8.2—Payment of premiums.
(a) What is a premium?
A premium is a payment that a policyholder is required to make for an insurance policy.
(3)
Automatic deduction from VA benefits (pension, compensation or insurance dividends (see § 8.4 )).
(c) When should policyholders pay premiums?
(1)
Unless premiums are paid in advance, policyholders must pay premiums on the effective date shown on the policy and on the same date of each following month. This is called the “due date.”
(d) What happens if a policyholder does not pay a premium on time?
(1)
When a policyholder pays a premium within 31 days from the “due date,” the policy remains in force. This 31-day period is called a “grace period.” If the insured dies within the 31-day grace period, VA deducts the unpaid premium from the amount of insurance payable.
(2)
If a policyholder pays a premium after the 31-day grace period, VA will not accept the payment and the policy lapses effective the date the premium was due; Except that VA will accept a premium paid after the 31-day grace period as a timely payment if:
(4)
When a policyholder pays a premium by check or money order which is not honored and it is shown by satisfactory evidence that:
| The bank did not pay the check or money order because of: | Then: |
|---|---|
| An error by the bank | The policyholder has an additional 31 days (from the date stamped on VA's notification letter) to pay the premium and any other premiums due through the current month. |
| An error in the check or money order | The policyholder has an additional 31 days (same as above). |
| Lack of funds | The premium is considered not paid. |