38 CFR 8.13 - Policy loans.

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§ 8.13 Policy loans.

(a) At any time after the premiums for the first policy year have been paid and earned and before default in payment of any subsequent premium, and upon the execution of a loan agreement satisfactory to the Secretary, the United States will lend to the insured on the security of his or her National Service Life Insurance policy, any amount which will not exceed 94 percent of the reserve, and any indebtedness on the policy shall be deducted from the amount advanced on such loan. At any time before default in the payment of the premium, the loan may be repaid in full or in amounts of $5 or more. Failure to pay either the amount of the loan or the interest thereon shall not make the policy voidable unless the total indebtedness shall equal or exceed the cash value. When the amount of the indebtedness equals or exceeds the cash value, the policy shall become voidable. On loans applied for before the effective date of this regulation (November 2, 1987) and not exchanged pursuant to paragraph (b) of this section, the policy loan interest rate in effect when the loan was applied for shall not be increased for the term of the loan.

(b) Loans applied for or exchanged on and after the effective date of this regulation (November 2, 1987) shall bear interest at a rate which may be varied during the term of the loan, not more frequently than once a year, as provided by paragraphs (c) and (d) of this section. After October 1, 1988, the policy loan rate shall not be varied more frequently than once a year. Notification of the initial rate of interest on new loans will be forwarded at the time the loan is made. Policyholders with existing variable rate loans will be forwarded reasonable advance notice of any increase in the rate. Reasonable advance notice of any change in the variable loan rate will be published in the Federal Register. A notice pertaining to variable loans which is sent to the policyholder's last address of record will constitute sufficient evidence of notice.

(c) Subject to the provisions of paragraph (d) of this section, loan rates established pursuant to paragraph (b) of this section shall equal the yield on the Ten-Year Constant Maturities Index for U.S. Treasury Securities for the month of June of the year of calculation rounded down to the next whole percentage. Such loan rate shall be effective on the date on or after the first day of October on which the rate change is made in the insurance automatic data processing system, and shall remain in effect for not less than one year after the date of establishment. The prevailing variable loan rate shall apply to all loans granted under paragraph (b) of this section.

(d) Notwithstanding any other provisions of this section, the variable loan rate shall not exceed 12 percent or be lower than 5 percent per annum.

(Authority: 38 U.S.C. 1906)
[ 52 FR 39626, Oct. 2, 1987, as amended at 53 FR 17466, May 17, 1988; 59 FR 65717, Dec. 21, 1994. Redesignated at 61 FR 29290, June 10, 1996. Redesignated at 65 FR 7437, Feb. 15, 2000]

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.

United States Code
U.S. Code: Title 38 - VETERANS’ BENEFITS

§ 107 note - Certain service deemed not to be active service

§ 210

§ 701 - Placement of employees in military installations

§ 724

§ 725 - Annual performance plan for political appointees

§ 781

§ 788

§ 797

§ 808

§ 1901 - Definitions

§ 1902 - Premium rates and policy values

§ 1903 - Amount of insurance

§ 1904 - Plans of insurance

§ 1905 - Renewal

§ 1906 - Policy provisions

§ 1907 - Payment or use of dividends

§ 1908 - Premium payments

§ 1909 - Effective date of insurance

§ 1910 - Incontestability

§ 1911 - Forfeiture

§ 1912 - Total disability waiver

§ 1913 - Death before six months’ total disability

§ 1914 - Statutory total disabilities

§ 1915 - Total disability income provision

§ 1916 - Insurance which matured before August 1, 1946

§ 1917 - Insurance maturing on or after August 1, 1946

§ 1918 - Assignments

§ 1919 - National Service Life Insurance appropriation

§ 1920 - National Service Life Insurance Fund

§ 1921 - Extra hazard costs

§ 1922 - Service disabled veterans’ insurance

§ 1922A - Supplemental service disabled veterans’ insurance for totally disabled veterans

§ 1923 - Veterans’ Special Life Insurance

§ 1924 - In-service waiver of premiums

§ 1925 - Limited period for acquiring insurance

§ 1926 - Authority for higher interest rates for amounts payable to beneficiaries

§ 1927 - Authority for higher monthly installments payable to certain annuitants

§ 1928 - Authority for payment of interest on settlements

§ 1929 - Authority to adjust premium discount rates

§ 3101 - Definitions