October 1, 1973 M29-1, **Part I\
Change 5**

CONTENTS

CHAPTER 19. CHANGE OF PLAN

PARAGRAPH PAGE\
19.01 General 19-1\
19.02 Requirements 19-2\
19.03 Applications 19-3

19.04 Change in Plan to a Policy Having a Lower Reserve Value\
(VA Regulations 3048 and 3436) 19-3\
19.05 Change in Plan to a Policy Having a Higher Reserve Value\
(VA Regulations 3047 and 3435) 194

19.06 Reinstatement or Replacement of Insurance Under 38 U.S.C. 781\
With a Change of Plan 194

19.07 Effective Date of Change 194\
19.08 Reduction and/or Reinstatement and Change of Plan 19-5\
l9.09 Change or Withdrawal of Application 19-6\
19.10 Death of Insured 19-6\
19.11 Loan at Time of Change of Plan (Higher to Lower Reserve Value)
19-6\
19.12 Persons By Whom Change of Plan May Be Effected 19-6\
19.13 Change of Plan With Paid-Up Additions 19-7\
19.14 Modified Life-Age 65 Changed to Modified Life-Age 70 19-7

19-i

December 22, 1978 **M29-1, Part I\
. Change** 8\
CHAPTER 19. CHANGE OF PLAN\
19.01 GENERAL

a\. A permanent plan contract in force under premium-paying conditions
may be exchanged, wholly or in part, in multiples of \$500 but not less
than \$ 1 ,000 (except for the Modified Life plan) for any other
permanent plan contract in the same insurance fund, with the same
effective date and based on the same age, subject to the restrictions
and requirements hereinafter outlined. Generally, a contract with a
lower premium rate will have a lower reserve value than a contract with
a higher premium rate. However, it is possible to exchange a permanent
plan policy for another permanent plan policy and the premiums will be
the same on each one, but the reserve value on each policy will be
different. It is also possible to have different premiums on two
policies, and the reserve value on the two policies will be the same.
These variations from the general rule occur when the premium-paying
periods are of varying lengths of time on the two contracts.

b\. Generally, a permanent plan, once correctly established, may not be
exchanged to 5-Year Level Premium Term insurance. However, \[if\] it is
determined, after the exchange of \[a 5 LPT\] for the Special Endowment
at Age 96 plan, that \[ \] the ( \] policy matured because of the total
permanent disability of the insured (VA Regulations 3120, 3121, 3122),
or the insured was entitled to \[ \] benefits (VA Regulation 3160 or
3164 \[ .\]) under the Total Disability Income Provision \[prior to the
exchange, the term policy may be restored\]. The insured, upon surrender
of ( \] all rights, title and interest in \[the endowment policy and any
provision attached thereto,\] will be entitled to the benefits which are
payable under the prior term policy and the total disability provision.
The cash value, less any indebtedness on the endowment policy as of the
date that due proof is received, will be refunded together with any
premiums paid on the total ( \] disability provision. (VA Regulation
3052(B))

c\. When a plan of insurance is changed to one with a lower reserve
value and the original permanent plan has been in force at the date of
change less than I year, the difference in the reserve on the two plans
of insurance may not be withdrawn in cash but may be used only for the
purpose of paying premiums (including past due premiums and interest) on
the amount of insurance retained under the new plan; and such premiums
are not subject to withdrawal by the insured prior to the expiration of
the first policy year. When the original permanent plan has been in
force, at the date of change, for 12 or more months, there will be a
cash value involved. The insured may elect to have the difference in
reserve:

\(1\) Withdrawn in cash;or

\(2\) Applied in payment of future premiums on the new plan; or

\(3\) Applied in payment of premiums on any other Government insurance
contract; or

\(4\) Applied to pay premiums in arrears and interest when reinstating
any Government insurance contract; or

\(5\) Applied toward payment of a loan or lien on any Government
insurance contract.

d\. Reduced paid-up insurance may not be restored to premium-paying
status or changed to a different plan of insurance.

e\. ((Deleted.)\]

f\. Under the USGLI and NSLI (V and H) programs, if the issue age on the
original permanent plan policy is 66 or older, the plan may not be
changed to a 30-Payment Life or 30-Year Endowment policy. Mso, if the
issue age on the original permanent plan policy is 76 or older, the plan
may not be changed to a 20-Payment Life or a 20-Year Endowment policy.

g\. Under the NSLI (RH) program, if the issue age on the original
permanent plan policy is 70 or older, the plan may not be changed to a
30-Payment Life policy. Also, if the issue age on the original permanent
plan policy is 80 or older, the plan may not be changed to a 20-Payment
Life or a 20-Year Endowment policy.

19-1

October 1,1973 M29-1, **Part 1\
Change 5**

\(d\) The required amount of reserve and the first premium on the new
policy must be paid by the insured.

\(2\) Change to a lower reserve.

\(a\) Present policy must be in force in premium-paying condition.

\(b\) Present policy must be surrendered with all rights and claims.

\(c\) An application must be submitted.

\(d\) A comparative health statement must be submitted if the change is
made within l year from the effective date of the policy or where less
than 90 days of such year remains after August l, 1969, within 90 days
of that date.

\(e\) The change must be made within 5 years of the effective date of
the policy.

19-2a

December 22, 1978 M29-1, **Part I**

. Change

\(d\) The required amount of reserve and the first premium on the new
policy must be paid by the insured.

\(2\) Change to a lower reserve.

**(a)** Present policy must be in force in premium-paying condition.

\(b\) Present policy must be surrendered with all rights and claims.

\(c\) An application must be submitted.

\(d\) A comparative health statement must be submitted if the change is
made within I year from the effective date of the policy or when less
than 90 days of such year remain after August I, 1969, within 90 days of
that date.

\(e\) The change must be made within 5 years of the effective date of
the policy.

\(f\) On and after the first anniversary of the policy, the applicant
must be in good health and furnish satisfactory proof of same.

19.03 APPLICATIONS

**a.** VA Form 29-1549, Application for Change of Permanent Plan
(Medical), should be used to apply for

change of plan to **a** policy having a lower reserve value.

b\. VA Form 29-1550, Application for Change of Permanent Plan
(Nonmedical), should be used to apply for change of plan to **a** policy
having a higher reserve value.

c\. A statement over the signature of the insured containing information
as to the amount of insurance and plan desired will be considered as an
informal application. When an informal application has been submitted
and the change is to a policy with a lower reserve (NSLI or USGLI), the
insured must also furnish **a** complete physical examination report. If
the change is to a higher reserve (NSLI only), the insured must also
furnish a signed statement certifying he or she is not totally disabled.

(d. If the insured does not provide a sufficient statement regarding
disability, a VA Form 29-1550 will be forwarded to the insured for **a**
reply to the question \"Are you now disabled?\" before the change is
processed. 1f the question is unanswered on **a** formal application, an
FL 29-6 IS will be used to obtain the certification of health.

e\. If the question is answered in the affirmative on the VA Form
29-1550, without a complete and medically acceptable explanation, the
applicant will be requested to specify the nature and extent of the
disability. Ml applications received indicating that the veteran is
disabled and the nature of the disability is furnished, will be
forwarded to the Insurance Claims Section via the Insurance Files
Section for the attachment of the insurance folder. If the insured is
found totally disabled for insurance purposes, the application will be
disapproved.\]

19.04 CHANGE IN PLAN TO A **POLICY** HAVING A LOWER RESERVE VALUE (VA
REGULATIONS 3048 AND 3436)

**a. National** Service Life Insurance

\(I\) There is no time limit as to when the change may be made. However,
prior to September 22, 1952, the change could only be made during the
5-year period from the effective date of the permanent plan policy.

\(2\) The change may be made on any premium due date prior to the first
anniversary date of the policy if the insured is in as good health on
the date of change as he or she was on the effective date of the policy.
On and after the first anniversary date, the insured must be in good
health and submit a complete medical examination report.

\(3\) Permanent plans may *not* be exchanged for the Modified Life plan
\[age 65\] if the insured is insurance age 6I or older on the date of
change, (or to the Modified Life plan age 70 if the insurance age is 69
or older on the

. date of change.\]

19-3

December 22,1978 M29-1, Part **I**

I-. Change

19.06 REINSTATEMENT OR REPLACEMENT OF INSURANCE UNDER 38 U.S.C. 781 WITH
A CHANGE OF PLAN

A veteran may reinstate or replace a permanent plan policy under 38
U.S.C. 781 and change the plan simultaneously.

19.07 EFFECTIVE DATE OF CHANGE

a\. The effective date of change for a change of plan must always be a
premium due date. The premium due date for policies issued on the 29th,
30th or 31st day of the month is the same date in each succeeding month
except for the months that do not have the particular date. In these
months, the effective date is the last day of the month.

\(I\) Use the premium due date of the premium-paying (not calendar)
month during which the request for change is submitted, being governed
by the postmark date if mailed, by the earliest VA receiving stamp date
if otherwise delivered to the VA, or by the date of signature if the
application is received through military channels, if the premium for
that month has not been paid.

\(2\) Use the premium due date of the next premium-paying (not calendar)
month:

\(a\) If the premium on the existing plan, for the amount of insurance
to be changed, has been paid for the

month in which the request for change was submitted.

\(b\) If the method of payment is by allotment from service pay and
premiums are being paid in advance, or by deduction from any benefits
due and payable monthiy by the VA.

\(3\) Prospective Effective Date of Change Requested

\(a\) When a change of plan to one with a lower reserve value is
requested, the change may not be made effective as of a future date
which is more than 31 days after the date of the comparative health
statement or the date of physical examination. The insured will be
advised that consideration may be given to a change as of the premium
due date of the premium month in which the request for change was
submitted, or as of the next premium-paying month. He or she wffl also
be informed that if the change is to be made as of the future date he or
she must submit a new comparative health statement or physical
examination report and a new application at the time he or she desires
the change to be effective. Before the VA can make a change, the
applicant must authorize the action and submit a certification of health
within 31 days from the date of notification.

\(b\) When a change of plan to one with a higher reserve value is
requested, the applicant is advised the change will be considered
provided premiums are paid to the effective date of chan\~, but that
processing will be deferred until the requested date of change. Further,
that the change may be considered with an effective date as of the
premium due date of the premium month in which the request was
submitted, or as of the next premium-paying month, if he or she
authorizes such action. On NSLI policies, the requirements of health
must be satisfied.

19.08 REDUCTION AND/OR REINSTATEMENT AND CHANGE OF PLAN

a\. A permanent plan may be reduced in amount and the reduced amount
change to another permanent plan at the same time if all other
conditions are met.

b\. Lapsed insurance must be reinstated in the amount to be exchanged
for a different permanent plan.

c\. When only part of the full amount of insurance is to be exchanged
for a contract under another permanent plan, the insurance wffl be
reduced or divided (split) in accordance with the following:

\(I\) The insurance may be reduced when:

\(a\) The permanent plan has been in force less than 3 months, whether
lapsed or not, and even if only a part is to be reinstated.

19-5

December 22, 1978 M29-1, **Part I\
Change8**

19.11 LOAN AT TIME OF CHANGE OF PLAN (HIGHER TO LOWER RESERVE VALUE)

If there is an outstanding loan at the time a change of plan from higher
to lower reserve value is made, the outstanding indebtedness must be
checked against the maximum loan value of the new contract as of the
effective date of change, and if greater than the maximum loan value of
the new contract, it must be reduced to an amount which wffl not exceed
the loan value on the new plan, by deduction from the reserve credit
incident to the change.

19.12 PERSONS BY WHOM CHANGE OF PLAN MAY BE EFFECTED

Change of Plan may be made by:

a\. The insured, if competent.

19-6a

October 1,1973 M29-1, **Part I\
**Change 5

b\. The insured tlirougli an attorney-in-fact, if the insured gives
specific delegation of authority to the attorney-in-fact to d\~aiige thc
plan and specifies the particular policy to be changed.

c\. The legal guardian, committee, conservator, curator, or trustee for
the insured, provided the application is supported by a court order from
the court of jurisdiction if required under the State law.

(19.13 CHANGE OF PLAN WITH PAID-UP ADDITIONS

a\. When a permanent plan life policy with pald-up additions is changed
to another life contract, no adjustment of the paid-up additions is
required.

b\. When a permanent plan life policy with paid-up life additions is
changed to an endowment contract, the paid-up life additions may be:

\(I\) Retained as paid-up life additions, without any adjustment, or

\(2\) Changed to paid-up endowment additions by applying the reserve of
the paid-up life additions based on

the basic endowment policy and the attained age of the insured, or

\(3\) Changed to purchase the same amount of paid-up endowment additions
as there were paid.up life additions with the insured paying the
difference in reserve.

c\. When an endowment policy with paid-up endowment additions is changed
to another endowment policy, an adjustment to the paid-up endowment
additions must be made.

\(l\) On a change to an endowment policy with a lower reserve, the
amount of the paid-up endowment

\~ additions may not be increased because of the change in plan. The
reserve of the paid-up endowment additions on the prior policy will be
determined and the amount of reserve needed to establish the same amount
of paid-up endowment additions on the new endowment policy will be
deducted. The difference in reserve may be paid to the insured in cash
or, at his request, used to pay premiums or applied to an outstanding
indebtedness.

\(2\) On a change to an endowment policy with a higher reserve, the
paid-up endowment additions will be changed by applying the reserve of
the paid-up endowment additions on the prior policy to purchase a lesser
amount of paid-up endowment additions based on the new basic endowment
policy and the attained age of the insured or to purchase the same
amount of paid-up endowment additions with the insured making payment of
the difference in reserve.

d\. When an endowment policy with paid-up endowment additions is changed
to life policy, the paid-up endowment additions will be changed to the
same amount of paid.up life additions, with the difference in reserve
paid to the insured in cash or, at his request, used to pay premiums or
applied to an outstanding indebtedness. The paid-up additions may not
remain as endowment additions. Mso, the amount of paid-up life additions
may not exceed the amount of paid-up endowment additions.

19.14 MODIFIED LIFE-AGE 65 CHANGED TO MODIFIED LIFE-AGE 70

a\. A new Modified Life-Age 70 plan of NSLI insurance became available
on July l, 1972. Policyholders with the Modified Life-Age 65, reduced
Modified Life-Age 65 and replacement insurance may exchange these
policies for the new plan.

b\. The law which provided for thc new plan also granted certain
insureds special rights for l year (July l, 1972 through July 2, 1973),
to change to the plan. They were:

\(l\) Insureds past their 65th birthday but who had not reached
insurable age 70 with reduced Modified Life-Age 65 in force by payment
of premiums could have exchanged to the amount of insurance in force
prior to

19-7

M29-1,Part **I** October 1, 1973

Change 5

age 65 by submitting a signed application, payment of the difference in
reserve, and at least one monthly premium on the Modified Life-Age 70.
Proof of good health was not required.

\(2\) Insureds past their 65th birthday but who had not reached
insurable age 70 with either the reduced Modified Life-Age 65 or the
replacement insurance in a state of lapse (HP l or 4) and the other
policy was in force by payment of premiums, could have exchanged both
policies to the amount of insurance in force prior to age 65 without
reinstating the lapsed policy by submitting a signed application,
payment of the difference in reserve, and at least one monthly premium
on the Modified Life-Age 70. If the lapsed policy was on extended
insurance, the net cash value of the extended insurance was added to the
cash value of the policy in force in determining the difference in
reserve. Proof of good health was not required.

\(3\) Insureds past their 65th birthday but who had not reached
insurable age 70 with the reduced Modified Life-Age 65 in a state of
lapse without replacement insurance or with the reduced Modified
Life-Age 65 and the replacement in-surance both in a state of lapse,
must have reinstated the reduced Modified Life-Age 65 before the change
to Modified Life-Age 70 could have been made. When the reduced Modified
Life-Age 65 was reinstated and the lapsed replacement insurance was on
extended insurance, the cash value of the extended insurance was &dded
to the cash value of the reinstated insurance in determining the
difference in reserve.\]

19-8

**M29-1,Part I** December 22,1978\
**Change** 8 .

\(b\) Part of a permanent plan, which has not lapsed and has been in
force at least I year, is surrendered for cash (reduction) and the
premium for the premium month in which the application was submitted has
been paid.

\(c\) Part of a lapsed permanent plan continued in force as extended
term insurance is reinstated and the remaining insurance is surrendered
for the cash value.

\(d\) Part of a lapsed permanent plan, on which the extended term
insurance has expired, is reinstated.

\(2\) The insurance may not be reduced but will be divided into
contracts when:

\(a\) Only a part of a permanent plan contract is changed to **a**
different plan and the remainder is continued on the original plan.

\(b\) Part of a permanent plan contract is allowed to lapse and is
extended as term insurance or surrendered for paid-up insurance.

\(c\) Part of a permanent plan which has not lapsed is surrendered for
cash, the premium for the month in which the application is submitted
has not been paid, and dividend credit is used to pay the premium for
that month on the portion of insurance to be surrendered.

\(d\) Part of **a** permanent plan contract in force as extended term
insurance is reinstated, and the remainder is continued as extended term
insurance.

d\. When change of plan is involved with division, reduction, and/or
reinstatement, all actions wffl be processed

in conformity with the rules prescribed for the particular action
involved.\
19.09 CHANGE OR WITHDRAWAL OF APPLICA\~ON .

a\. When a properly signed request for withdrawal or for **a**
permissible plan or amount, other than that stated in the original
acceptable application for change of plan, is received in the VA, or
bears a postmark date, or there is evidence that it was placed in
military channels prior to the \"effective date of change,\" the request
will be granted; otherwise, the change as originally requested, will be
processed in the usual manner and the applicant informed of the
necessary additional requirements to continue the insurance in the
amount and plan desired.

b\. When any additional evidence, such as medical evidence or other
data, is necessary for determination of eligibility, the insured will be
given an opportunity to withdraw the application or change the amount
and/or plan requested on the original application. Such request, if in
order, must be mailed or otherwise delivered to the VA prior to
submission of the requested information or other requirement.

c\. When applications for reinstatement and change of plan have been
submitted and an acceptable request for withdrawal of the application
for change of plan only is received, the reinstatement application will
be processed and the policyholder notified of action taken.

19.10 DEATh OF INSURED

**\[a.\]** The application wffl be disapproved if:

((1)\] The insured dies prior to meeting all the requirements.

\[(2)\] The insured dies prior to the \"effective date of change,\" even
though the application is otherwise acceptable.

b\. \[The application will be canceled if the change in plan to **a**
higher reserve has been approved and the insured dies prior to the *next
premium due date after the date of change.* When an application is
canceled, the original permanent plan contract wffl be restored. Any
loan amount used to pay the difference in reserve will be

reversed and any difference in reserve paid by direct remittance will be
included in the insurance award.\] .

19-6

M29-1,Part **I** December 22,1978\
**Change** 8 .

\(4\) Permanent plans under the V prefix may not be exchanged for the
Special Ordinary Life plan. This plan may be obtained only by an insured
with (the\] Modified Life plan in force who replaces the insurance
reduced at age 65 \[or 70.\]

\(5\) The old policy must be surrendered with all rights and provisions,
but the insured will not be requested to return the policy to the VA.

b\. United States Government Life **Insurance**

\(I\) The plan of insurance must be exchanged within 5 years of the
effective date ofthe permanent plan policy.

\(2\) The change may be made on any premium due date prior to the first
anniversary date of the policy if the insured is in as good health on
the date of change ashe or she was on the effective date of the policy.
On and after the first anniversary date, the insured must be in good
health and submit a complete medical examination report.

\(3\) Permanent plans may *not* be exchanged for the Special Endowment
at Age 96 plan.

\(4\) The old policy must be surrendered with all rights and provisions,
but the insured will not be requested to return the policy to the VA.

19.05 CHANGE IN PLAN TO A **POLICY** HAVING A HIGHER RESERVE VALUE (VA
REGULATIONS 3047 AND 3435)

a\. National Service Life Insurance

\(I\) There is not time limit as to when the change may be made except
that a plan may not be exchanged for an endowment policy if, on the date
of change, it would result in a matured endowment.

\(2\) The plan may *not* be changed if the insured is totaUy disabled.

\(3\) The insured must pay in cash, or by policy loan if the policy has
been in force for 12 months or more, the difference between the reserve
value of the new policy and the reserve value of the old policy plus at
least one monthly premium on the new policy.

\(4\) The old policy must be surrendered with all rights and provisions,
but the insured will not be requested to return the policy to the VA.

b\. United **States Government** Life Insurance

\(I\) There is not time limit as-to when the change may be made except
that a plan may not be exchanged for an endowment policy if, on the date
of change, it would result in a matured endowment.

\(2\) A medical examination is not required. The exchange may be made
even though the insured is totally disabled.

\(3\) The insured must pay, in cash, or by policy loan, if the policy
has been in force for 12 months or more, the difference between the
reserve value of the new policy and the reserve value of the old policy
plus at least one monthly premium on the new policy.

\(4\) The Special Endowment at Age 96 plan may not be exchanged for any
other plan of insurance.

\(5\) The old policy must be surrendered with all rights and provisions,
but the insured will not be requested to

return the policy to the VA. .

19-4

M29-1,Part **I** December 22,1978\
**Change** 8 .

h\. Under the NSLI (W)program, if the issue age on the original
permanent plan policy is 71 or older the pIan may not be changed to a
30-Payment Life policy. Also, if the issue age on the original permanent
pIan policy is 81 or older, the plan may not be changed to a 20-Payment
Life or a 20-Year Endowment policy.

i\. Under the NSLI (J-JR-JS) program certain policies are not available
at certain ages. The specific plan and the specific ages are too
involved to list in this manual. For additional information, see VA
Pamphlets 29-I 5, 29-18 and 29-21.

j\. After limited-payment life contracts become paid-up by payment of
all the required premiums, the insured may change the plan to one with a
higher reserve under the USGLI program and to a higher or lower reserve
plan under the NSLI program, provided all other requirements are met.
Mso, if the paid-up limited-payment life policy had a Total Disability
Income Provision attached which was also paid-up when the plan was
changed, the TDIP will be continued on the new plan as a fully paid-up
rider.

\~ Under the USGLI program, rerated 5-Year Level Premium Term insurance
may not be exchanged for the Special Endowment at Age 96 plan.

19.02 REQUIREMENTS

a\. National Service Life **Insurance**

\(I\) Change to a higher reserve.\
(a) Present policy must be in force in premium-paying condition.\
(b) Present policy must be surrendered with all rights and claims.\
(c) An application must be submitted. .\
(d) The required amount of reserve and the first premium on the new
policy must be paid by the insured.\
(e) The insured must not be totally disabled.\
(2) Change to **a** lower reserve.\
(a) Present policy must be in force in premium-paying condition.\
(b) Present policy must be surrendered with all rights and claims.\
(c) An application must be submitted.

\(d\) A comparative health statement must be submitted if the change is
made within I year from the effective date of the policy or when less
than 90 days of such year remain after August I, I969, within 90 days of
that date.

\(e\) On and after the first anniversary of the policy, the applicant
must be in good health and must furnish satisfactory proof of same.

b\. United States Government Life Insurance

\(I\) Change to a higher reserve.\
(a) Present policy must be in force in premium-paying condition.\
(b) Present policy must be surrendered with all rights and claims.\
(c) An application must be submitted.

19-2