Opinion ID: 110578
Heading Depth: 1
Heading Rank: 2

Heading: The Statutory Background

Text: In order to make life insurance coverage available to members of the uniformed services on active duty, particularly in combat zones, Congress in 1965 enacted the SGLIA. See H. R. Rep. No. 1003, 89th Cong., 1st Sess., 7 (1965). The impetus for the legislation was the escalating level of hostilities and casualties in the then ongoing Vietnam conflict; this had prompted private commercial insurers to restrict coverage for service members. [2] See 111 Cong. Rec. 24339 (1965) (remarks of Rep. Teague, Chairman of the House Committee on Veterans' Affairs); see also S. Rep. No. 619, 89th Cong., 1st Sess., 3 (1965). The earlier program of federally sponsored life insurance for service members, see National Service Life Insurance Act of 1940, 54 Stat. 1008, and National Service Life Insurance Act of 1958, as amended, 38 U. S. C. § 701 et seq. (NSLIA), placed in effect shortly before the involvement of this country in World War II, had been allowed to lapse after the end of the Korean hostilities when commercial insurance generally became available to service members. [3] Accordingly, NSLIA coverage could not be obtained by many service members on active duty in 1965. See 111 Cong. Rec. 24339 (1965) (remarks of Rep. Teague). Although its purposes and provisions resemble those of the NSLIA in many respects, the SGLIA differs from the predecessor program in that it directs the Administrator of Veterans' Affairs to purchase coverage from one or more qualified commercial insurers instead of offering coverage by the United States itself. See 38 U. S. C. § 766. Thus, under the SGLIA, the Government is the policyholder, rather than the insurer. The Administrator has contracted with petitioner Prudential Insurance Company of America, which now serves as the primary insurer under the SGLIA and which operates, under Veterans' Administration supervision and pursuant to 38 U. S. C. § 766(b), the Office of Servicemen's Group Life Insurance in Newark, N. J. The SGLIA initially provided insurance only for members serving in specified services. 79 Stat. 880. The maximum coverage allowed was then $10,000. Id., at 881. Since 1965, however, statutory changes have expanded both eligibility for coverage and the amount of insurance available. [4] The program is operated on a presumptive enrollment basis; coverage is provided automatically and premiums are withheld from the service member's pay, unless the insurance is expressly declined or is terminated by written election. 38 U. S. C. §§ 767(a) and 769. [5] In order to make the insurance available through a commercial carrier at a reasonable rate, notwithstanding the special mortality risks that service members often must assume, Congress undertook to subsidize the program. See S. Rep. No. 91-398, p. 2 (1969). A sum representing the extra premium for special mortality risks is periodically deposited by the United States into a revolving fund that is used to pay premiums on the master policy. See 38 U. S. C. §§ 769(b) and (d)(1). The fund otherwise is derived primarily from deductions withheld from service members' pay. §§ 769(a)(1) and (d)(1). Accordingly, depending upon the conditions faced by service members at any given time, the program may be financed in part with federal funds. See S. Rep. No. 91-398, at 2. The SGLIA establishes a specified order of precedence, 38 U. S. C. § 770(a), for policy beneficiaries. By this statutory provision, the proceeds of a policy are paid first to such beneficiary or beneficiaries as the member . . . may have designated by [an appropriately filed] writing received prior to death. If there be no such designated beneficiary, the proceeds go to the widow or widower of the service member or, if there also be no widow or widower, to the child or children of such member . . . and descendants of deceased children by representation. Parents, and then the representative of the insured's estate (an obvious bow at this point in the direction of state law), are next in order. Ibid. See also 38 CFR § 9.16(i) (1980). In 1970, by Pub. L. 91-291, § 5, 84 Stat. 330, Congress added an anti-attachment provision. With certain exceptions not applicable here, this provision shields payments made under § 770(a) from taxation and from claims of creditors, and states that the payments shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. § 770(g). Pursuant to his general rulemaking authority over veterans' programs, § 210(c)(1), the Administrator has promulgated regulations implementing the SGLIA. These provide that the insured may designate any person, firm, corporation or legal entity as a policy beneficiary, and any such designation or change of beneficiary . . . will take effect only if it is in writing, signed by the insured and received [by the appropriate office] prior to the death of the insured. 38 CFR §§ 9.16(a) and (d) (1980). A change of beneficiary may be made at any time and without the knowledge or consent of the previous beneficiary. § 9.16(e). And [n]o change or cancellation of beneficiary . . . in a last will or testament, or in any other document shall have any force or effect unless such change is received by the appropriate office. § 9.16(f).