April 27, 1972 M29-1,Part II\
Change 6

CONTENTS

CHAPTER 5. RENEWAL

PARAGRAPH PAGE\
5.01 General 5-1\
5.02 Automatic Processing 5-1\
5.03 Clerical Processing 5-3\
5.04 Release of Conversion Information on W Term Insurance 5-3\
5.05 Release of Information on Exchange of USGLI Term Insurance 5-4\
5.06 Renewal of Reduced Amount of Term Insurance at the Older Ages . 5-5

5-1

February 10, 1975 M29-1, Part 11

• Change 12

CHAPTER 5. RENEWAL

5.01 GENERAL

a\. All NSLI and USGLI term policies are renewable every 5 years as
outlined in M29-I, part I, chapter 7. However, NSLI term policies with W
prefixes cannot be renewed after the policyholder\'s 50th birthday. If
the W term policy is not converted to a permanent plan before the end of
the term period in which the policyholder reaches age 50, the protection
ceases and the insurance contract expires at midnight on the last day of
that term period.

b\. The computer system automatically processes the majority of the
renewal transactions, releasing the renewal certificate, updating the
insurance master record and printing a transaction history line. The
transaction type 800, 810 or 820 printed on the transaction history line
reflects the action which was taken by the system.

These transaction codes are listed and defined in MP-6, part II,
supplement No. 1.4, chapter 2. The transaction history line also
contains the renewal premium for all modes of premium payment, the
effective date of renewal and a code indicating the type of renewal
certificate (deduction or direct pay) which was released. The codes are
80 for direct pay and **81** for deduction certificates of renewal.

c\. Automatic renewal action will not be taken by the system if there is
a policy and/or life freeze on the insurance master record. In such
cases, a **VA** Form \[29-5886b\] Insurance Record Print Out, in the RPO
reason code 800 series is generated for clerical action. The RPO reason
codes are listed and defined in MP-6, part II, supplement No. 1.4,
chapter l.

\[d. Renewal of **V,** H or K policies after age 90 and RH policies
after age 94 are at the same rates as those for the corresponding
ordinary life plan issued at the same ages. As the rates are the same
and the ordinary life plan has guaranteed values, term insurance due for
renewal after the above ages will be automatically converted to the
ordinary life plan instead of being renewed.\]

5.02 AUTOMATIC PROCESSING

a\. Direct pay accounts (how paid 9) are automatically updated on the
actual renewal date provided the premiums for the 60th month of the
current term period, which is about to expire, has been paid. \[VA Forms
29-483, Certificate of Renewal\] are system generated and released to
the mailing address of record \[for the following types of accounts:\]

\(1\) NSLI Accounts, \[other than\] W insurance prefix, \[and\]

\(2\) NSLI Accounts, \[ \] W Insurance prefix, renewal age \[50\] or
under, \[and\]

\(3\) \[USGLI\] Accounts

\(4\) and (5) \[(Deleted by change 12.)\]

b\. Allotment from \[active\] service or retired pay accounts (how paid
6) are automatically renewed in two phases:

\(l\) **Transaction Type 810.** Four months before the actual renewal
date, a **\[VA** Form 29-l588, Request for Allotment Deduction Change\]
is generated by the system and immediately released to the respective
Service Department Finance Center. \[Simultaneously, a **VA** Form
29483a, Certificate of Renewal\] is \[ \] generated and released to the
mailing address of record. \[The renewal certificate will be overprinted
with the legend WE ARE REQUESTING YOUR ALLOTMENT OFFICE TO INCREASE YOUR
DEDUCTION TO COVER THE NEW MONTHLY PREMIUM.\] In addition, the system
inserts into the \[ \] master record an\' action type 20 with an action
date l month subsequent to the actual renewal date. The action type
codes are listed and defined in MP-6, part II, supplement No. 1.4,
chapter 3. \[On multiple policy cases, the renewal certificate will be
generated and

5-1

M29-I, Part II February 10, 1975

Change 12

released to the mailing address of record. An RPO will be generated with
reason code 876 for clerical preparation of **the VA** Form 29-1588 and
forwarding to the Service Department Finance Centers.\]

**(2) Transaction Type S20.** One month after the \[ \] renewal date,
the insurance master record is automatically \[updated for renewal\],
the system restores the action type **10** and advances the action date
to 4 months prior to the next actual renewal date. If the renewal
deduction increase has not been received, a follow-up VA Form
\[29-1588\] is generated and immediately released to the respective
Service Department Finance Center. Simultaneously, the system inserts a
951 policy freeze with a 60-day callup date. If the renewal deduction
increase is received prior to the callup date, the 951 policy freeze is
automatically deleted. The deduction transaction is automatically
posted, if in order, or is inserted as a pending transaction. If the
renewal deduction is **not** received prior to the callup date, an RPO
reason code 951 is generated for clerical follow-up action and the 951
policy freeze callup date is automatically advanced by 30 days.

c\. Deduction from VA benefit accounts (how paid 3) are also
automatically renewed in two phases:

\(I\) Transaction Type 810 \[(Deduction From Benefit Cases)\] - On the
5th day of the 2d calendar month preceding the actual renewal date, a
punched card, VA Form 29-5926, Request for DFB Action, is generated by
the system. These punched cards are used to transmit the request for the
renewal deduction increase to the Hines DPC, Manila regional office and
Philadelphia VA center on the 25th day of the calendar month preceding
the effective date of the required deduction increase. In addition, the
system inserts into the insurance master record an action type 20 with
an action date 3 months subsequent to the actual renewal date.
Simultaneously, \[a VA Form 29483a is generated\] and released to the
mailing address of record \[ \]. The renewal certificates are
overprinted with the legend WE WILL INCREASE YOUR DEDUCTIONS \[TO
COVER\] THE NEW MONTHLY PREMIUM.

\(a\) and (b) \[(Deleted by change 12.)\]

\(2\) **Transaction Type 820.** Upon receipt of the renewal deduction
increase or 3 months after the actual renewal date, whichever comes
first, the insurance master record is automatically renewed. The system
restores the action type l0 and advances the action date to the 5th day
of the 2d calendar month preceding the next actual renewal date. If the
renewal deduction increase has not been received, a 951 policy freeze
with a 60-day callup date is inserted in the insurance master record and
an RPO reason code 874 is generated for clerical follow-up action. If
the renewal deduction increase is received prior to the 951 policy
freeze callup date, the deduction transaction is automatically posted,
if in order, or is inserted as a pending transaction. If the renewal
deduction increase is not received prior to the 95 l policy freeze
callup date, an RPO reason code 951 is generated for clerical action and
the callup date is automatically advanced by 30 days.

d\. Employee payroll deduction accounts (how paid 8) are automatically
renewed in the following manner:

\(1\) **Transaction Type 810 \[(Payroll Employee Cases)\] -** Four
months before the actual renewal date, \[a\] renewal \[certificate will
be\] system generated and released to the mailing address of record \[
\] - These renewal certificates are overprinted with the legend PLEASE
HAVE YOUR EMPLOYER INCREASE THE AMOUNT PAID TO THIS OFFICE BY \$
\_\_\_\_\_\_ - A duplicate copy of the renewal certificate is also
transmitted to the policyholder\'s employer. In addition, the system
inserts into the insurance master record an action type 20 with an
action date \[for\] **the** actual renewal date.

\(a\) **and** (b) \[(Deleted by change 12.)\]

\(2\) **Transaction Type 820.** \[On the\] renewal date, the insurance
master record is automatically renewed.

**The** system also restores action type 10 and advances the action date
to 4 months prior to the next actual renewal **date.**

e\. Disability waiver (how **paid** 5) and section 724 waiver (how paid
7) accounts are automatically renewed on the actual renewal date.
**\[The** computer system generates a renewal certificate on each amount
under a disability waiver and releases it to the mailing address of
record.\] The renewal certificate \[is\] overprinted with the legend
PREMIUM WAIVER WILL CONTINUE ON THE RENEWED POLICY UNTIL FURTHER NOTICE.
\[Renewal certificates *are not* released on the section 724 accounts.
These insured\'s were notified their insurance will remain

5-2

M29-1, Part II

Advance Manual Change No. 2-84 July 13, 1984

[Chapter 5]{.underline} - [Renewal]{.underline}

A. [Change:]{.underline} M29-1, Part 11, Chapter 5. This Advance Manual
Change provides\
instruct ions for inviting exchange of USGLI term insurance now\
that all \"K\" policies have been declared paid-up. VA Form\
Letter 29-646, Exchange for Endowment at Age 96, VA Form Letter\
29-692, Cost Comparison Between Term and Endowment at Age 96,\
and VA Form 29-358, Application for Exchange to Special\
Endowment at Age 96, formerly used, are no longer appropriate\
because they refer to the premium paying status of the insured.

B. [Procedure]{.underline}: Page 5-4, delete subparagraphs 5.05a and b
and substitute the following:

a\. One month before the insured\'s 65th birthday, the system generates
a Reason Code 996 RPO. Unless the RPO shows a disability waiver diary, a
letter will be released to the insured inviting him to exchange his
USGLI term insurance for Special Endowment at Age 96. The appropriate
Endowment at Age 96 exchange letter is prepared in the Policy Service
Section Office, on a case by case basis. The RPO is noted to show
release of the letter, stamped \"Ready For File,\" signed, dated, and
filed in the insurance folder.

b\. If the Reason Code 996 RPO shows a waiver diary, no letter will be
released. The RPO will be destroyed.

C. New or Revised

[Insurance Forms]{.underline}: None

ROBERT W. CAREY

Assistant Director for Insurance

[DISTRIBUTION]{.underline}:

335/29 92\
310/290 51\
310/291 111\
310/Library 1\
203/SDA 2\
CO/311D 2

May 12, 1980 M29-1, Part II\
Change 16

in force until they request termination of the waiver or at the end of
the 120-day period following separation from active duty whichever
occurs first. They were also told that it is their responsibility to
tell the VA of their separation from active duty if the section 724
waiver is in force at that time.

\[\]

5.03 CLERICAL PROCESSING

a\. When the renewal action cannot be taken automatically by the system,
an RPO in the 800 series is generated for clerical action. The RPO
reason codes are listed and defined in MP-6, part II, supplement No.
1.4, chapter 1.

b\. When it is necessary to renew the account clerically, prepare two VA
Forms 29-8530, Life/Miscellaneous, input document, transaction type 082,
to update the policy segment and transaction type 072 to change the
action type and action date. The 072 transaction type must be prepared
as a second- or third-day release.

5.04 RELEASE OF CONVERSION INFORMATION OF W TERM INSURANCE

a\. Term policies with W prefixes may not be renewed after the
policyholder\'s 50th birthday. On these term policies, a policy callup
code 869 is inserted into the system. This will cause the system to
generate an RPO reason code 869 I year before the end of the final term
period. Upon receipt of the RPO reason code 869, action is taken to
insert a policy callup code 870 into the system. This will cause the
system to generate an RPO reason code 870 3 months before the end of the
final term period. If the term policy is in force under disability
waiver (section 712-how paid 5), the system will generate an RPO reason
code 860 I month after the termination date of the final term period.

b\. Direct Pay Accounts (How Paid 9). FL 29-700 will be released to the
insured when the 869 RPO is generated, and FL 29-700a will be released
when the 870 RPO is generated. The RPO\'s, in each instance, will be
noted to reflect release of the form letter, date of release and stamped
Ready for File, and sent for filing in the insurance folders.

c\. Allotment Accounts (How Paid 6). A dictated letter will be released
containing substantially the same information contained in the FL\'s
29-700 and 29-700a. The insured will be informed that the VA will
request the adjustment of the allotment to the amount of the premium for
the plan selected. Further, in the reason code 870 letter, the insured
will be informed that discontinuance will be requested if he or she
decides not to covert. The month of discontinuance will also be
furnished. A diary message 953 W CONV LTR (MN) will be inserted with a
callup date 2 months after the end of the term period. When an RPO is
received as a result of the diary, and the insured has not applied for
conversion and the allotment is still active, a letter will be released
to the insured informing him or her that the insurance protection
terminated as of the end of the term period (quote date), and the
allotment will be discontinued as of a date that would pay premiums
through the term period. At the same time, a similar letter will be sent
to the allotment office soliciting their aid in having the W term
Insurance allotment stopped.

d\. DFB Accounts (How Paid 3). A dictated letter will be released
containing substantially the same information contained in the FL\'s
29-700 and 29-700a. The insured will be informed that VA will
automatically increase the deduction to provide for the conversion
premium for the plan of insurance selected if the compensation is
sufficient. The insured will be told that he or she should pay direct
premiums if the compensation is not enough to cover the converted
insurance premium. In the reason code 870 letter, also include the
information that the insured should immediately notify VA if he or she
does not intend to convert the insurance. A VA Form 29-5926 will be
prepared requesting discontinuance as of a date which will pay premiums
through the end of the term period, and the RPO annotated accordingly.

e\. Payroll Deduction Accounts (How Paid 8). A dictated letter will be
released containing substantially the same information contained in the
VA FL 29-700 and 29-700a. The insured will be informed to increase the
payroll deduction to provide for the plan of insurance selected. If the
insured does not intend to convert to a permanent plan, he or she should
notify VA immediately, and discontinue the payroll deduction to pay
through the last month of the term period. If the insured fails to
convert or discontinue his or her deduction after expiration of the
contract, a dictated letter will be released to the insured, advising
him or her of the termination of the W term contract.

5-3

M29-I, Part II May 12, 1980

Change 16

f\. Section 712 Waiver Accounts (How Paid 5)

\(1\) When reason codes 869 and 870 are received on a how paid 5
account, a dictated letter will be released informing the policyholder
of the requirements to convert the account by the expiration date of his
or her W term contract. A **VA** Pamphlet 29-20 will be enclosed and the
insured\'s attention will be called to the description of the available
plans of Insurance (endowments excluded). The insure **d** will also be
referred to the premium rate tables and informed that unless the
disability has been declared statutory (not subject to future review),
he or she would be required to pay premiums at the rate for the plan
selected, if at a future date he or she becomes less than totally
disabled and the waiver of premiums is terminated. The insured will also
be informed that if he or she does not convert within the specified
time, the W term contract will automatically be converted to the
Ordinary Life plan.

\(2\) When reason code 860 RPO is receive d, it will be determined
whether the insure d was notified of conversion requirements. If he or
she had not been notified, a 3l-day letter will be released giving
conversion requirements as in subparagraph (l) above. This letter will
also include a statement that he or she must convert as of the
expiration date of the W term contract, or the contract will
automatically be converted to the Ordinary Life plan. If he or she had
been notified and did not comply with requirements, the Policy Service
Section will take action to automatically convert the contract to the
Ordinary Life plan.

5.05 RELEASE OF INFORMATION ON EXCHANGE OF USGLI TERM INSURANCE

When an insured with USGLI term insurance reaches his or her 65th
birthday, he or she is eligible to apply for exchange of the term
insurance to a Special Endowment at Age 96 plan.

a\. One month before the insured\'s 65th birthday, the system generates
**a** reason code 996 RPO. FL 29-646 will be released to the insured
advising of the Special Endowment at Age **96** plan. **VA** \[Form\]
29-358a \[Application for Exchange to Special Endowment at Age 96 Plan}
will be enclosed **with this letter. The** RPO will be noted to show
release of the form letter, stamped Ready for File, signed, dated and
filed in the insurance folder.

b\. At each renewal on and after the insured\'s 65th birthday, the
system generates an RPO reason code 865. The insurance folder will be
examined to determine if the insured was previously advised within the
last 3 months, and if so, the RPO will be destroyed. If not, FL 29-692
will be released to the insured. The RPO will be noted, stamped Ready
for File, signed, dated and filed in the insurance folder.

5.06 RENEWAL OF REDUCED AMOUNT OF TERM INSURANCE AT THE OLDER AGES

Due to the sharp increase in the term insurance premiums upon renewal at
the older ages, some insureds find it financially impossible to pay the
higher premiums. When an insured, whose term insurance is subject to
renewal, informs the VA that he or she is discontinuing the insurance
because he or she cannot afford the increase in premiums, the following
actions will be taken:

a\. The amount of premiums being paid prior to the renewal will be
applied at (that} rate for the renewal age to determine the exact amount
of insurance it will purchase. **The** computed amount will be rounded
to the next higher dollar.

\[\]

5-4

M29-1, part II\
September 301977 Change 14

b\. If the TDIP (total disability income provision) is attached to the
expiring term policy, the following options of reduced coverage will be
available to the insured at the old premium rate:

\(1\) Use **the** amount **of** the combined insurance and TDIP premium
he or she has been paying on the expiring term insurance to renew
reduced insurance TDIP in equal amounts;

**(2) Drop the** TDIP and use the combined insurance and TDIP premium
that he or she has been paying to renew the insurance only. In some
cases, the combined premium being paid could buy the full face amount of
insurance, but **in most** cases it would purchase a reduced amount.

c\. **A letter will be** written informing the insured of the option(s)
available. Quote the exact amount(s), rounded to the **next dollar** of
term insurance and TDIP, if any, being paid on the expiring term policy
will -purchase **at the attained age. Advise** that he or she may
continue the amount(s) quoted for the next 5 years at the **old premium
rate, but that** subsequent renewals at the older ages will require
further reductions if he or she wants **to** continue **to** pay **the**
same premium. If TDIP is involved, the insured should be reminded of the
date on which TDIP premiums will cease, and, as appropriate, the age
after which TDIP premiums do not increase at renewal.

**The** letter should also include information about regular reduction
in multiples of \$500 to an amount not less than \$1 **,000,** and a
**VA** Form 29-339, Application for Reduction, should be enclosed.

d\. If, at any time other than in connection with renewal, the insured
informs the **VA** that he or she is discontinuing the insurance because
he or she cannot afford to pay the premiums, advise the insured that the
insurance can be reduced in multiples of \$500 to an amount not less
than \$1,000. Quote premium rates per \$1 ,000 and enclose a **VA** Form
29-339 in the letter.

e\. In all cases when corresponding with an insured concerning a
reduction of the term insurance, it should be suggested that, as a means
of avoiding future periodic premium increases, he or she should consider
converting a reduced amount of the insurance to a permanent plan. An
appropriate pamphlet should be enclosed in the letter **and** attention
called to the paragraphs concerning conversion, the permanent plans
available, and the premium rates and guaranteed values for these plans.
**A VA** Form 29-358, Application for Conversion, should also be
enclosed in the letter. \[If paid-up additions are involved, disposition
of the paid-up addition will also be requested.\]

f The insured will be given 31 days to let the **VA** know of his or her
decision and to pay any premiums required to place the account on a
current basis. In addition, a frozen 45-day diary with a 970 callup type
will be inserted in the master record with the message 690 (MO NO.,
DAY). This will be a standard diary message to indicate **that it is
an** *Insurance not desired* case and must be processed with the
insurance folder.

**g.** Upon **receipt** of **the required** information and premiums,
the proper input forms will be prepared to change the **age and reduce
the amount** of insurance.

h\. **At the end** of **the** diary period, the case will be reviewed
and if there is no indication that the insured desires **to continue
the** insurance, action will be taken to refund any credits and
authorize any unpaid dividends using the dividend **rate** for last
year\'s dividend if the current rate is not available. Any credits
and/or dividends **will be inserted** as a pending disbursement
transaction type 609. The how paid code will be changed to 1 and the
action type **to 5 with** an action date to purge the master record from
tape one day after the disbursement date. If the **insured** has another
active policy being paid direct, any credits will be transferred to that
policy unless there is **a** specific request for **refund. \[ \]**

\(1\) On deduction type accounts, \[take immediate action to have the
deduction decreased or discontinued, refund all credits and authorize
any unpaid dividends. Change the how paid code to 1, the action type to
5 and insert **the** appropriate diary in the master record.\]

**(2)** In **all** cases, if paid-up additions are involved, disposition
of the paid-up addition will be requested from the insure **d.**

5-5

M29-1, Part I

Advance Manual Change **No. 11-84** November 1, 1984

[Chapter 5]{.underline} **-** [Dividends]{.underline}

A. [Change:]{.underline} M29-1, Part **I,** Chapter 5, Paragraph 5.14.

B. [Procedure:]{.underline} Delete paragraph 5.14 (Interest Rates) in
its entirety and substitute

the following:

a\. Effective January 1, 1985, the interest earned **o** NSLI (\"V\"
Prefixed Policies) dividend credit and deposit accounts is 0 percent per
annum. The interest rates for prior years are shown in Exhibit A.

b\. Effective January 1, 1988, the interest earned on USGLI (\"K\"
Prefixed Policies) dividend credit and deposit accounts is 7.0 percent
per annum. The interest rates for prior years are shown in Exhibit B.

c\. Effective January 1, 1988, the interest earned on dividend credit
and deposit accounts on \"RS\" and \"w\" prefixed policies is

7 [\~\~]{.underline} percent per annum. The interest rates for prior
years are shown in Exhibit C.

d\. Effective January 1, 1988 the interest earned on dividend credit and
deposit accounts on policies prefixed in the \"J\" series is

9\. \~ 9.50 percent per annum. The interest rates for prior years are
shown in Exhibit D.

C. New or Revised

[Insurance Forms]{.underline}: **None**

**Y** \`,\`-.\~\~ \~\~5

Assistant Director for Insurance

[DISTRIBUTION]{.underline}:

335/29 85\
310/290 50\
310/291 137\
310/Library 1\
203/SDA 2\
CO/311D 2

EXHIBIT **A.** INTEREST RATE CHART

([NSLI)]{.underline} \"[V\" PREFIXED POLICIES]{.underline})

Percentage

[Period]{.underline} [Rate]{.underline}

Prior to the 1965 Policy Anniversary Date 3\
1965 Policy Anniversary Date through December 18, 1967 . 3 **1/4\
**December 19, 1967 December 31, 1970 **4\
**January 1, 1971 December 26, 1971 **4 1/4\
**December 27, 1971 - December 31, 1974 4 1/2\
January 1, 1975 December 31, 1975 **4 3/4\
**January 1, 1976 - December 31, 1977 5\
January 1, 1978 - December 31, 1978 5 1/2\
January 1, 1979 -December 31, 1979 5 3/4\
January 1, 1980 December 31, 1980 6 3/4\
January 1, 1981 - December 31, 1981 7\
January 1, 1982 - December 31, 1982 7 3/4\
January 1, 1983 - December 31, 1983

January 1, 1984 - December 31, 1984 8 1/2\
/ ,

EXHIBIT B. INTEREST RATE CHART

([USGLI)]{.underline} \"[K\" PREFIXED POLICIES]{.underline})

Percentage

[Period]{.underline} [Rate]{.underline}

Prior to December 19, 1967 3 1/2

December 19, 1967 - December 26, 1971 **4\
**December 27, 1971 - December 31, 1974 **4 1/4**

January 1, 1975 - December 31, 1975 **4** 1/2\
January 1, 1976 - December 31, 1977 **4 3/4\
**January 1, 1978 - December 31, 1978 5 1/4\
January 1, 1979 - December 31, 1979 5 3/4\
January 1, 1980 - December 31, 1980 6 3/4\
January 1, 1981 December 31, 1981 6 3/4\
January 1, 1982 December 31, 1982 7\
January 1, 1983 - December 31, 1983\
January 1, 1984 December 31, 1984\
, ,

EXHIBIT C. INTEREST RATE CHART

([\"\"RS\" AND]{.underline} \"[W\" PREFIXED POLICIES]{.underline})

Percentage

[Period]{.underline} [Rate]{.underline}

January 1, 1979 **-** December 31, 1979 5 3/4

January 1, 1980 December 31, 1980 6 1/4\
January 1,1981 - December 31, 1981 6 1/2

January 1, 1982 - December 31, 1982 7\
January 1, 1983 December 31, 1983 7 1/4\
January 1, 1984 December 31, 1984 7 3/4\
- , 1985

EXHIBIT D. INTEREST RATE CHART ([\"\`J, JR, JS\" PREFIXED
POLICIES]{.underline})

Percentage

[Period]{.underline} [Rate]{.underline}

January 1, 1980 December 31, 1980 7 **1/4\
**January 1, 1981 - December 31, 1981 7 1/2\
January 1, 1982 - December 31, 1982 8\
January 1, 1983 - December 31, 1983 8 1/2\
January 1, 1984 - December 31, 1984 9\
. 1985 9, 1/2