpose and role of disability insur-
ance in financial planning; and 
‘‘(2) the availability of commercial disability in-
surance. 
‘‘(g) CHANGES IN BENEFITS.—The effective date and 
time for any change in benefits under the Servicemembers’ 
Group Disability Insurance Program shall be based on the 
date and time according to the time zone immediately west 
of the International Date Line.
‘‘§ 1994. Qualifying disabilities 
‘‘Any of the following is a qualifying disability for the 
purposes of this subchapter: 
‘‘(1) Complete and permanent loss of movement 
of an extremity. 
‘‘(2) Burns of a severity equaling third degree 
or higher and affecting an area or areas of the body 
exceeding one square foot. 
‘‘(3) The loss of sight of one or both eyes en-
tirely, irrecoverably, and uncorrectably. 
‘‘(4) The permanent loss of one hand, by sever-
ance at or above the wrist joint. 
‘‘(5) The permanent loss of one foot, by sever-
ance at or above the ankle joint. 
‘‘(6) The loss of speech or hearing entirely, irre-
coverably, and uncorrectably. 
‘‘(7) Any other disability specified by the Sec-
retary by regulation for the purposes of this section. 
‘‘§ 1995. Duration and termination of coverage 
‘‘Each policy purchased under this subchapter shall 
contain a provision, in terms approved by the Secretary, 
to the effect that any insurance thereunder on any mem-
ber of the uniformed services, unless discontinued upon 
the written request of the insured (or discontinued pursu-
ant to section 1996(a)(2)(B) of this title), shall continue 
in effect while the member is on active duty, active duty
for training, or inactive duty training scheduled in advance 
by competent authority during the period thereof, or while 
the member meets the qualifications set forth in subpara-
graph (B) or (C) of section 1965(5) of this title and such 
insurance shall cease as follows: 
‘‘(1) With respect to a member on active duty 
or active duty for training under a call or order to 
duty that does not specify a period of less than 31 
days, insurance under this subchapter shall cease— 
‘‘(A) at midnight, local time, on the date 
of separation or release from active duty or ac-
tive duty for training; or 
‘‘(B) at the end of the thirty-first day of 
a continuous period of— 
‘‘(i) absence without leave; 
‘‘(ii) confinement by civil authorities 
under a sentence adjudged by a civilian 
court; or 
‘‘(iii) confinement by military authori-
ties under a court-martial sentence involv-
ing total forfeiture of pay and allowances. 
Any insurance so terminated as the result of an ab-
sence or confinement referred to in subparagraph 
(B), together with any beneficiary designation in ef-
fect for such insurance at such termination thereof,
shall be automatically revived as of the date the 
member is restored to active duty with pay or to ac-
tive duty for training with pay. 
‘‘(2) With respect to a member on active duty 
or active duty for training under a call or order to 
duty that specifies a period of less than 31 days, in-
surance under this subchapter shall cease at mid-
night, local time, on the last day of such duty. 
‘‘(3) With respect to a member on inactive duty 
training scheduled in advance by competent author-
ity, insurance under this subchapter shall cease at 
the end of such scheduled training period. 
‘‘(4) With respect to a member of the Ready 
Reserve of a uniformed service who meets the quali-
fications set forth in subparagraph (B) or (C) of 
section 1965(5) of this title, insurance under this 
subchapter shall at midnight, local time, on the date 
of separation or release from such assignment. 
‘‘§ 1996. Premiums: deductions and payments; invest-
ment; expenses 
‘‘(a) DEDUCTIONS AND PAYMENTS.—The provisions 
of subsection (a) of section 1969 of this title shall apply 
to Servicemembers’ Group Disability Insurance in the 
same 
manner 
as 
those 
provisions 
apply 
to
Servicemembers’ Group Life Insurance under that sub-
section. 
‘‘(b) APPROPRIATIONS FOR PREMIUMS FOR EXTRA 
HAZARD OF DUTY IN THE UNIFORMED SERVICES.—The 
provisions of subsection (b) of section 1969 of this title 
shall apply to Servicemembers’ Group Disability Insurance 
in the same manner as those provisions apply to 
Servicemembers’ Group Life Insurance under that sub-
section. 
‘‘(c) ADVANCE ON APPROPRIATIONS.—The provisions 
of subsection (c) of section 1969 of this title shall apply 
to Servicemembers’ Group Disability Insurance in the 
same 
manner 
as 
those 
provisions 
apply 
to 
Servicemembers’ Group Life Insurance under that sub-
section. 
‘‘(d) DEPOSITS
TO REVOLVING FUND.—(1) The 
sums withheld from the basic or other pay of members, 
or collected from them by the Secretary concerned, under 
subsection (a) and the sums contributed from appropria-
tions under subsection (b) together with the income de-
rived from any dividends or premium rate adjustments re-
ceived from insurers shall be deposited to the credit of a 
revolving fund established in the Treasury of the United 
States. All premium payments and extra hazard costs on 
Servicemembers’ Group Disability Insurance and the ad-
ministrative cost to the Department of insurance issued 
under this subchapter shall be paid from the revolving 
fund. 
‘‘(2) The provisions of paragraphs (2) and (3) of sub-
section (d) of section 1969 of this title shall apply to 
Servicemembers’ Group Disability Insurance, and to the 
fund established under paragraph (1) of this subsection, 
in the same manner as those provisions apply to 
Servicemembers’ Group Life Insurance and the fund es-
tablished under paragraph (1) of that subsection (d). 
‘‘(e) SECRETARY OF DEFENSE REGULATIONS.—The 
Secretary of Defense shall prescribe regulations for the 
administration of the functions of the Secretaries of the 
military departments under this section. Such regulations 
shall be subject to the second sentence of subsection (e) 
of section 1969 of this title. 
‘‘(f) STATE TAXES.—The provisions of subsection (f) 
of section 1969 of this title shall apply to Servicemembers’ 
Group Disability Insurance in the same manner as those 
provisions apply to Servicemembers’ Group Life Insurance 
under that subsection. 
‘‘§ 1997. Payment of insurance 
‘‘(a) PAYMENT.—An amount of insurance under this 
subchapter in force on a member or former member on 
the date on which that person incurs a qualifying disability
shall be paid, upon the establishment of a valid claim 
therefor, to the member or former member. 
‘‘(b) LUMP SUM PAYMENT.—A payment under sub-
section (a) shall be a lump sum payment in settlement 
of insurance under this subchapter. 
‘‘(c) STATUS OF PAYMENT.—The provisions of sub-
section (c) of section 1970 of this title shall apply to a 
payment due or to become due under Servicemembers’ 
Group Disability Insurance in the same manner as those 
provisions apply to a payment due or to become due under 
Servicemembers’ Group Life Insurance under that sub-
section. 
‘‘(d) PROHIBITION ON PAYMENT THAT WOULD ES-
CHEAT TO STATE.—The provisions of subsection (h) of 
section 1970 of this title shall apply to insurance payable 
under Servicemembers’ Group Disability Insurance in the 
same manner as those provisions apply to insurance pay-
able under Servicemembers’ Group Life Insurance under 
that subsection. 
‘‘§ 1998. Premiums; readjustment of rates 
‘‘(a) BASIC PREMIUM RATE
FOR FIRST POLICY 
YEAR.—Each policy purchased under section 1992 of this 
title shall include for the first policy year a basic premium 
rates which the Secretary shall have determined on a basis 
consistent with the lowest schedule of basic premium rates
generally charged for new group disability insurance poli-
cies issued to large employers. Each policy so purchased 
shall also include provisions whereby the basic rates of 
premium determined for the first policy year shall be con-
tinued for subsequent policy years, except that they may 
be readjusted for any subsequent year, based on the expe-
rience under the policy, such readjustment to be made by 
the insurance company or companies issuing the policy on 
a basis determined by the Secretary in advance of such 
year to be consistent with the general practice of disability 
insurance companies under policies of group disability in-
surance issued to large employers. 
‘‘(b) TOTAL PREMIUM.—The total premiums for 
Servicemembers’ Group Disability Insurance shall be the 
sum of— 
‘‘(1) the amounts computed according to sub-
section (a); and 
‘‘(2) the estimated cost traceable to the extra 
hazard of active duty in the uniformed services as 
determined by the Secretary, with such estimated 
costs to be retroactively readjusted annually in ac-
cordance with section 1996(b) of this title. 
‘‘(c) MAXIMUM EXPENSE
AND RISK CHARGES.— 
Each policy purchased under section 1992 of this title 
shall contain a provision stipulating the maximum expense
and risk charges for the first policy year, which charges 
shall have been determined by the Secretary on a basis 
consistent with the general level of such charges made by 
disability insurance companies under policies of group dis-
ability insurance issued to large employers. Such max-
imum charges shall be continued from year to year, except 
that the Secretary may redetermine such maximum 
charges for any year either by agreement with the insur-
ance company or companies issuing the policy or upon 
written notice given by the Secretary to such companies 
at least one year in advance of the beginning of the year 
for which such redetermined maximum charges will be ef-
fective. 
‘‘(d) ANNUAL ACCOUNTING.—Each policy under sec-
tion 1992 of this title shall provide for an accounting to 
the Secretary not later than 90 days after the end of each 
policy year. Each such accounting shall set forth, in a 
form approved by the Secretary, the following: 
‘‘(1) The amounts of premiums actually accrued 
under the policy from its date of issue to the end of 
such policy year. 
‘‘(2) The total of all claim charges incurred for 
that period. 
‘‘(3) The amounts of the insurers’ expense and 
risk charge for that period.
‘‘(e) SPECIAL CONTINGENCY RESERVE.—Any excess 
of the total of paragraph (1) of subsection (d) over the 
sum of paragraphs (2) and (3) of that subsection shall 
be held by the insurance company issuing the policy as 
a special contingency reserve to be used by such insurance 
company for charges under such policy only. Any such re-
serve shall bear interest at a rate to be determined in ad-
vance of each policy year by the insurance company 
issuing the policy, which rate shall be approved by the Sec-
retary as being consistent with the rates generally used 
by such company for similar funds held under other group 
disability insurance policies. 
‘‘(f) CREDITS TO REVOLVING FUND.—If and when 
the Secretary determines that a special contingency re-
serve established under subsection (e) has attained an 
amount estimated by the Secretary to make satisfactory 
provision for adverse fluctuations in future charges under 
the policy, any further excess shall be deposited to the 
credit of the revolving fund established under section 
1996(d)(1) of this title. If and when such policy is discon-
tinued, and if after all charges have been made, there is 
a positive balance remaining in such special contingency 
reserve, such balance shall be deposited to the credit of 
the revolving fund, subject to the right of the insurance 
company or companies issuing the policy to make such de-
posit in equal monthly installments over a period of not 
more than two years. 
‘‘§ 1999. Other provisions 
‘‘(a) BENEFIT CERTIFICATES.—The provisions of 
section 1972 of this title shall apply to members insured 
under Servicemembers’ Group Disability Insurance in the 
same manner as those provisions apply to a member in-
sured under Servicemembers’ Group Life Insurance under 
that section. 
‘‘(b) FORFEITURE.—The provisions of the first sen-
tence of section 1973 of this title shall apply to 
Servicemembers’ Group Disability Insurance in the same 
manner as those provisions apply to Servicemembers’ 
Group Life Insurance under that section. 
‘‘(c) JURISDICTION OF DISTRICT COURTS.—The pro-
visions of section 1975 of this title shall apply to 
Servicemembers’ Group Disability Insurance in the same 
manner as those provisions apply to Servicemembers’ 
Group Life Insurance under that section. 
‘‘(d) REINSTATEMENT.—The provisions of section 
1978 of this title shall apply to Servicemembers’ Group 
Disability Insurance in the same manner as those provi-
sions apply to Servicemembers’ Group Life Insurance 
under that section.
‘‘(e) INCONTESTABILITY.—Subject to subsection (b), 
insurance coverage granted under this subchapter shall be 
incontestable from the date of issue, reinstatement, or con-
version except for fraud or nonpayment of premium.’’. 
(b) EFFECTIVE DATE.—The insurance provided for 
in subchapter V of chapter 19 of title 38, United States 
Code, as added by subsection (a), and the deductions and 
contributions for that purpose under that subchapter, 
shall take effect on the date designated by the Secretary 
of Veterans Affairs, which date shall not be later than one 
year after the date of the enactment of this Act. The Sec-
retary shall publish a notice of such date in the Federal 
Register and shall submit to Congress notice in writing 
of such date. 
(c) CLERICAL AMENDMENT.—The table of sections 
at the beginning of such chapter is amended by adding 
at the end the following new items: 
‘‘SUBCHAPTER V—SERVICEMEMBERS’ GROUP DISABILITY INSURANCE 
‘‘1991. Definitions; program name. 
‘‘1992. Program authority; eligible insurance companies. 
‘‘1993. Persons insured; amount. 
‘‘1994. Qualifying disabilities. 
‘‘1995. Duration and termination of coverage. 
‘‘1996. Premiums: deductions and payments; investment; expenses. 
‘‘1997. Payment of insurance. 
‘‘1998. Premiums; readjustment of rates. 
‘‘1999. Other provisions.’’. 
Æ