VA Life Insurance: Premiums and Program Reserves Need More Timely Adjustments.
Abstract
The Department of Veterans Affairs (VA) manages eight life insurance programs that provide about $400 billion in insurance coverage for military personnel and veterans. The largest of these programs, Servicemen's Group iMe Insurance (sGu), is administered by The Prudential Insurance Company of America under contract with VA and provides nearly $347 billion in coverage. The Chairman of the Senate Committee on Veterans' Affairs asked GAO to examine SGU and determine (1) the size of the reserves held by Prudential and VA in relation to program needs and (2) the extent that Prudential and the government are liable to pay claims arising from this program. SGU provides group term life insurance to about 3.8 million active duty and reserve personnel. Operating costs are funded by the policyholder's premiums. Legislation passed in April 1991 increased the maximum SGU insurance coverage from $50,000 to $100,000 for each individual insured. This coverage was made retroactive to pay claims incurred in the Persian Gulf War. Under SGU, premiums are deducted from service members' pay by the military services and forwarded to VA. VA deposits these funds in the SGLI revolving fund in the Treasury of the United States and transfers the amounts needed for processing and paying claims to Prudential on a monthly basis. Monies not needed to pay benefits or for administrative expenses are held in reserves by both VA and Prudential. (KAR) p. 3
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 01, 1992
- Accession Number
- ADA298456
Entities
Organizations
- United States Government Accountability Office