§1922B Service-disabled Veterans Insurance

Summary

Starting January 1, 2023, the Department of Veterans Affairs will offer a whole-life insurance policy for veterans who have a service-connected disability. A veteran can apply anytime, but must apply before turning 81 unless the veteran filed a compensation claim before age 81, was first found to have a service-connected disability after turning 81, and then applies within two years of that finding. The policy only starts after the veteran has been enrolled for two years and paid required premiums during that time. If the veteran dies in that two-year waiting period, the beneficiary gets the premiums paid plus interest (1% in the program’s first year, possibly adjusted but never less than 0%; later years use the fund’s prior-year return, never less than 0%, and VA will publish the average rate each year). Veterans can pick coverage in $10,000 steps: $10,000, $20,000, $30,000, or $40,000. The VA may allow a higher maximum if the amount and premiums are actuarially sound, won’t cause a loss, and the VA publishes that decision and tells Congress. Premiums go into a special revolving fund in the Treasury, which pays claims and may buy special Treasury securities to manage the fund. Premium rates will match typical guaranteed-acceptance life plans sold by private insurers and may be adjusted after the first year. Veterans may name a beneficiary; if none is named, benefits go to survivors in this order: spouse; children and their descendants; parents; executor/administrator; then other next of kin under state law. The named beneficiary has the exclusive right to file a claim for one year after the veteran’s death; others may file in the following year. Payments are made in a lump sum, normally within 90 days for a named beneficiary or within one year for other claimants, cannot be paid if they would escheat to a State, and bar any other recovery. Administrative support costs come from premiums and are later reimbursed from available funds.