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After a year, the VA is calling its new insurance program a success

It is not every day the Veterans Affairs Department comes up with a new insurance program. In fact, last year was the first time in 50 years. For a progress report and what it took to launch it, the Federal Drive with Tom Temin spoke with Dan Keenaghan, the executive director of the insurance service at the Veterans Benefits Administration.


Interview Transcript: 


Dan Keenaghan So the VA, or the Veterans Affairs has launched Veterans Affairs Life Insurance, or as we like to call it, VA life. And it’s open to all service connected veterans aged 80 and under with any level of service connected disability 0% to 100%. And for veterans who are age 81 and older, they need to apply for a service connected rating before they turn age 81. And then they have a two year timeline to request enrollment.


Tom Temin So basically anybody under 80 can have this life insurance.


Dan Keenaghan Correct. Anyone with a service connected rating. We launched this program in response to a call from veterans and veterans service organizations who were looking for a life insurance program that didn’t have time limits to sign up and had higher levels of life insurance coverage available than what we had currently offered. This one is a whole life insurance program that goes up to $40,000 in increments of $10,000.


Tom Temin Got it. And when you say they have to have a veteran’s rating, what does that mean exactly?


Dan Keenaghan So when uniformed service members separate from their uniformed service, they have an opportunity to apply to the Department of Veterans Affairs, Veterans Benefit Administration for a service connected rating on a disability that may have been incurred during their service. And we provide the life insurance that supports veterans who have these service connected ratings. We also provide life insurance for those who currently serve. And we have 11 different programs that provide life insurance, including service members group life insurance and veterans group life insurance, which totaled about $1.5 trillion of coverage across 5.6 million lives.


Tom Temin This new program, though, is only for those with some degree of rating.


Dan Keenaghan Correct.


Tom Temin Because everybody is insured at some point in their military career. I remember when my father passed away at 92, long after serving in World War Two, just a few years ago, we got a check from Veterans Affairs for $5,000. Everybody’s got that.


Dan Keenaghan Yes. It’s tremendous because our insurance service has existed for over 100 years and dates back to World War one, and in each era, World War One, World War Two, Korea, Vietnam. And now today, we have introduced different life insurance programs in order to meet the needs or the changing needs of our veterans and their survivors. And it’s unique because service connected veterans aren’t always eligible for commercial life insurance. And VA provides this as a means of protection to provide insurance at a rate that is commensurable with what you can find in the private sector without any additional costs due to the service connected nature of their disability rating.


Tom Temin Right. That was my question. This is something that is hard to obtain for those with a rating commercially, because commercial don’t want to insure people that they might have to pay out for.


Dan Keenaghan In general, we find that our actuaries look at what’s available in the private sector, and then how can we provide something that meets or is better than the value that’s provided to honor not only the service of the service member, but to be able to help them see it as a benefit that they’ve earned through their service.


Tom Temin We’re speaking with Dan Keenaghan. He’s the director of the insurance service at the Veterans Benefits Administration. And this was in reaction to a congressional statute, a law passed to create this program a couple of years ago.


Dan Keenaghan Yes, the law was enacted in 2022. And we work with the Congress in order to implement it in a way that provides a superior customer experience. We’ve seen automation of the application process and levels that are higher than 93% this calendar year alone, and we’ve integrated it with VA profile in order to ensure that veterans don’t have to put in unnecessary information, and veterans are known customers and we can be able to meet their needs. We’ve had some veterans who sign up saying this is the easiest benefit they’ve ever applied for with the VA, and we’ve found that veterans are very responsive to the online tool. Especially when it comes to updating their beneficiaries for life changing events. And we appreciate the support of the Congress as this was, as you mentioned, part of the Johnny Isaacson and David Ro Veterans Health Care and Benefits Improvement Act of 2020.


Tom Temin And how many people have signed up so far?


Dan Keenaghan We’ve had over 34,000 veterans sign up for this. And it’s really exciting because just after one year of the program being available, we’ve achieved over $1 billion of coverage.


Tom Temin Ok. And you called it whole life. And that’s an instrument that you don’t find that much anymore, commercially. Almost like a savings that has value at the end and it accrues, I guess you’d call it equity over time. Those are not very common anymore in the commercial market.


Dan Keenaghan We offer both term life and whole life, and we work with veterans service organizations and veterans in order to provide an education as to how insurance can complement their overall financial planning. Whole life is a way for veterans to be able to invest in their future, because VA life builds cash value after the first two years. It also, unlike term life insurance, has fixed premiums, which means the younger you are when you sign up, that is the premium that you will pay for the rest of your life. Unlike term life insurance, when costs often increase in five year increments. And then finally, the real value is that there’s a cash component to this. And so veterans like to know that there might be some longer term value. There’s an interest earned against that cash value. And then not yet for VA life, but for our existing programs. Veterans are able to take loans against that cash value, or when the policy matures, they actually get that cash value returned to them as a matured endowment. And so it’s part of an overall financial planning picture for veterans. That is an alternative to term life.

    

Tom Temin And how does it work for Veterans Benefits Administration? That is to say, do you simply offer this, but there’s a commercial outfit that’s actually operating it in the background? Or is VBA its own insurance company. And if so, how come you don’t have a 100 story skyscraper somewhere?


Dan Keenaghan So I’m really pleased to say we have a few more than 300 VA employees who work primarily out of Philadelphia, who service all these policies. We have our actuaries, we have our financial team, we have our policy holder services, we have our own phone center, and we run it efficiently enough that we’re able to provide it at at a value that meets or exceeds what’s available in the private sector. Unlike the private sector, we don’t need a 100 story skyscraper in order to let people know we’re here. But we find veterans and survivors really appreciate the customer experience that we give them. And we’re really seeing positive returns through trust scores, through what we call B signals, which is our customer experience data. And veterans are really trusting VA to provide high quality life insurance, just like when they were in uniform. We previously provided their life insurance coverage.


Tom Temin And within VBA then, is there a fund of dollars somewhere so that when you do have to pay out a benefit, a death benefit, that it’s there?


Dan Keenaghan So based on our actuarial determinations, we build up a cash reserve. And so this program was designed in order to be fully self-supporting. And so that means the more veterans that sign up, the better it is going to support other veterans over time. And we’re very efficient and effective in being able to deliver benefits that the veterans are able to count on and trust the VA to have that value there.


Author: Tom Teman

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