When will Veterans' Mortgage Life Insurance (VMLI) coverage increase and what will be the maximum coverage amount?
The Veterans' Benefits Act of 2010 (P.L.111-275) increases the maximum amount of VMLI from $150,000 to $200,000, effective January 1, 2012.
Who is eligible for the increased coverage?
Any Veteran whose mortgage balance was over $150,000 at the time they obtained VMLI coverage is eligible for the increase.
Will policyholders be able to select my level of VMLI coverage?
Yes, all VMLI policyholders will be able to select their level of VMLI coverage to be effective January 1, 2012. Coverage may not exceed the maximum amount of coverage allowed by law, or your mortgage balance, whichever is less.
How are the premiums calculated for the increase in VMLI coverage?
VMLI premiums are calculated using four factors. These factors include:
- Your current mortgage balance as of the effective date of VMLI coverage.
- Your age as of the effective date of VMLI coverage.
- The number of months remaining on your mortgage as of the effective date of your VMLI coverage.
- The amount of VMLI coverage.
Your premiums for the increased coverage will be calculated using the same factors as when you last obtained VMLI coverage, the only difference will be the amount of VMLI coverage.
We will use the following as an example:
Effective Date of Coverage: August 11, 2005 Mortgage Balance as of Effective Date: $300,000 Insurance Age as of Effective Date: 56 Number of Months Remaining on Loan as of Effective Date: 360 Amount of VMLI Coverage: $90,000 VMLI Premium: $161.66
Using the same factors, but for $200,000 of VMLI coverage:
Effective Date of Coverage: August 11, 2005 Mortgage Balance as of Effective Date: $300,000 Insurance Age as of Effective Date: 56 Number of Months Remaining on Loan as of Effective Date: 360 Amount of VMLI Coverage: $200,000 VMLI Premium: $306.98
Why do you not use my current age and mortgage information to calculate my premiums for the increased coverage?
There is a significant cost savings to you if we use the original factors to calculate your new premium. In the example above, if we used the Veteran's current age, current mortgage balance, and current number of months remaining on the loan, the premium would be $407.47, over $100 more per month than using the original factors.
When will the new VMLI premium be deducted from my VA compensation?
You will see the new premium reflected in your February 2012 compensation payment if you are taking the maximum amount of VMLI coverage, or if you are selecting a different amount of coverage.
Will I be able to change the amount of my VMLI coverage?
Yes, you will have until May 1, 2012 to reduce your coverage, and until January 1, 2013 to increase your coverage if you change your mind. You will only have one opportunity to increase or decrease your coverage, unless you refinance your mortgage or sell your home and purchase another home you wish to cover under VMLI.