(a) What is a premium? A premium is a payment that a policyholder is required to make for an insurance policy.
(b) How can policyholders pay premiums? Premiums can be paid by:
(1) Cash, check, or money order directly to VA.
(2) Allotment from service or retirement pay.
(3) Automatic deduction from VA benefits (pension, compensation or insurance dividends (see § 8.4)).
(4) Pre-authorized debit from a checking account.
(c) When should policyholders pay premiums? (1) Unless premiums are paid in advance, policyholders must pay premiums on the effective date shown on the policy and on the same date of each following month. This is called the “due date.”
(2) Policyholders may pay premiums in advance on an annual basis.
(3) Policyholders insured as of July 11, 2022 may pay premiums in advance on an annual, semi-annual, or quarterly basis.
(d) What happens if a policyholder does not pay a premium on time? (1) When a policyholder pays a premium within 31 days from the “due date,” the policy remains in force. This 31-day period is called a “grace period.” If the insured dies within the 31-day grace period, VA deducts the unpaid premium from the amount of insurance payable.
(2) If a policyholder pays a premium after the 31-day grace period, VA will not accept the payment and the policy lapses effective the date the premium was due; Except that VA will accept a premium paid after the 31-day grace period as a timely payment if:
(i) The policyholder pays the premium within 61 days of the due date; and
(ii) The policyholder is alive at the time the payment is mailed.
(3) When a policyholder pays the premium by mail, the postmark date is the date of payment.
(4) When a policyholder pays a premium by check or money order which is not honored and it is shown by satisfactory evidence that:
| The bank did not pay the check or money order because of:
| Then:
|
|---|
| An error by the bank | The policyholder has an additional 31 days (from the date stamped on VA's notification letter) to pay the premium and any other premiums due through the current month.
|
| An error in the check or money order | The policyholder has an additional 31 days (same as above).
|
| Lack of funds | The premium is considered not paid. |
(e) What happens if a policyholder enrolled in VALife dies, surrenders or cancels coverage during the two-year enrollment period? If a policyholder enrolls in VALife for an amount less than the statutory maximum and elects to apply for additional coverage at a later date and dies before completing the two-year waiting period for the additional VALife coverage amount, the beneficiary shall be refunded premiums that were paid for the additional VALife coverage, plus interest, in accordance with 38 U.S.C. 1922B(c)(3)(A). If a policyholder surrenders or cancels a VALife policy during the two-year waiting period imposed by 38 U.S.C. 1922B(c)(2) before coverage is in force, the United States shall not return to the policyholder the premiums that were paid to purchase the coverage.
[65 FR 7437, Feb. 15, 2000, as amended at 87 FR 35421, June 10, 2022; 87 FR 73653, Dec. 1, 2022]