[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: 38CFR8.3]

[Page 501-502]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
                CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS
 
PART 8_NATIONAL SERVICE LIFE INSURANCE--Table of Contents
 
Sec.  8.3  Revival of insurance.

    (a) If the sole reason death or total disability benefits under a 
policy of National Service life insurance cannot be granted is that the 
policy had lapsed, the insurance will be considered in force under 
premium-paying conditions on the date of death or the date of 
commencement of total disability if,
    (1) On the date of lapse there were accrued dividends, not then 
payable, resulting from premiums paid since the last anniversary date of 
the policy and such dividends were equal to or greater in amount than 
the total of the monthly premiums which have become due from and 
including the date of lapse to the date of death or date of commencement 
of total disability, and/or
    (2) At the end of the grace period for the unpaid premium causing 
lapse there were due and payable to the policyholder unpaid dividends, 
refundable premiums, pure insurance risk credits, other refundable 
credits or total disability benefit payments arising from the 
policyholder's U.S. Government or National Service life insurance which 
are equal to or greater in amount than the total of the monthly premiums 
which have become due from and including the date of lapse to the date 
of death or date of commencement of total disability.
    (3) For purposes of this section amounts under paragraphs (a)(1) and 
(2) of this section may be combined. In that case, the amount, if any, 
of dividend accrued under paragraph (a)(1) of this section will first be 
determined and the amount available under paragraph (a)(2) of this 
section, if any, will be added thereto for the purpose of determining if 
the total amount thus available is equal to or greater than the total of 
monthly premiums which have become due.
    (4) In determining the amount of monthly premiums which have become 
due under paragraphs (a)(1) and (2) of this section a shortage of 10 
percent per monthly premium may be allowed for a period not to exceed 3 
months.
    (5) In determining the monthly premiums which have become due for 
adjustment purposes under paragraphs (a)(1) and (2) of this section, the 
premium for the monthly due date immediately preceding the date of death 
or date of commencement of total disability may be omitted because of 
the coverage provided by the allowable grace period (Sec.  8.2(d)) and 
if the conditions of paragraph (b) of this section are met, the premium 
for the second due date immediately preceding the date of death or date 
of commencement of total disability may be omitted.
    (6) When a policy is deemed in force under premium-paying conditions 
by operation of this section, the amount of any shortage included in the 
calculation and the premium for any monthly due date omitted in the 
calculation will become a lien against the policy.
    (7) The provisions of this section may be applied if, on the date of 
death, the insurance is in force under the extended term insurance 
provision (Sec.  8.14) and a policy loan was outstanding on the date of 
lapse or a dividend deposit balance was included in the cash value as 
determined at time of lapse.
    (8) If accrued dividends under paragraph (a)(1) of this section and/
or amounts due and payable under paragraph (a)(2) of this section exist 
in connection with more than one policy of the same veteran and one or 
more policies lapsed prior to the date of death or date of commencement 
of total disability, the amounts available will be related first to the 
policy or policies on which they arose if such policy or policies are 
lapsed. Any amount available under paragraphs (a)(1) and (2) of this 
section which is not required to place in force the policy upon which it 
arose

[[Page 502]]

or which is insufficient to place in force the policy upon which it 
arose, may be combined with similar amounts available on any other 
policy whenever the total of such amounts is sufficient to place another 
policy in force.
    (9) Where more than one policy is involved and credits are not 
needed or are insufficient to revive the policy on which the credits 
arose, the credits will be used insofar as they are sufficient to revive 
the policy or policies under which the most insurance is payable.
    (10) No total disability income provision will be considered in 
force under this section unless it lapsed at the same time as the life 
insurance contract and both the life insurance and total disability 
income provision can be considered in force through the same date and 
benefits are payable under the total disability income provision. An 
exception will be a paid-in-full limited pay contract on which total 
disability income provision premiums are due and payable to age 65.
    (11) When a total disability income provision lapsed at the same 
time as the life insurance, the premium for the provision will be 
considered separately in determining if the amounts available are equal 
to or in excess of the monthly premiums which have become due. In such a 
case if the amounts available are sufficient, both the life insurance 
and the provision will be revived. If the amounts are insufficient for 
that purpose, they will be applied to revive the policy or policies with 
the greatest amount payable in death cases or the policy or policies 
providing the greatest life insurance and total disability benefit in 
total disability cases.
    (12) Accrued dividends and/or credits on any policy of National 
Service or U.S. Government life insurance held by the policyholder may 
be considered for the purpose of this section.
    (b) If the sole reason death or total disability benefits under a 
policy of National Service life insurance cannot be granted is that the 
policy had lapsed, the insurance will be considered in force on the date 
of death or date of commencement of total disability if,
    (1) The policyholder died or became totally disabled within 61 days 
of the due date of the unpaid premiums, and
    (2) The policy prior to the lapse had been in force for 5 years or 
more. In determining in-force status under this subparagraph if the 
original effective date of the insurance (when necessary, include 
predecessor contracts involving renewal, conversion or replacement/
reinstatement under 38 U.S.C. 1981) is 5 years or more earlier than the 
date of death or date of total disability and during the 5 years 
immediately preceding the date of lapse the insurance has not been 
lapsed at any one time in excess of 6 months, the requirement will be 
satisfied. When insurance is considered in force under this section the 
amount of the monthly premium due on the date of lapse and the following 
monthly premium(s) will become a lien against the policy.
    (3) The provisions of this section may be applied if, on the date of 
death, the insurance is in force under the extended term insurance 
provision (Sec.  8.14) and a policy loan was outstanding on the date of 
lapse or a dividend deposit balance was included in the cash value as 
determined at time of lapse.

[33 FR 17915, Dec. 3, 1968. Redesignated and amended at 61 FR 29290, 
29291, June 10, 1996. Redesignated at 65 FR 7437, Feb. 15, 2000; 65 FR 
19658, Apr. 12, 2000]