this purpose. Under no circumstances shall commercial agents, including representatives of loan, finance, insurance or investment companies, be used for this purpose. Educational materials prepared or presented by outside organizations expert in this field may, with appropriate disclaimers and permission, be adapted or used if approved by the Military Department concerned. Presentations by approved organizations shall only be conducted at the express request of the installation commander.

(2) The Military Departments shall also make qualified personnel and facilities available for individual counseling on loans and consumer credit transactions in order to encourage thrift and financial responsibility and promote a better understanding of the wise use of credit, as prescribed in DoD Directive 1344.9.7

(3) Military members shall be encouraged to seek advice from a legal assistance officer or their own lawyer before making a substantial loan or credit commitment.

(4) Each Military Department shall provide advice and guidance to military personnel who have a complaint under Pub. L. 90-321 or who allege a criminal violation of its provisions, including referral to the appropriate regulatory agency for processing of the complaint.

[51 FR 7552, Mar. 5, 1986, as amended at 52 FR 25008, July 2, 1987]

APPENDIX A TO PART 43—LIFE INSURANCE PRODUCTS AND SECURITIES

A. LIFE INSURANCE PRODUCT CONTENT

PREREQUISITES

1. Insurance products, other than certificates or other evidence of insurance issued by a self-insured association, offered and sold worldwide to personnel on DoD installations, must:

a. Comply with the insurance laws of the State or country in which the installation is located and the procedural requirements of this Directive.

b. Contain no restrictions by reason of military service or military occupational specialty of the insured, unless such restrictions are clearly indicated on the face of the contract.

7 See footnote 1 to § 43.6(d)(10).

c. Plainly indicate any extra premium charges imposed by reason of military service or military occupational specialty.

d. Contain no variation in the amount of death benefit or premium based upon the length of time the contract has been in force, unless all such variations are clearly described therein.

2. To comply with paragraphs A.1.b., c., and d., above, an appropriate reference stamped on the face of the contract shall draw the attention of the policyholder to any extra premium charges and any variations in the amount of death benefit or premium based upon the length of time the contract has been in force.

3. Variable life insurance products may be offered provided they meet the criteria of the appropriate insurance regulatory agency and the Securities and Exchange Commission.

4. Premiums shall reflect only the actual premiums payable for the life insurance product.

B. SALE OF SECURITIES

1. All securities must be registered with the Securities and Exchange Commission.

2. All sales of securities must comply with existing and appropriate Securities and Exchange Commission regulations.

3. All securities representatives must apply directly to the commander of the installation on which they desire to solicit the sale of securities.

4. Where the accredited insurer's policy permits, an overseas accredited life insurance agent-if duly qualified to engage in security activities either as a registered representative of the National Association of Securities Dealers or as an associate of a broker or dealer registered with the Securities and Exchange Commission-may offer life insurance and securities for sale simultaneously. In cases of commingled sales, the allotment of pay for the purchase of securities cannot be made to the insurer.

C. USE OF THE ALLOTMENT OF PAY SYSTEM

1. Allotments of military pay for life insurance products shall be made in accordance with DoD Directive 7330.1.8

2. For personnel in pay grades E-1, E-2, and E-3, at least seven days shall elapse for counseling between the signing of a life insurance application and the certification of an allotment. The purchaser's commanding officer may grant a waiver of this requirement for good cause, such as the purchaser's imminent permanent change of station.

D. ASSOCIATION-GENERAL

The recent growth and general acceptability of quasimilitary associations offering

8 See footnote 1 to § 43.6(d)(10).

various insurance plans to military personnel are acknowledged. Some associations are not organized within the supervision of insurance laws of either a State or the Federal Government. While some are organized for profit, others function as nonprofit associations under Internal Revenue Service regulations. Regardless of the manner in which insurance plans are offered to members, the management of the association is responsible for complying fully with the instructions contained herein and the spirit of this part.

APPENDIX B TO PART 43—THE OVERSEAS LIFE INSURANCE ACCREDITATION PROGRAM

A. ACCREDITATION CRITERIA

1. Initial Accreditation.

a. Insurers must demonstrate continuous successful operation in the life insurance business for a period of not less than five years on December 31 of the year preceding the date of filing the application.

b. Insurers must be listed in Best's LifeHealth Insurance Reports and be assigned a rating of B+ (Very Good) or better for the business year preceding the Government's fiscal year for which accreditation is sought. 2. Reaccreditation.

a. Insurers must demonstrate continuous successful operation in the life insurance business, as described in subsection A.1.a., above.

b. Insurers must retain a Best's rating of B+ or better, as described in paragraph A.1.b., above.

c. Insurers must establish an agency sales force in one of the overseas commands within two years of initial accreditation.

3. Waiver Provisions.

Waivers of the initial accreditation and reaccreditation provisions will be considered for those insurers demonstrating substantial compliance with the aforementioned criteria.

B. APPLICATION INSTRUCTIONS

1. Applications Filed Annually. During the months of May and June of each year insurers may apply for solicitation privileges for personnel assigned to U.S. military installations in foreign areas for the fiscal year beginning the following October 1.

2. Application Prerequisites. A letter of application, signed by the president, vice president, or designated official of the insurance company shall be forwarded to the Assistant Secretary of Defense (Force Management and Personnel), Attention: Personnel Administration and Services Directorate, ODASD(MM&PP), The Pentagon, Washington, DC 20301-4000. The letter shall contain the information set forth below, submitted

in the order listed. Where not applicable, so state.

a. The overseas commands (e.g., European, Pacific, Atlantic, Southern) where the company is presently soliciting, or planning to solicit on U.S. military installations.

b. A statement that the company has complied with, or will comply with, the applicable laws of the country or countries wherein it proposes to solicit. "Laws of the country" means all natural, provincial, city, or county laws or ordinances of any country, as applicable.

c. A statement that the products to be offered for sale conform to the standards prescribed in Appendix A and contain only the standard provisions such as those prescribed by the laws of the State where the company's headquarters are located.

d. A statement that the company shall assume full responsibility for the acts of its agents with respect to solicitation. Sales personnel will be limited in numbers to one general agent and no more than 50 sales personnel for each overseas area. If warranted, the number of agents may be further limited by the overseas command concerned.

e. A statement that the company will not utilize agents who have not been accredited by the appropriate overseas command to sell to DoD personnel on or off its DoD installations.

f. Any explanatory or supplemental comments that will assist in evaluating the application.

g. If the Department of Defense requires facts or statistics beyond those normally involved in accreditation, the company shall make separate arrangements to provide them.

h. A statement that the company's general agent and other accredited agents are appointed in accordance with the prerequisites established in section C., below.

3. If a company is a life insurance company subsidiary, it must be accredited separately on its own merits.

C. AGENT REQUIREMENTS

Unified commanders shall apply the following principles:

1. An agent must possess a current State license. The overseas commander may waive this requirement for an accredited agent continuously residing and successfully selling life insurance in foreign areas, who, through no fault of his or her own, due to State law (or regulation) governing domicile requirements, or requiring that the agent's company be licensed to do business in that State, forfeits eligibility for a State license. The request for a waiver shall contain the name of the State or jurisdiction which would not renew the agent's license.

2. General agents and agents shall represent only one accredited commercial insurance company. This requirement may be

waived by the overseas commander if multiple representation can be proven to be in the best interest of DoD personnel.

3. An agent must have at least one year of successful life insurance underwriting in the United States or its territories, generally within the five years preceding the date of application, in order to be designated as accredited and employed for overseas solicitation.

4. Appropriate overseas commanders shall exercise further agent control procedures as deemed necessary.

5. An agent, once accredited in an overseas area, may not change affiliation from the staff of one general agent to another and retain accreditation, unless the previous employer certifies in writing that the release is without justifiable prejudice. Unified commanders will have final authority to determine justifiable prejudice. Indebtedness of an agent to a previous employer is an example of justifiable prejudice.

D. ANNOUNCEMENT OF FINDINGS

1. Accreditation by the Department of defense upon annual applications of insurers shall be announced as soon as practicable by a notice to each applicant and by a listing released annually in September to the appropriate overseas commander. This approval does not constitute DoD endorsement of the insurer. Any advertising by insurers which suggests such endorsement is prohibited.

2. In the event accreditation is denied, specific reasons for such findings shall be submitted to the applicant.

a. Upon receipt of notification of an unfavorable finding, the insurer shall have 30 days from the receipt of such notification (forwarded certified mail, return recipt requested) in which to request reconsideration of the original decision. This request must be accompanied by substantiating data or information in rebuttal of the specific reasons upon which the adverse findings are based.

b. Action by the Assistant Secretary of Defense (Force Management and Personnel) on appeal is final.

c. If the applicant is presently accredited as an insurer, up to 90 days from final action on an unfavorable finding shall be granted in which to close out operations.

3. Upon receiving the annual letter of accreditation, each company shall send to the applicable unified commander a verified list of agents currently accredited for overseas solicitation. Where applicable, the company shall also include the names of new agents for whom original accreditation and permission to solicit on base is requested. Insurers initially accredited will be furnished instructions by the Department of Defense for agent accreditation procedures in overseas areas.

4. Material changes affecting the corporate status and financial conditions of the company which may occur during the fiscal year

of accreditation must be reported as they

occur.

a. The Department of Defense reserves the right to terminate accreditation if such material changes appear to substantially affect the financial and operational criteria described in section A., above, on which accreditation was based.

b. Failure to report such material changes can result in termination of accreditation regardless of how it affects the criteria.

5. If an analysis of information furnished by the company indicates that unfavorable trends are developing which may possibly adversely affect its future operations, the Department of Defense may, at its option, bring such matters to the attention of the company and request a statement as to what action, if any, is contemplated to deal with such unfavorable trends.

(a) Defense support industry. Any business or corporation so determined by FEMA.

(b) Extreme community hardship. A situation that, because a reservist is mobilized, may have a substantially adverse effect on the health, safety, or welfare of the community. Any request for a determination of such hardship shall be made by the reservist and must be supported by documentation as required by the Secretary of the Military Department concerned.

(c) Extreme personal hardship. An adverse impact upon a reservist's dependents resulting from his or her mobilization. Any request for a determination of such hardship shall be made by the reservist and must be supported by documentation as required by the Secretary of the Military Department concerned.

(d) Key employee. Any Federal employee occupying a key position.

(e) Key position. A Federal position that cannot be vacated during a national emergency or mobilization without seriously impairing the capability of the parent Federal agency or office to function effectively. There are three categories of Federal key positions. The first two categories are, by definition, key positions. Only the final category requires a case-by-case determination and designation:

(1) The Vice President of the United States or any official specified in the order of presidential succession as set forth in 3 U.S.C. 19.

(2) Members of Congress, heads of Federal agencies appointed by the President with the consent of the Senate, and the Federal judiciary (District, Circuit, and Supreme Court judges and justices only; all other positions within the Federal judiciary shall be considered under the provisions of paragraph (e)(3) of this section). For the purposes of the definition contained in this paragraph, the terms "heads of Federal agencies" does not

include any person appointed by the President with the consent of the Senate to a Federal agency as a member of a multimember board or commission. Positions occupied by such persons may be designated as key positions only by the application of the criteria set forth in § 44.5(b)(2) of this part.

(3) Other Federal positions determined by Federal agency heads, or their designees, to be key positions in accordance with the guidelines specified in § 44.5(b)(2) of this part.

(f) Ready Reserve. Units and individual reservists liable for active duty as outlined in 10 U.S.C. 672 and 673.

(g) Selected Reserve. Part of the Ready Reserve of each reserve component consisting of units and individuals who participate actively in paid training periods and serve on paid active duty for training each year.

(h) Standby Reserve. Units or members of the reserve components, other than those in the Ready Reserve or Retired Reserve, who are liable for active duty as provided in sections 672 and 674 of title 10, U.S.C.

§ 44.4 Policy.

It is DoD policy that members of the Selected Reserve and other Ready Reservists who are not on active duty shall be screened at least annually to provide a Ready Reserve force composed of members who:

(a) Meet Military Service wartime standards of mental, moral, professional, and physical fitness.

(b) Possess the military qualifications required in the various ranks, grades, ratings, and specialties.

(c) Are available immediately for active duty during a mobilization (or during a war or national emergency or in response to a presidential order to augment the active forces for an operational mission).

$ 44.5 Procedures.

(a) Reserve component screening activities. The following general procedures shall be followed to ensure the immediate availability of a Ready Reserve force:

(1) Annual screening. All Ready Reservists shall be screened at least annually to ensure their availability.

Upon mobilization, all screening activity ceases, and all those remaining in the Ready Reserve shall be considered immediately available for active duty service.

(2) Maintaining current data. The development and maintenance of current information pertaining to the mobilization availability of Ready Reservists shall be the responsibility of the Secretary of the Military Department concerned.

(3) Civilian employment. After a mobilization is ordered, no deferment, delay, or exemption from mobilization will be granted to Ready Reservists because of their civilian employment.

(4) Retention in the Ready Reserve. All Ready Reservists shall be retained in the Ready reserve for the entire period of their statutory obligation or voluntary contract. Exceptions to this policy are made in this part or may be made by the Secretaries of the Military Departments (10 U.S.C. 269).

(5) Transfer of National Guard members to the Standby Reserve. In accordance with section 269(g) of title 10, U.S.C., a member of the Army National Guard or the Air National Guard may be transferred to the Standby Reserve only with the consent of the governor or other appropriate authority of the State, commonwealth, or territory concerned (including the District of Columbia).

(6) Transfer from the Standby Reserve to the Ready Reserve. Under section 272 of title 10, U.S.C., any eligible member of the Standby Reserve may be transferred back to the Ready Reserve when the reason for the member's transfer to the Standby Reserve no longer exists (32 CFR part 100).

(7) Extreme hardship. The Secretaries of the Military Departments shall screen extreme hardship cases (section 271a(5) of title 10, U.S.C.). Ready Reservists whose immediate recall to active duty during an emergency would create an extreme personal or community hardship shall be transferred to the Standby Reserve or the Retired Reserve or shall be discharged, as appropriate.

(8) Miscellaneous screening requirements. Ready Reservists identified in the following categories shall be processed as follows:

(i) Civilian employment restrictions. Ready Reservists who are also DoD civilian employees may not hold a mobilization assignment to the same positions that they fill as civilian employees. These Ready Reservists shall be reassigned or transferred, as appropriate. Reserve component unit civilian technicians, as members of reserve units, are excluded from this provision.

(ii) Theological students. Ready Reservists who are preparing for the ministry in an accredited theological or divinity school cannot be involuntarily called to active duty or required to participate in inactive duty training (10 U.S.C. 685). Accordingly, such Ready Reservists (other than those participating in a military Chaplain Candidate or Theological Student Program) shall be transferred to the Standby Reserve (active status) for the duration of their ministerial studies at accredited theological or divinity schools. Ready Reservists participating in a military Chaplain Candidate or Theological Student Program may continue their Ready Reserve affiliation and engage in active duty and inactive duty training.

(iii) Health care professionals. Ready Reservists may not be transferred from the Ready Reserve solely because they are students, interns, residents, or fellows in the health care professions. Upon mobilization, they either shall be deferred or shall be mobilized in a student, intern, resident, or fellow status until qualified in the appropriate military specialty as prescribed by the Military Department Secretaries (DoD Directive 1215.4).

(9) Availability determinations. The Secretaries of the Military Departments shall make determinations for mobilization availability on a case-bycase basis, consistent with this part, and not by class or group determinations.

(10) Removal determinations. Under this part, the Secretaries of the Military Departments shall review recommendations for removal of employees from the Ready Reserve submitted by employers and shall take appropriate action.

(b) Screening activities by employers of Ready Reservists. In addition to the