September 30,1977 M29-1, Part II\
Change 14

CONTENTS

CHAPTER 37. CHANGE OF PLAN (NONMEDICAL)

PARAGRAPH PAGE\
37.01 General 37-I\
37.02 Initial Processing of Applications 37-I\
37.03 System Processing of Applications 37-2\
37.04 clerical Processing of Applications 37-3\
37.05 change of Plan-TDIP 37A\
37.06 Disapproved Applications 37-5\
37.07 Withdrawal of Applications 37-5\
37.08 Paid-up Additions 37-6

37-i

September 30, 1977 M29-1, Part 11\
Change 14

CHAPTER 37. CHANGE OF PLAN (NON-MEDICAL)

37.01 GENERAL

a\. A permanent plan contract, in force under premium-paying conditions,
may be exchanged wholly or in part for any other permanent plan contract
in the same prefix series issued by the VA, with the same effective date
and based on the same age.

b\. A VA Form **29-1550,** Application for Change of Permanent Plan
(Non-Medical), may be used by the insured whenever a change of plan is
made to a policy with a higher reserve value. These applications are
generally processed by the Policy Service Section.

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 is received, the
insured must furnish a signed statement certifying that he or she is not
totally disabled.

d\. Additional rules and requirements for processing applications for
change of plan on NSLI (National Service Life Insurance) and USGLI
(United States Government Life Insurance) policies are found in M29-l,
part **I,** chapter 19.

37.02 INITIAL PROCESSING OF APPLICATIONS

a\. When VA Form **29-I 550** is received in the Policy Service Section,
the Policy Service technician will review the application to determine
if all requirements have been met.

\(l\) **Signature:** If the application is not signed, the Policy
Service technician will:

\(a\) Obtain a photocopy of the application and print SUPPLEMENTAL (in
red) in the upper right corner.

\(b\) Prepare an automatic typewriter letter or a dictated letter
advising the insured that the unsigned application has been approved and
that the enclosed copy should be signed, dated and retumed. If a
beneficiary designation and optional settlement was indicated, the
insured should also be advised that the application is not acceptable
unless the photocopy is signed, dated and returned.

**(2) Monetary Requirements:** The remittance must be sufficient to pay
the difference in reserve between the two plans and at least one monthly
premium on the new plan.

\(a\) The difference in reserve may be paid by a remittance and/or a
loan on the new contract, provided the plan being changed has been in
effect l year or more on the date the change is effected. If the amount
of reserve necessary to effect the change of plan has not been provided,
the insured **will** be requested to forward the required amount and
informed that if the amount is not tendered within 15 days from the date
of the letter, the application will be disapproved.

\(b\) The provisions of VAR regulations **3018** and 3407.2 may be
applied to the acceptance of delayed remittances when accompanied by a
premium payment. For example: If the insured submitted an application
for change of plan postmarked February **1(), 1976,** with a requested
effective date of change as December **15, 1975** and a premium payment
accompanied the application, the application should be processed on a
current basis with December 15, **1975** as the effective date of
change. This can be accomplished when the insured requested an effective
date to coincide with the next premium due date and the application was
postmarked within 61 days of the due date.

\(c\) If the payment received with the application is not sufficient to
pay the new contract to the current premium-paying month, a dictated
letter will be released advising the insured that the contract **will**
be lapsed unless the payment is received. A VA Form **29-369** (S) or
(P), Notice of Premium Due, will be prepared and enclosed.

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September 30, 1977

M29-1 , Part II

Change 14

\(3\) pending **Waiver Cases:** When the record printout contains a
pending waiver **diary,** the Policy Service technician **will:**

**(a)** Advise the insured that action on the change of plan **will** be
taken into consideration after the disability waiver decision has been
made.

\(b\) Forward the applications with the folder attached, to the
Insurance Claims Section for **a** decision concerning the application
for waiver of premiums.

\(c\) After the Insurance Claims Section has reached a decision on the
waiver **and completed** other related actions, the case **will** be
returned to the Policy Service Section to complete action on the
application for change of plan.

\(4\) Amount **of** Insurance: The insured may change **a** plan for its
entire face amount, divide the original permanent plan to more than one,
or reduce and change the plan in **a** reduced amount.

NOTE: When the original contract is split to more than one policy it
will be necessary to obtain a new policy number(s) from the
Administrative Division.

**(5) TDIP (Total Disability Income Provision):** When TDIP is
continued, discontinued or exchanged, the change of plan will be
processed by the Policy Service technician. When the TDIP is to be
added, the applications with the insurance folder will be referred to
the Medical Determination Section for processing.

**(6) disability Statement:** If the insured does not provide a
sufficient statement regarding disability, with an informal application
**a** VA Form **29-1550,** Application Change of Permanent Plan
(Nonmedical)\~ will be sent to the insured for completion of the
question, \"Are you **now** disabled?\", before the change is processed.
If the insured failed to answer this question on **a** formal
applications **a** FL **29-615, will** be sent to the insured for a
certification of health.

\(a\) When 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.

\(b\) All applications received stating the nature of the disability
**and** that the veteran is disabled, will be forwarded to the Insurance
claims Section via the Insurance Files activity for the attachment to
the insurance folder. If the insured is found totally disabled for
insurance purposes the application will be \~5approved.

(?) Applications received with entries regarding beneficiary and/or
Optional Settlement will-be processed in accordance with the procedures
outlined in chapter 15 of this manual.

\(b\) When supplemental information is necessary before approval of the
application can be made, a VA Form **29.5895a,** Pending Transaction
Input Card, or VA Form **29.8526,** Pending Transaction, transaction
type 008 or **078, will** be prepared to insert or change **a diary.**

\(c\) When all actions to complete the processing of the application or
have been completed the application or will be stamped APPROVED, signed
by the Policy Service technician and dated. The release of any input
documents **will** also be noted on the application. The effective date
of change should always be shown on all applications which are computer
processed.

37.03 SYSTEM PROCESSING OF APPLICATIONS

**a.** When it is determined that the application for change of plan is
acceptable it will be reviewed for acceptability for processing within
the system. If any of the f0flowing conditions exist, the application
for change of plan must be processed clerically:

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September 30,1977 M29-I, Part II\
Change 14

\(I\) Policy prefix is J, JR, JS, or

**(2)** Reserve value is split; i.e., part applied to loan and part to
pay premium, or part to pay premium and part to be refunded, etc.

**(3)** How paid code is **0,** l, **2, 4, 5** or **7** or the account
is on 724 waiver.

\(4\) More than two policies.

**(5)** Continuation of TDIP-age 60 rider.

**(6)** Exchange of TDIP-age **60** for TDIP-age **65,** or there is an
existing TDIP-age **65** rider.

**(7)** Master record indicates the insured is incompetent.

**(8)** TDIP optional segment how paid or next month due is different
than in the fixed policy segment.

**(9)** The amount of insurance is in excess of **\$1,000** but not in
multiples of **\$500.**

**(10)** The policy contains paid-up additions and the plan is being
changed from a limited pay life to an endowment plan; the whole life
paid-up additions are being changed to paid-up endowment additions in a
lesser amount; or changed to paid-up endowment additions in the same
amount.

**(11) An** endowment plan with paid-up additions is being changed to
another endowment plan.

1(12) Plan in master record is a **9** or **-9.**

b\. If none of the above conditions exist, a VA Form **29-8520,**
Underwriting, **will** be prepared. When this input is processed, a
transaction type **000** is automatically created, which will initiate
the system processing of a policy for the new plan of insurance, and if
appropriate, a policy for the TDIP rider, plus status, if the how paid
code in the master record is not **3** or **6,** or if the policy callup
is not **951. In** addition, the system will:

\(I\) Calculate any cash dividend overpayment.

**(2)** Establish liens.

**(3)** Adjust the paid dividend segment.

\(4\) Insert a lien letter diary message.

**(5)** Delete **972** diary message.

**(6)** Generate VA Form **29-5886b,** Insurance Record Printout, reason
code **008,** for clerical release of lien letter.

NOTE: If program logic determines that only a dividend adjustment is
necessary, the system will insert a dividend adjustment diary and
generate an RPO (record printout) for clerical processing.

37.04 CLERICAL PROCESSING OF APPLICATIONS

a\. When the system cannot process the change, the following input
documents and forms will be prepared:

\(l\) VA Form **29-328,** Underwriting Worksheet, for filing in the
insurance folder.

**(2)** VA Form **29-8522,** Policy, transaction type **022,** to effect
the policy changes.

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September 30, 1977

\(3\) VA Form 29-8523, Premium/TDIP, transaction type 053, to change
premium status, the how paid code and the mode in the master record.

NOTE: VA Form 29-8522, and VA Form 29-8523 are related inputs and must
be inserted consecutively.

\(4\) VA Form 29-8527, Accounting Control, transaction type 089, to
effect miscellaneous accounting action.

\(5\) VA Form 29-8526, Pending Transaction, transaction type 098, to
delete the pending transactions and/or diary messages.

\(6\) VA Form 29-8530, Life Miscellaneous, transaction type 000. The
policy issue code entered on this document will cause the system to
automatically issue the appropriate policy and/or status. It is
important to control the sequence of this document by completing the
sort field, to assure that it is processed after all other changes have
been completed.

b\. In addition to the above inputs, the following forms, if applicable,
will also be prepared:

\(1\) VA Form 29-8528, Paid Dividend/Dividend History, to adjust
dividends.

\(2\) VA Form 29-5934, Change of Address for Insurance Purpose, if
address change is required.

\(3\) VA Form 29-8525, Dividend/Loan/lien, transaction type 004 or 084,
to insert or make changes to the dividend credit or adjust paid-up
additions, transaction type 005 or 085 to insert or make changes to the
loan segment and/or 006 or 086 to insert or make changes to the lien
segment.

NOTE: Inserting or changing the above segments will require, as
applicable, a VA Form 294459, Dividend Deposit/Credit Statement; VA Form
29-8668, Statement of Paid-Up Additions, or a VA Form 29-1468b, Notice
of Approval of Policy Loan, and/or a Lien Letter.

\(4\) VA Form 29-8531, TDIP, transaction type 007 or 027 to insert or
change date in the \`TDIP segment in the master record. When transaction
types 007 and 027 are used, the control sort field should be completed
to assure proper sequence of inputs being processed.

\(5\) If the case is being processed in the VA Center, St. Paul and
subsequent premiums are to be deducted from VA benefit payments,
allotment from service department active or retirement pay, a VA Form
29-8522, transaction type 082 with a 951 policy callup code will be
prepared to assure that the records will be transferred, to the VA
Center, Philadelphia.

\(6\) When premiums are being paid by deduction from service pay or VA
benefit payments, action will be taken to adjust the deduction in
accordance with M29-1, part II, chapters 29 and 30.

**37.05** CHANGE OF PLAN-TDIP

a\. When an application for change of plan with TDIP is approved, the
policyholder may elect one of the following options:

\(1\) If under 60 years of age, continue the age 60 rider.

\(2\) Exchange the age 60 rider to the age 65 rider. (If the insured has
not reached his or her 55th birthday.)

\(a\) Provide for a single premium payment in accordance with VA
Pamphlet 29-23, Rev. Table l, (paid-up 20 payment life and 30 payment
life policies).

\(b\) Pay a single premium for premiums in advance to age 65 using the
discounted premium value rate (paid-up policy(ies)).

37-4

\(c\) Provide for premium payments to age 65.

**(3)** Cancel the TDIP.

b\. If the insured requests to pay the single premium rather than to
continue the monthly premiums, a letter furnishing complete information
will be released. The letter will advise the insured of the amount
required to pay the monthly premiums in advance to age 65; and a clear
cost comparison between the two methods of payment will be shown. The
insured should also be advised that although the single premium is
somewhat less than the amount necessary to pay premiums in advance, that
if total disability or death should occur before **65** years of age,
premiums which have been paid by this method are not refundable.
However, when premiums are paid in advance, any premiums paid beyond the
date of total disability or date of death are refunded.

c\. The effective date for the TDIP on the new contract will be the same
as the effective date of the provision on the old contract.

d\. The insurance age for the TDIP will be the same as the age for the
provision on the old contract.

e\. When unable to determine if the TDIP-age **60** is to be continued
or exchanged, the insured will be sent a VA Form **29-467a,**
Application for Exchange of TDIP.

f\. If TDIP is to be added at the time the plan is changed, refer to
Medical Determination Section for processing.

g\. If the insured requests that the TDIP be canceled, the following
action(s) will be taken:

**(1)** If the change of plan is being processed by the system, enter
**0** in the TDIP code block on VA Form

**29-8530,** transaction type **000.**

**(2)** If clerical action is necessary to affect the change in plan, VA
Form **29-8531,** transaction type **097,** will be prepared to delete
the TDIP segment.

37.06 DISAPPROVED APPLICATIONS

When an application for a change of plan, other than one which was
intended to continue insurance protection of a matured endowment policy,
is disapproved, the following actions will be taken:

a\. The application will be noted DISAPPROVED, the reason for
disapproval, date and the last name of the clerk taking the action. The
disapproved application will also be stamped Ready for File, and filed
in the insurance folder.

b\. The applicant will be notified of the action taken and advised of
the reason for disapproval.

37.07 WITHDRAWAL OF APPLICATIONS

When a properly signed request for withdrawal or for a plan or amount,
other than stated in the original application for change of plan, is
received in the VA, and 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.

37-5

M29-I, Part II September 30, 1977

Change 14

37.08 PAID-UP ADDITIONS

a\. When dividends are used to buy paid-up whole life additions on a
permanent plan policy and the policy is changed to another permanent
plan (other than endowment), there will be no adjustment necessary of
the paid-up whole life additions.

b\. When dividends are used to buy paid-up additions on an endowment
plan policy and the plan is changed to another endowment plan, an
adjustment in the paid-up endowment additions will be necessary. The
paid-up endowment additions may be retained in the same amount by
payment of the difference in reserve; or may be changed to paid-up
endowment additions in a lesser amount.\]

37\~ \* U. S GOVERNMENT PRINTING OFFICE : 1977 O - \~40-99z (501)