[Code of Federal Regulations]
[Title 38, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 38CFR8.10]

[Page 505-507]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
                CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS
 
PART 8_NATIONAL SERVICE LIFE INSURANCE--Table of Contents
 
Sec. 8.10  How paid.

    (a) Except as hereinafter provided in this paragraph, a National 
Service Life Insurance policy shall participate in and receive such 
dividends from gains and savings as may be determined by the Secretary 
of Veterans Affairs. Dividends becoming payable after January 1, 1952, 
shall be payable on the date preceding the anniversary of the policy 
unless the Secretary shall declare them payable on some other date. 
Dividends are not payable on insurance:
    (1) Issued or reinstated under the provisions of section 602(c)(2) 
of the National Service Life Insurance Act, as amended, where the 
requirements of good health were waived at the time of such issue or 
reinstatement;
    (2) Issued under sections 620 and 621 of the National Service Life 
Insurance Act, as amended;
    (3) Issued under sections 1904(c) and 1922(a) of title 38 U.S.C.;


(Authority: 38 U.S.C. 1923(b) and 725)

    (4) Issued on the ordinary life plan under section 1904(d) of title 
38 U.S.C., to replace the amount of insurance reduced under a modified 
life plan policy issued under 38 U.S.C. 1904(c); and
    (5) On which premiums are waived, in whole or in part, under the 
provisions of section 622 of the National Service Life Insurance Act, as 
amended, and 38 U.S.C. 1924 for the period during which such premium 
waiver is in effect.
    (b) Unless and until VA receives a written request from the insured 
that National Service Life Insurance dividends be paid in cash, or that 
they be used to pay an insurance indebtedness, or that they be placed on 
deposit or be used to pay premiums in advance, or that they be used to 
pay the premiums

[[Page 506]]

on a particular policy or policies, or that they be used to purchase 
paid-up additions, any such dividends shall be held to the credit of the 
insured to be applied to pay monthly premiums becoming due and unpaid 
after the date such dividends are payable on any National Service or 
United States Government Life Insurance policy or policies held by the 
insured: Provided, That such dividend credits will be applied as of the 
due date of any unpaid premium. Dividend credits will earn interest at 
such rate and in such manner as the Secretary may determine.


(Authority: 38 U.S.C. 1907(a))

    (c) In the event premiums on more than one policy having the same 
premium due date are unpaid and the dividend credit of the insured for 
application to payment of premiums is not sufficient to keep all 
policies in force, in the absence of instructions to the contrary by the 
insured, such dividend credit will be applied to pay premiums in such 
manner as will provide the maximum amount of insurance protection.
    (d) At the expiration of any term period, dividend credit of the 
insured held for payment of premiums will be applied to pay the required 
premium for renewal of term insurance unless the insured requests 
otherwise in writing prior to the expiration of the term period.
    (e) A request for payment of dividends in cash or for other 
disposition will be effective as of the date the request is delivered to 
the Department of Veterans Affairs: If forwarded by mail, properly 
addressed, the postmark date will be taken as the date of delivery: If 
forwarded through military channels by the insured while in military 
service, the date the request is placed in military channels will be 
accepted as the date of delivery. Unless otherwise stipulated by the 
insured, such request will remain in force until revoked in writing 
signed by the insured and delivered to the Department of Veterans 
Affairs.
    (f) Dividend credit of the insured held for payment of premiums may 
not be used to satisfy any indebtedness due the United States without 
the insured's consent. If the insured requests payment of such dividend 
credit, or any unused portion thereof, in cash, or requests that such 
credit be left to accumulate on deposit, as provided in paragraph (g) of 
this section, then any indebtedness due the United States, such as 
described in Sec. 5301 of title 38 U.S.C. will be recovered therefrom.
    (g) At the written request of the insured, National Service life 
insurance dividends may be left to accumulate on deposit at interest 
which will be credited in such manner and at such rate as the Secretary 
may determine: Provided, That the policy is in force on a basis other 
than extended term insurance or level premium term insurance. Dividend 
credit of the insured held for payment of premiums or dividends left to 
accumulate on deposit as provided in this paragraph may be applied to 
the payment of premiums in advance upon written request of the insured 
made before default in payment of a premium. Dividends on deposit under 
the provisions of this paragraph will be used in addition to the reserve 
on the policy for the purpose of computing the period of extended term 
insurance or the amount of paid-up insurance as provided in Sec. Sec. 
8.14 and 8.15, respectively. Any dividend credit of a person who no 
longer has insurance in force by payment or waiver of premiums will be 
paid in cash to such person. If a person has a dividend credit option on 
a lapsed level premium term policy or a permanent plan policy on which 
extended term insurance has expired and such person has another policy 
in force by payment or waiver of premiums, any dividend credit or unpaid 
dividends on the lapsed policy, in the absence of instructions from the 
insured to the contrary, will be transferred to the policy which is in 
force and will be held on such policy as a dividend credit. Such 
dividend credit will be deemed to have accrued on the policy which is in 
force. Upon maturity of the policy, any dividend on deposit, any unpaid 
dividend payable in cash, and any dividend credit accruing from such 
policy which cannot be used to pay premiums will be paid to the person 
currently entitled to receive payments under the policy. If the policy 
is not in force at death, any such unpaid dividends and dividend

[[Page 507]]

credits will be paid to the insured's estate.
    (h) Any insured receiving an annual dividend in cash may return such 
dividend check or an equivalent amount of money in order to have the 
dividend retained under the deposit or credit option. The return of such 
dividend must be made during the lifetime of the insured and before the 
end of the calendar year during which the dividend was paid. Dividends 
returned under this provision are not available for the payment of 
premiums, receipt of interest, or calculation of cash value prior to the 
postmark date of the returned check.

[17 FR 2362, Mar. 19, 1952, as amended at 18 FR 3715, June 30, 1953; 24 
FR 5021, June 20, 1959; 25 FR 7369, Aug. 5, 1960; 28 FR 12545, Nov. 23, 
1963; 30 FR 3646, Mar. 19, 1965; 32 FR 13927, Oct. 6, 1967; 37 FR 3352, 
Feb. 15, 1972; 46 FR 57043, Nov. 20, 1981; 50 FR 12252, Mar. 28, 1985. 
Redesignated and amended at 61 FR 29290, 29292, June 10, 1996. 
Redesignated at 65 FR 7437, Feb. 15, 2000; 65 FR 19659, Apr. 12, 2000]

                       Cash Value and Policy Loan