OAR 274-022-0005: Loan Cancellation Life Insurance

(1) The Director of Veterans’ Affairs (DVA), prior to obtaining loan cancellation life insurance for any person who receives or assumes a loan or makes a contract with DVA for the acquisition of a home or farm, and the spouse or former spouse of that person, may enter into a contract with an insurance carrier which allows the carrier to: (a) Require an application for insurance; (b) Underwrite classes of prospective insureds on the basis of information, such as age and health status, contained in the application; (c) Set premium schedules commensurate with risk factors for other than service-connected disability; (d) Deny payment of benefits for suicide or certain preexisting, nonservice-connected disability. (2) The Director will negotiate a contract with the insurance carrier as necessary to insure procurement and maintenance of adequate, solvent, and uninterrupted, long-term insurance coverage. (3) The insurance contract may provide that loan cancellation life insurance on a loan or contract for the acquisition of a home or farm will be canceled after payments on the loan or contract become four months delinquent. Accounts due monthly are considered four months delinquent when the cumulative delinquency equals four times the standard monthly payment. (4) Accounts due quarterly, semi-annually, or annually are considered four months delinquent when an amount that would equal four monthly payments (if payments were made monthly) remains unpaid four months after the due date. (5) The insurance contract may provide that insurance canceled for the above reason cannot be reinstated unless payments are brought current and a new application for insurance is submitted. The provisions of section (1) of this rule will apply to the newly submitted application.