Public Law 92–95

That chapter 21 of title 38, United States Code, is amended by adding at the end thereof the following new section:

Ҥ 806. Mortgage Protection Life Insurance

“(a)“(a)

The Administrator is authorized, without regard to section 3709 of the Revised Statutes, as amended (41 U.S.C. 5), to purchase from one or more life insurance companies a policy or policies of mortgage protection life insurance on a group basis to provide the benefits specified in this section.

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“(b)“(b)

Any policy of insurance purchased by the Administrator under this section shall be placed in effect, on a date determined by the Administrator and shall automatically insure any eligible veteran who is or has been granted assistance in securing a suitable housing unit under this chapter against the death of the veteran, unless the veteran elects in writing not to be insured under this section or fails to timely respond to a request from the Administrator for information on which his premium can be based.

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“(c)“(c)

The initial amount of insurance provided hereunder shall not exceed the lesser of the following amounts: (1) $30,000, (2) the amount of the loan outstanding on such housing unit on the date insurance under this section is placed in effect, or (3) in the case of a veteran granted assistance in securing a housing unit on or after such date the amount of the original loan. The amount of such insurance shall be reduced according to the amortization schedule of the loan and at no time shall exceed the amount of the outstanding loan with interest. If there is no outstanding loan on the housing unit no insurance shall be payable hereunder. If any eligible veteran elects not to be insured under this section, he may thereafter be insured hereunder only upon application, payment of required premiums, and compliance with such health requirements and other terms and conditions as may be prescribed by the Administrator.

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“(d)“(d)

The premium rates charged a veteran for insurance under

Premium rates.

this section shall be paid at such times and in such manner as the Administrator shall prescribe and shall be based on such mortality data as the Administrator deems appropriate to cover only the mortality cost of insuring standard lives. The Administrator is authorized and directed to deduct the premiums charged veterans for life insurance under this section from any compensation or other cash benefits payable to them by the Veterans’ Administration and to pay such premiums to the insurer or insurers for such insurance. Any veterans insured hereunder not eligible for cash benefits from the Veterans’ Administration may pay the amount of his premiums directly to the insurer or insurers for insurance hereunder.

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“(e)“(e)

The United States shall bear all of the cost of the insurance

Cost.

provided under this section except the amount of the premium rates established for eligible veterans under subsection (d) as the mortality cost of insuring standard lives. For each month for which any eligible veteran is insured under a policy purchased under this section there shall be contributed to the insurer or insurers issuing the policy or policies from the appropriation ‘Compensation and Pensions, Veterans’ Administration’ an amount necessary to cover the cost of the insurance in excess of the premiums established for eligible veterans, including the cost of administration and the cost of the excess mortality attributable to the veterans’ disabilities. Appropriations to carry out the purposes of this section are hereby authorized.

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“(f)“(f)

Any amount of insurance in force under this section on the date of death of an eligible veteran insured hereunder shall be paid only to the holder of the mortgage loan, the payment of which such insurance was granted, for credit on the loan indebtedness and the liability of the insurer under such insurance shall be satisfied when such payment is made. If the Administrator is the holder of the mortgage loan, the insurance proceeds shall be credited to the loan indebtedness and, as appropriate, deposited in either the direct loan or loan guaranty revolving fund established by section 1823 or 1824 of this title, respectively.

72 Stat. 1214; 74 Stat. 532.

Policy provisions.

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“(g)“(g)

Each policy purchased under this section shall also provide, “ in terms approved by the Administrator, for the following:

“(1)“(1)

reinsurance, to the extent and in a manner to be determined by the Administrator to be in the best interest of the veterans or the Government, with other insurers which meet qualifying criteria established by the Administrator as may elect to participate in such reinsurance.

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“(2)“(2)

that at any time the Administrator determines such action to be in the best interest of veterans or the Government he may (A) discontinue the entire policy, or (B) at his option, exclude from coverage under such policy loans made after a date fixed by him for such purpose; however, any insurance previously issued to a veteran under such policy may not be canceled by the insurer solely because of termination of the policy by the Administrator with respect to new loans. If the policy is wholly discontinued, the Administrator shall have the right to require the transfer, to the extent and in a manner to be determined by him, to any new company or companies with which he has negotiated a new policy or policies, the amounts, as determined by the existing insurer or insurers with the concurrence of the Administrator of any policy or contingency reserves with respect to insurance previously in force;

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“(3)“(3)

issuance to each veteran insured under this section of a uniform type of certificate setting forth the benefits to which he is entitled under the insurance;

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“(4)“(4)

any other provisions which are reasonably necessary or appropriate to carry out the provisions of this section; and

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“(5)“(5)

an accounting to the Administrator not later than ninety days after the end of each policy year which shall set forth, in a form approved by the Administrator, (A) the amount of premiums paid by veterans and contributions made by the Veterans’ Administration accrued under the contract or agreement from its date of issue to the end of such contract year; (B) the total of all mortality and other claim charges incurred for that period; and (C) the amount of the insurer’s expense and risk charges, if any, for that period. Any excess of the total of item (A) over the sum of items (B) and (C) shall be held by the insurer as a contingency reserve to be used by such insurer for charges under the contract or agreement only. The contingency reserve shall bear interest at a rate to be determined in advance of each contract year by the insurer, which rate shall be approved by the Administrator if consistent with the rates generally used by the insurer for similar funds held under other plans of group life insurance. If and when the Administrator determines that such contingency reserve has attained an amount estimated by him to make satisfactory provision for adverse fluctuations in future charges under the contract, the Administrator shall require the insurer to adjust the premium rates and contributions so as to prevent any further substantial accretions to the contingency reserve. If and when the contract or agreement is discontinued and if after all charges have been made there is any positive balance remaining in the contingency reserve, such balance shall be payable to the Administrator and by him deposited to the appropriation ‘Compensation and Pensions, Veterans’ Administration,’ subject to the right of the insurer to make such payment in equal monthly installments over a period of not more than two years.

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“(h)“(h)

With respect to insurance contracted for under this section, the Administrator is authorized to adopt such regulations relating to eligibility of the veteran for insurance, maximum amount of insurance, maximum duration of insurance, and other pertinent factors not specifically provided for in this section, which in his judgment are

Effective date.

in the best interest of veterans or the Government. Insurance contracted for under this section shall take effect as to eligible veterans heretofore granted assistance under this chapter on a date determined by the Administrator, and as to eligible veterans hereafter granted assistance under this chapter at the time of the closing of his loan. The amount of the insurance at any time shall be the amount necessary to pay the mortgage indebtedness in full, except as otherwise limited by the policy.

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“(i)“(i)

Insurance contracted for under this section shall terminate upon whichever of the following events first occurs:

“(1)“(1)

satisfaction of the veteran’s indebtedness under the loan upon which the insurance is based;

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“(2)“(2)

the veteran’s seventieth birthday;

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“(3)“(3)

termination of the veteran’s ownership of the property securing the loan;

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“(4)“(4)

discontinuance of payment of premiums by the veteran; or

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“(5)“(5)

discontinuance of the entire contract or agreement.

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“(j)“(j)

Termination of the mortgage protection life insurance will in no way affect the guaranty or insurance of the loan by the Administrator.”

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Sec. 2.

The analysis of chapter 21, title 38, United States Code, is amended by adding at the end thereof the following: