January 14, 1974 M29-I, Part II\
Change 11

CONTENTS

CHAPTER 15. BENEFICIARY AND OPTION DESIGNATIONS

PARAGRAPH PAGE\
15.01 General 15-I\
\`1 5.02 Initial Processing by Policy Service Clerks 1 5-2\
15.03 Additional Processing by Policy Service Clerks 15-4\
15.04 Processing Irregularities 15-5\
15.05 Designations Not To Be Entered 15-7\
15.06 Supplemental Procedures Involving Incompetents l 5-8\
15.07 Miscellaneous Information 15-9\
15.08 Disapproved Applications Containing B&O Designation 15-10\
15.09 Application for Cash Surrender Value and Maturing Endowment 15-10\
15.10 Optional Settlement Clauses-Defimtions 15-10a\
15.11 Microfilming 15-10a\
15.12 Processing Beneficiary Designation on Matured Endowment 15-12\
15.13 Obtaining B&O on Replacement Insurance 15-12

15-j

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

CHAPTER 15. BENEFICIARY AND OPTION DESIGNATIONS

15.01 GENERAL

a\. Most designations or changes of beneficiaries and/or selection of
optional settlement are received on VA Form 29-336, Designation of
Beneficiary and Optional Settlement. However, many others are received
and/or \[are\] a part of other insurance forms. B&O designations
received on, or as a part of other forms, are categorized as a formal
designation. Informal requests for B&O designations are those received
in writing over the signature of ilk insured and, provided the
insured\'s intentions are clearly stated, are also acceptable.

b\. All B&O designations that are a part of, or accompany any medical
underwriting actions requiring the attention of a **Lay** Medical
Approver, will be controlled and processed in the Medical Determination
Section. All others will be processed in the Policy Service Sections.

c and d. (Deleted.)

e\. B&O designations, both formal and informal, will be received in the
Policy Service Sections accompanied by matching VA Forms 29-5886b,
Insurance Record Printout. when multiple actions are indicated in
connection with any B&O designations, and the insurance folder is needed
to complete the other actions involved, none of the material will be
separated.

**The** priority of routing will be to the Policy Service Section via
the \[Insurance Files Section\], and then to the operating element
having responsibility for the additional processing.

f\. Disbursement actions such as refunds, dividends, loans and cash
surrenders, will take priority over B&O changes.

g\. All acceptable B&O designations are microfilmed for security
purposes. Each microfilm reel is identified by a five-digit number, the
first three of which represent the reel number which corresponds to the
processing day number within a calendar year (I through 365; 366 for
leap year). The final two numbers represent the last two digits of the
processing year. This reel number is entered in ilk master record and
appears in flu policy segment of all RPO\'s. Whenever a reel number of
00000 appears on an RPO, it is an indication that no B&O designation has
been recorded since ilk security program commenced in late 1958.

h\. The procedures for handling B&O designations apply whether the forms
are processed in the Medical Determination or the Policy Service
Section.

i\. B&O designations for RH TEMPORARY MASTER RECORDS will not be
processed until the insurance is issued.

15.02 INITIAL PROCESSING BY POLICY SERVICE TECHNICIANS

The B&O designations will be reviewed to insure the following:

a\. That each designation is properly signed; initials and surname are
sufficient. The name represented by the signature must correspond with
the name of the insured appearing on the RPO (record printout).

b\. The designation of beneficiary and selection of option should be
sufficiently clear to provide no difficulties in effecting settlement
should a claim arise. (See M29-I, pt. I, ch. 26.)

c\. The basic B&O designation, VA Form 29-336, is a two-part form, the
second part of which, after processing, is retumed to the insured for
his or her records. Other VA forms on which B&O designations are made do
not provide a copy for this purpose. Therefore, all B&O designations
that are made on forms other than a VA Form 29-336 must be photocopied
to provide a copy to be returned to the insured. Processing will not be
initiated by a Policy Service technician unless a

[A]{.underline}- duplicate copy accompanies the original. It is the
responsibility of the designated \[technician\] to provide a photocopy
of all

\~ formal B&O designations that are received without a duplicate copy.\
d. The initial examination should determine that the policies to which
B&O designations are applicable are properly

15-I

M29-I, Part II May 12, 1980

Change 16

identified. If tile RPO indicates that the insured has only a single
policy in **force, all** B&O designations, whether formal or informal
will be identified with both the file and policy numbers plus
identifying prefixes of both. If more than one policy is in force, and
the insured clearly indicates that a B&O designation applies to all
policies in force, all applicable policy numbers and corresponding
prefixes plus flu file number and prefix will be entered on flu
applicable designation(s). Ml file and/or policy number identification
not entered by an insured, but supplied instead by a Policy Service
technician will be entered in red on the designation. When file and
policy number identification is supplied by the \[local\] Index Unit,
care must be exercised to ascertain that the numbers (usually penciled
notations) apply to the B&O designation(s) being processed. If this
determination is affirmative, the numbers supplied by the \[local\]
Index Unit will be entered or traced in red, as applicable. When
multiple policies exist, a clear indication that a B&O designation
applies to all policies in **force** will **be** assumed in those
instances when the insured indicates one of the following:

\(I\) Correspondence by itself or accompanying an application implies
that the designation is applicable to all contracts. The word ALL in the
column entitled, Share to Each or Amount to Each, is insufficient for
ills **purpose** unless the insured supplies the identification for all
active policies on flu B&O designation.

\(2\) A B&O designation is acceptable if the Share to Each or Amount to
Each column contains an amount or amounts (in lieu of fractions or
decimals), the total of which equals the full amount of insurance in
force.

\(3\) If the insured does not submit a form for each policy in force but
completes item 2 or 3 on the VA Form 29-336 for one of the active
accounts, process the request. \[An FL 29-727 will be prepared to invite
a change to the additional policies.\] Complete items 2 and 3 of VA Form
29-336 for each additional active account and attach to \[FL 29-727\]
for release to the **insured.** In the lower right corner of the
designation processed, enter \"VA Form 29-336 \[released\] for policy
number

\(4\) When more than one VA Form 29-336 is received and no number or the
same number is shown in block 3 of all of the forms, the following
action will be taken:

\(a\) If the number of VA Forms 29-336 received is the same as the
number of active policies and the designations on all the forms are the
same, they will be accepted, if otherwise in order.

\(b\) ,If the number of VA Forms 29-336 received is not flu same as the
number of active policies, or if the designations on an the forms are
not flu same, a new VA Form 29-336 for each active policy, showing the
file number in block 2 and the policy number in block 3, will be sent to
the insured requesting clarification of his or **her** intent.

*NOTE: As a* result of the special B&O mailings, *when a VA* Form
*29-336* is released for each policy *in* separate envelopes, some
insureds occasionally return the completed forms *in* separate envelopes
and they *are not* always received *\[at the* same time. *FL 29-727\]*
will not be released upon receipt of a single *VA* Form *29-336* with a
cut corner and the insured has more than one policy.

e\. When B&O designations are accompanied by RPO\'s representing pending
RH issues which are identified by the legend, Temporary Master Record,
the Policy Service technician will requisition the folder and file the
designation therein. The designation will be processed by a Lay Medical
Approver if and when the insurance is issued.

f\. When a B&O designation is received with an insurance folder and
without an accompanying RPO, the folder will be examined to determine if
there is insurance in force that would require the establishment of an
insurance master record.

15-2

y

M29-1, Part II

Advance Manual Change N November 10, 1982

[Chapter 15]{.underline} - [Beneficiary and Option
Designations]{.underline}

A. [Change:]{.underline} M29-1, Part II, Chapter 15.

B. [Procedure]{.underline}: 1. Add ??Note?? before paragraph 15.02d as
follows:

Note: The latest revision of VA Form 29-336 (June 82) cancels all prior
beneficiary and option selections, and unless indicated in item #5 on
the form, this designation applies to all Government life insurance
policies under that file number. Other B&O Designations, both formal and
informal, will continue to be processed as outlined in paragraph
15.()2d.

2, Paragraph 15.02d, after the first sentence add the following:

(Where the new revision of VA Form 29-336 (June 82) is used, the
designation will apply to all policies, unless the insured indicates
which policy or policies it is intended for.)

C. New or Revised

[Insurance Forms]{.underline}: None

ROBERT W. CAREY

Assistant Director for Insurance

[DISTRIBUTION]{.underline}:

335/29 80\
310/290 45\
310/291 191\
310/Library 1\
244C 10

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

NOTE: A contract on extended insurance that has not expired is
considered insurance in force.

**(1)** If it is determined that a master record should be inserted an
attempt will be made to obtain an **RPO. If** the input document rejects
because it failed to match an item on the master record, the input
documents necessary to establish **a** master record on tape will be
prepared. The **B&O** designation will be inserted at the same time and
the folder returned to file.

\(2\) If the review of an insurance folder discloses that a **B&O**
designation applies to a USGLI (United States **Government Life**
Insurance) contract that has matured because of permanent and total
disability, the designation will be processed as any other designation.
Additionally, a VA Form 3230, Reference slip \[will be prepared
showing\] the insured\'s full name, file and policy numbers (including
prefix) and the security reel number. The VA Form 3230 will be forwarded
to the Operations and Input Section, Finance and Data Processing
Division, for the preparation of **VA** Form 24-8223, Award Policy Input
Card #2-ADP, to update the Insurance Awards master record.

\(3\) If the review of an insurance folder discloses that the
designation applies to a matured endowment or to a cash surrendered
contract, payable in monthly installments, the designation will be
examined to determine its acceptability. The insured may only elect that
the present value of any remaining unpaid guaranteed installments upon
his **or** her death be paid to the beneficiary in one sum or continue
to be paid under the option originally selected for payment of the
endowment or cash surrender proceeds. If any other optional mode of
settlement is selected or if the designation is not clear, a statement
will be prepared on bond paper \[with a\] tissue copy for the **folder**
and forwarded **to** the insured for \[ J completion and signature. The
heading will be in capital letters; i.e.:

NATIONAL SERVICE LIFE INSURANCE DESIGNATION OF BENEFICIARY-MATURED ENDOW

MENT or CASH SURRENDER).

Six spaces below the heading will be typed:

I, **the** undersigned, under (endowment or cash surrendered) policy no.
, the proceeds of which **I have** elected **to** receive in ( monthly
installments or as a refund life income), elect that any remaining
installments **due** or **to** become due at my death shall be payable
as follows: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**A** copy of the incomplete or inadequate designation will be enclosed
with the letter. A **B/O** reel number will be assigned and the
designation will be photocopied. Additionally, a **VA** Form 3230 will
be prepared as outlined in subparagraph (2) above.

\(4\) If a review of the insurance folder discloses that there is no
insurance in force, the B&O designation will be filed in the folder
without additional processing. The insured will be advised by letter
that there is **no** insurance in force and that no action has been
taken on the B&O designation. If any of the insured\'s contracts are
eligible for reinstatement, he or she should be advised of the
reinstatement requirements. Reinstatement requirements should not be
included if the folder discloses evidence of a medical rejection. An
opinion will be obtained from a **Lay** Medical Approver as to whether
or not reinstatement requirements should be furnished.

**g.** In all instances, when reviewing a **B&O** designation and
sufficient clarity is lacking, or the designation is incomplete or
illegible, it will be processed as outlined in paragraph l 5.04.

15.03 ADDITIONAL PROCESSING BY POLICY SERVICE TECHNICIANS

**a.** Upon verification that **B&O** designations meet the conditions
outlined in paragraph 15.02, the Policy Service technicians will
initiate additional processing as follows:

**(1) All** acceptable **B&O** designations submitted **on VA** Forms
29-336 will be completed by entering the current **B&O** security reel
number in the item captioned **FOR VA USE ONLY** which is located in the
upper right **portion of** the form. Additionally, the Policy Service
technician will enter his or her signature and the current

• date on the bottom portion of the form in the spaces provided.\[.\[\]

IS-3

M29-I, Part II September 30, 1977

change 14

\(2\) Acceptable B&O designations that are submitted on other VA forms
will be completed by superimposing an *APPROVED* stamp to which will be
added the signature of the Policy Service technician and the current
date. This stamp serves as an indication that actions related to the
basic form or application have also been approved. The B&O security reel
number will be entered in any available clear space in the upper right
portion of the form, preferably in the item captioned For Use of VA
Index.

\(3\) Acceptable informal \[B&O designations\] will be completed by
superimposing \[an INFORMAL B&OJ stamp \[ \] to which will be added the
\[current date and initials\] of the Policy Service technician. The
current B&O security reel number will be entered on \[the B&O
designation J in the upper right portion of the correspondence. \[No
development will be taken for clarity or to obtain missing information.
Instead, a VA Form 29-336, will be sent to the veteran. The Policy
Service technician will enter the insured\'s name, address, full number
and full policy number on the VA Form 29-336, before releasing. In
addition, VA Form 29-8769, Important Notice-Regarding Receipt of
Informal B&O Designation, will be attached to the lower part of VA Form
29-336. A copy of the acceptable designation will not be mailed to the
veteran.\]

\(4\) The RPO\'s accompanying the B&O designations will be used as
source documents, whenever possible, for preparing the input required to
enter the B&O reel numbers in the master record. \[ \] VA Form 29-5934,
Change of Address for Insurance Purposes, will be used to insert the
change of address and/or social security number. Whenever the RPO is
required for some other action and cannot be used as a source document,
the necessary input documents will be prepared. Extreme care should be
exercised when processing B&O designations on multiple-policy cases to
insure that the correct RPO is selected for updating the master record.
\[ J When a single designation is applicable to more than one policy,
the RPO\'s (or other input documents) representing all the policies to
which the designation is applicable, should be processed.

b\. The originals of all B&O designations will be stamped Ready for File
and accumulated by a general clerk who has the responsibility for
batching them for delivery to personnel in charge of the \[security\]
microfilm operation. The duplicate copy of all *\[FORMAL\]* B&O
designations will be released for mailing to the insureds. \[ \]

15A

\~\~9-l, Part II

Advance Manual Change No. **6-80 November** 24, 1980

A. [Issue Affected]{.underline}: \~\~9-l, Part II.

B. [Purpose]{.underline}: **To revise procedure** when trustee is named
as beneficiary without **a** statement that **the** VA has no liability
to see that the trustee properly disburses the proceeds.

C. [Text]{.underline}: Page 15-5 - Delete paragraph 15.O4f and
substitute the following:

l5.O4f

\`1\"When a trustee is named as beneficiary, the designation will be
accepted without any development, **even if it** does not contain a
statement that the VA has **no** liability as to how the trustee
disburses the proceeds.\"

D. New or Revised

[Insurance Forms]{.underline}: Form Letter 29-727

BERT W. CAREY

Assistant Director or Insurance

[DISTRIBUTION]{.underline}:

335/29 120\
310/291 203\
310/290 45\
Library 1\
244C 10

j/N

p

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

c\. The RPO\'s which will serve as source documents will be controlled
and batched at a central point throughout flu day and forwarded to the
DPC for the preparation of input documents. Input documents prepared by
Policy Service technicians will be similarly controlled.

d\. All completed designations will be batched, prominently identified
as B&O designations, and delivered on a daily basis to the
Administrative Division. A high priority will be established for
associating and filing these designations in the insurance folders.
\[When\] , a folder for an active account has been retired to a Federal
records center, the processed designation will be used as authority to
reactivate the folder.

15.04 PROCESSING IRREGULARITIES

a\. Any B&O designation that fails to comply with M29- I, part I,
chapter 26, that lacks clarity; that is incomplete or -illegible; or
fails to comply with the guidelines outlined in this chapter, will be
considered an irregularity and will require communicating or
corresponding with the insured. In most instances, deficiencies with
respect to missing information and incomplete or unacceptable
designations, can be clarified by use of (FL 29-727.\] When this letter
is \[ J unsuitable, a dictated or **\[AT** (automatic typewriter)\]
letter may be used. \[The latest edition of\] VA Form 29-336 \[ \]
should be enclosed with flu letter. The B&O designations will be entered
and become a part of the permanent insurance records after processing
(microfilming, etc.). In these cases, the duplicate copy will be mailed
to the insured with the \[FL 29-727\] and the \[ \] VA **Form** 29-336.

b\. When a designation cannot be **made** a matter of record because it
is unsigned, it will be returned to the insured with a letter of
explanation. If there are other discrepancies on the designation, the
letter will also explain them to the insured. When appropriate, a VA
Form 29-336 will be enclosed for the use of the insured. The designation
will not be processed nor a diary established for followup purposes.

c\. and d. (Deleted.)

e\. When a designation contains two or more principal or two or more
contingent beneficiaries and the survivorship clause is not shown,
clarification will be requested from the insured.

*NOTE:* Clarification will not be required in those cases when *the*
designation appears on a form which explains how *the* proceeds will be
paid in the event the survivorship clause is not included.

f\. When a trustee is named as beneficiary, the designation should
identify flu trust and include a statement that flu insured acknowledges
that the Veterans Administration has no liability to see to flu
application of flu proceeds of \[U.S.\] Government Life Insurance by ilk
trustee to the fulfillment of the purpose of the trust. If the
designation does not include the statement, a VA Form 29-336 will be
prepared showing the statement and released to the insured **with** a
request for his \[or her\] signature.

\(I\) The insured may designate a trustee as beneficiary by Last Will
and Testament without specific naming of such trustee in the beneficiary
document in his \[or her\] insurance records. Under these circumstances,
flu insured will be asked to complete, sign and return a VA Form 29-336
on which the following statement has been typed in the principal or
contingent block, as applicable:

l designate as (principal) (contingent) beneficiary the trustee named
under my Last Will and Testament; however, if evidence satisfactory to
the Veterans Administration is furnished that no trustee can qualify to
receive the proceeds, payment shall be made to my estate.

The insured will be informed he is limited in his \[or her\] selection
of optional settlement to Options l and 2.

\_\_\_\_ (2) If the insured submits a Standard Bank Trustee form which
states it is approved by The American Bankers Association and it is
properly completed, it will be accepted as a designation of beneficiary
and election of optional settlement. The Policy Service \[technician\]
will enter ilk designation by dating and signing the bottom portion of
the form in the spaces provided. After processing is completed, the
duplicate of the form, or a photocopy if an original only is received,
**will** be

15-5

M29-I, Part II May 12, 1980

change 16

**released to** the **insured or to the bank if** it **is clear** from
the correspondence received from the bank that the bank is representing
the **insured.**

**g.** If **a** contingent **beneficiary was** not named, ilk insured
will be requested to complete another VA Form 29-336, if he **\[or she\]
desired to do so.**

*NOTE:* This action will not be taken if *the* insured completed a form
which contained the information that if no contingent is named, it will
be assumed that none is desired.

h\. **\[If\]** Option 2 is **selected and ilk number** of installments
**are** not shown, clarification will be requested.

*NOTE: If the* form contains the statement that the beneficiary may
choose payment over a period of *36* to *240* months, when *the* number
of months was not indicated by the insured, clarification will not be
required.

i\. **lf more than one** principal **or more than** one contingent
beneficiary is shown and the share to each is not shown, the

**case will be further developed. However, if** the **phrase** SHARE
EQUALLY or SHARE AND SHARE ALIKE is added to the

designation, development is not necessary.

**j. When the designation provides** that the **proceeds** of **the**
insurance be withheld until the beneficiary(ies) reaches **a** given
**age, the insured** will **be informed that the VA** cannot withhold
payments under these conditions.

k\. A **beneficiary\'s** own first **name should be** shown on a
designation of beneficiary. If it is not shown, the insured will be
**requested** to furnish **the name(s). If** the **beneficiary\'s
address is** not shown, no further development is necessary.

**l. Relationship of flu beneficiary to flu insured** should **be**
shown for identification at the time of a claim. If relationship is not
shown, **it** will **be requested,** except when **the** beneficiary
named is a firm, corporation or legal entity.

**m.** If the insured has more **than one** contract **and submits** a
**VA** Form 29-336 for one policy only, he \[or she\] will be **sent a
VA Form 29-336 for each of the active** contracts. **(See** NOTE in par.
I5.02d for exception.)

**n. The insured may provide that settlement should** not **be made** to
**a** beneficiary unless flu beneficiary survives the insured **by a
given number of days (Common Disaster** Clause). In such cases the
designated period cannot exceed 30 calendar days. If **more** than 30
**days are requested,** the **insured** will **be** informed of the
restriction and requested to complete another VA Form 29-336.

o\. **Since** the **VA** cannot **be responsible for** how the proceeds
**of flu** insurance will be used after payment has been made **to the
beneficiary,** any reference to **such a statement** on **a**
designation should be brought to the attention of the insured. He **\[or
she\]** will be **requested to complete another form,** omitting such
reference.

p\. No development is necessary if the signature and/or address of a
witness is missing.

q\. When an **inquiry or a designation of beneficiary is received** in
which the insured has indicated that the purpose of the inquiry or
**change** is to **comply** with **a court order** prohibiting or
directing a change of beneficiary a letter will be sent to the
**insured. He \[or she\]** will **be advised that under** the **law**
and the policy provisions, an insured \[may not\] divest himself \[or
**herself\] of ilk** ownership of **a** policy, **nor can he \[or**
she\] make **a** irrevocable beneficiary designation. The insured at all
times has the **right** to **change ilk beneficiary of a Government life
insurance** policy without the consent of such beneficiary even though
he **\[or she\] has entered into an agreement** not to do **so.**

15-6

February 13, 1979 M29-I, Part II

A Change 15

r\. If the insured submits a VA Form 29-336 with Option **l** preprinted
on the form and enters a different option without deleting the
preprinted **l,** \[or\] if a form is received with additional words,
marks or accompanying evidence that makes the intent of the insured as
to the option \[selected\] questionable, it will be necessary to clarify
the designation. \[If, during routine review of an insurance folder, the
option selected on the latest beneficiary designation is questionable, a
letter will be released requesting clarification.\]

s\. when a copy of a previously accepted beneficiary designation is used
to request a change of beneficiary and/or option, it will not be
accepted unless each change is clearly initialed or otherwise marked to
indicate it is the act of the insured and the copy is redated. A VA Form
29-336 will be released with a request that the insured complete, sign
and return the form to confirm the change.

t\. Whenever the insured designates the beneficiary as SAME AS PRIOR
DESIGNATION, the RPO will be examined for a B&O reel number. If the RPO
does not have a B&O reel number, the insurance folder will be requested.
If there is no record in the folder of an acceptable designation of
beneficiary and optional settlement, a VA Fond 29-336 will be sent to
the insured with a request that the designation be restated.

u\. When a modified life policy with disability waiver in force is
automatically reduced and a replacement policy is issued, a VA Form
29-336 will be enclosed with the new policy. The insured will be
requested to designate a beneficiary and optional settlement for the new
policy. If the reply indicates that the current designation on the
modified life policy applies to the replacement insurance, the statement
will be filed in his or her insurance folder.

v\. When a beneficiary and option designation is submitted by a
fiduciary or the intent of the insured is not clear, it will be
forwarded to the Chief of the Insurance Death Claims Section by the
Policy Service Section supervisor (or designee) after it has been
assigned a reel number and microfilmed. A VA Form 3230, Reference Slip,
will be prepared for review by the chief of the Death Claims Section.

(\]VOTE: Enter tile policy and reel numbers on the VA Form 3230.)

**(l)** lf after review by the Chief of the Death Claims Section, the
designation is found to be ACCEPTABLE, it will be noted ACCEPTABLE,
signed and dated. The original copy will be forwarded for filing in the
insurance folder and the duplicate released to the insured.

\(2\) If the designation is not acceptable, a letter will be released
stating the reason why the designation is not acceptable or why
clarification is required. A new VA Form 29-336 will be furnished. The
original copy of the designation will be forwarded for filing in the
insurance folder and the duplicate copy destroyed. No followup action
will be taken.

15.05 DESIGNATIONS NOT TO BE ENTERED

a\. when a form or letter containing a beneficiary designation is not
acceptable, the insured will be advised that it is not complete or
clear, and will be told how to correct the matter. Stamps, notations or
other entries as to nonacceptance will not be placed on the document,
except as provided for in paragraph 15.06a. when applicable, VA Form
29-336 will be partially prepared showing the name, address, file and
policy numbers. No attempt will be made to inform the insured how the
insurance proceeds will be paid in the absence of further action by the
insured. If the insured refuses to take corrective action, insisting
that the designation be recorded as presented, it will be *ENTERED.* The
insured will be informed that it has been recorded as submitted, but
because of the objectionable feature(s) which were brought to his or her
attention, that delay and even possible litigation may result at the
time of claim.

b\. When a designation of change of beneficiary is submitted which is
suggestive of an assignment, a letter will be sent to the insured
advising that the proceeds of a Government life insurance contract are
not assignable by the insured. The insured will be further advised that
since the designation or change is questionable, he or she should
furnish a statement informing the VA of the purpose and circumstances
under which the designation was made. The case will be diaried for 1 5
days.

15-7

M29-I, Part II February 13, 1979

changes 15

*NOTE: An* insured\'s motive for a beneficiary designation *change is
not questionable* as *an improper* assignment in the absence of language
indicating an attempt to restrict *the* right to execute *any* later
changes in beneficiary designation an insured might choose to make.
Individual cases should be reviewed by *the* Chief Death Claims Section
*(295)* to determine if a questionable change constitutes *an* attempt
to prevent a later change or merely states insured\'s motive for the
change.

\(I\) If the insured fails to reply to the VA letter, the request will
not **be** entered or microfilmed. It will remain in the folder for
consideration if and when a claim is filed.

\(2\) If a reply is received and the information is inadequate to make a
determination as to whether the designation **is** an assignment, and/or
the insured insists that the designation be recorded, the request will
be *ENTERED* and the insured informed that the request as submitted, has
been made a matter of record. He or she will be further informed that
this action does not imply acceptance of the designation and that its
validity may be subject to further proof when the insurance becomes a
claim.

\(3\) When flu insured states that the designation is an assignment, or
when the information furnished discloses that it is an assignment, the
request will not be *ENTERED. A* letter will be sent telling the insured
that since the proceeds of the policy are not to be assigned, the
request for a change of beneficiary is not acceptable. A VA Form 29-336
will be released with the letter.

c\. If an estate is shown as beneficiary, payment must be made under
Option I. If any other option is selected, the designation will not be
entered. The insured will be advised that an installment option is not
available when an estate is named. VA Form 29-336 will be enclosed.

d\. Payment of insurance under Option 3 or 4 is prohibited in the case
of beneficiaries who are not persons or who are acting as trustees. When
this condition is present, the designation will not be entered. The
insured will be requested to select another option. VA Form 29-336 will
be enclosed.

e\. Options 3 and 4 may not be selected if a trustee is named principal
beneficiary. If this condition exists, a VA Form 29-336 will be sent to
the insured requesting he or she to select Option l or 2. However, a
contingent beneficiary may, as trustee, receive the remaining
installments under Options 3 and 4 if the principal beneficiary survives
the insured but dies before receiving all guaranteed installments.

f\. A designation or change of beneficiary and/or option submitted by a
person having a general power of attorney is not acceptable. The
designation will not be entered unless it is accompanied by a properly
executed power of attorney specifically designating or changing the
beneficiary. If the request is not acceptable, the person submitting the
request will be advised that the insured must complete a VA Form 29-336
or grant another power of attorney specifically authorizing the desired
designation.

g\. If restrictions are imposed, such as marriage, education,
employment, residence, etc., the designation will not be entered. The
insured will be advised that the VA may not accept any designations of
beneficiary which include such restrictions on the eligibility of the
beneficiary to receive payment. He or she may provide in a trust
agreement that a beneficiary receive all or a share of the insurance
proceeds if the beneficiary meets certain restrictions: however, the VA
will not be responsible for the execution of the terms of the agreement
and a statement to that effect must be included in such a designation. A
VA Form 29-336 will be enclosed with the letter to the insured.

15.06 SUPPLEMENTAL PROCEDURES INVOLVING INCOMPETENTS

a\. A request for designation or change of beneficiary and optional
settlement for an insured who is shown to be mentally incompetent will
be entered and acknowledged. A duplicate or photocopy of the request
will not be released. The notation, *MENTALLY INCOMPETENT,* will be
entered in the left margin of the form or request. In addition, an
attempt will be made to obtain evidence of the insured\'s testamentary
capacity to make or change a beneficiary and/or optional settlement.

15-8

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

**(1) When the insured is a** patient at a VA hospital and a statement
as to his or her testamentary capacity **does** not accompany the change
of beneficiary, a letter will be sent to the hospital requesting a
statement from the **ward** physician attesting to the insured\'s
testamentary capacity at the time the change was signed.

\(2\) If the insured **is** under guardianship and **is** not in a VA
hospital, the fiduciary will be contacted **and** apprised of the fact
that the insured is attempting to change **his or** her beneficiary
and/or optional settlement. The **guardian** will be further advised
that a statement from the insured\'s physician, attesting to the
testamentary capacity of the veteran, would be helpful in determining
the **correct** beneficiary at the time the insurance becomes **a**
claim.

**(3) When** in the development of these cases, a physician positively
states that the insured did **or did** not have testamentary capacity at
the time the designation or change of beneficiary was made, the evidence
may be filed without its referral to **the** underwriting medical
consultant. However, if examination of the information received in
conjunction with the evidence of **record does** not satisfactorily
resolve the **issue,** the folder will be referred to the medical
consultant for an opinion. The medical consultant will consider all of
**the** available evidence. He or she **will** then **express** an
opinion as to whether or not the insured understands the nature of
**his** or her act and will complete VA Form 29482, Request for Medical
Opinion, accordingly. If the medical consultant cannot determine the
insured\'s mental capacity, or when no evidence is submitted, **a**
determination will be made when **the insured is rated** competent, or
at the time of a claim.

May 12, 1980 M29-I, Part 11\
Change 16

\(4\) If the records disclose that the **insured requested a change** of
**beneficiary and/or** optional settlement while mentally incompetent
and was thereafter rated competent **and has** not submitted another
request since restoration to competency, a VA Form 29-336 will be sent
to \[the **insured\] for completion.**

**b.** If the insured does not have **a** fiduciary and the rating of
incompetency **has** not been removed and evidence is received which
indicates that lie or she may be competent; **i.e., is working or there
has been** a material improvement in the mental condition, the folder
**will be sent** to ilk Insurance Claims Section for **a** determination
**as** to whether the insured can be held as competent.

c\. Determination involving the testamentary capacity **and/or
competency of** the insured will not be made in those cases in which the
insured periodically submits **a B&O change. In** such **cases,** the
change of beneficiary will only be entered and acknowledged.

d\. Generally, a guardian of an insured who has been adjudged
incompetent **may** not make an original designation or a change of
beneficiary or optional settlement for the insured. However, there have
been decisions to the contrary depending upon the circumstances in the
case, the State statutes involved, **and** who was designated
beneficiary by the guardian with the approval of the State court.
Therefore, the VA will not pass upon **validity** of **such a**
beneficiary designation at the time it is made.

\(l\) When **a** guardian submits a designation **or change of
beneficiary for an** incompetent insured, the request will be assigned a
B&O reel number and microfilmed **for** security **purposes. It** will
not be **entered** and photocopies or duplicates will not be sent to ilk
guardian. Instead, the guardian will **be advised** that the **request
has** been made a matter of record, and that the validity of the request
will be determined when **a** claim **for flu insurance is filed. This**
procedure will be followed even though the request for change is
accompanied by **a** court **order directing** such change.

\(2\) When **a** guardian is joined by **the** insured in the completion
**of the request and** submits evidence as to the testamentary capacity
of the insured, the procedure in paragraph I5.03a(3) will be followed.
**If** no evidence of testamentary capacity is furnished, the guardian
will be advised to have the insured complete **a** request **for**
change of beneficiary and/or optional settlement when the insured has a
lucid period, in which **case, a statement by a physician** attesting to
the mental capacity of the insured should accompany ilk change.

15.07 MISCELLANEOUS INFORMATION

At any time a Policy Service technician is corresponding with an
**insured** whose records contain a beneficiary reel number consisting
of all zeros, the following paragraph will be included in the letter:

It is important to you that we have up-to-date beneficiary and option
designations for your Government life insurance. Please complete and
return the enclosed VA Form(s) 29.336.

This will not be done if the insured will qualify (within 31 **days)**
for selection under the mailing procedures \[J. If the folder is
available and reveals that such action was taken within the past 2
**years,** no further notice will be sent.

b\. When complying with subparagraph **a above,** or **answering**
requests for B&O forms, a separate form should be mailed for each policy
in force. Identifying file **and** policy **numbers** (and prefixes)
should be entered on the forms before mailing. A request for B&O forms
will remain permanently filed in the insurance folder whenever a request
contains something of record value. The following are examples of items
of record value that accompany requests f9r B&O forms:

\(l\) I have married and wish to name my **wife as** beneficiary.

\(2\) My wife and 1 are separated (or divorced) and I **wish to** name
**my** parent(s) (or children) as beneficiary(ies).

\(3\) My beneficiary (or person by name or class) has died and I want to
name **a** new beneficiary.

c\. When a B&O designation **fails** to draw **any insurance** number in
either the local index or in BIRLS (Beneficiary

M29-I, Part II May 12, 1980

Change 16

Identification and Records Locator Subsystem), **correspondence** with
**the** originator will **be** initiated by the Administrative Division
**for** the purpose of obtaining additional information to facilitate
identification. If it develops there **is** no insurance in **force,**
tl\~ designation will be returned to ilk **sender.**

d\. Some insureds use various terms in selecting Option I for **the**
payment of insurance proceeds. Among those that are acceptable **for**
this purpose **are** lump sum; lump sum-one payment; \[ \] cash payment
in lump **sum** or single sum; or single **sum** by itself. Unacceptable
terms **for** selecting Option I **are cash (by** itself); all; full
amount; in full; full; full **sum;** full payment; total; or 100
percent. When a designation is received containing one of the
unacceptable terms, an \[FL 29.727\] will be released to the insured
requesting clarification.

e\. The Policy Service Section will process beneficiary designations
requested on matured endowment contracts payable in installments, even
though flu designation **may** be received after the matured contract
has been transferred to the insurance awards system. The designation
will be processed and microfilmed the same as any other designation.
When the processing has been completed, the carbon copy or photocopy
**of** the designation, stamped with the microfilm reel number and year,
will be forwarded to the Finance \[activity\]. They will prepare VA Form
\[4\] -8223, Award Policy Input Card #2-ADP, to update the beneficiary
designation reel number on the Insurance **Awards** Master Record. The
copy of the beneficiary designation will then be mailed to ilk insured.

f\. When a communication, signed **by** the insured, designates an
attorney, trust **officer or** insurance agent as the representative
**for** insurance purposes, **or** otherwise requests that a third party
be furnished the beneficiary designation, a duplicate or photocopy of
the designation **will be mailed** to such representative. It will not
be necessary that a normal power of attorney or VA **Form 294337,**
Authorization for Release **of** Information From Insurance Records, be
of record.

15.08 DISAPPROVED APPLICATIONS CONTAINING B&O DESIGNATION

When **a B&O** designation is part of an application **for** contract
change and the application is disapproved, the designation, if otherwise
acceptable, will be **made a** matter of record. A VA Form 29-336 will
be released with a dictated letter, requesting flu insured to complete,
sign and return flu **form to** confirm the designation as it
**appears** on the disapproved application or, **if** he or **she** so
**desires,** to designate a new beneficiary. A copy of the letter to the
insured will be made a matter of record. The designation on the
disapproved application will receive regular processing, including
assignment of a reel number and microfilming.

15.09 APPLICATION FOR CASH SURRENDER VALUE AND MATURING ENDOWMENT

When an insured **submits** VA Form 29-1546, Application **for** Cash
Surrender Value, VA Form 29-5767, Matured Endowment Notification, or VA
Form 29-5772, Loan and Cash Surrender Values, and selects an installment
option, the beneficiary information should be completed.

a\. If the information is missing or incomplete, the insured will be
informed that a complete designation is necessary when an installment
option is selected fro the proceeds of the insurance. The procedure
outlined in paragraph l5.02f(3) will be followed.

**b.** When the designation **is** complete, a security reel number will
**be** assigned. The application will also be microfilmed and a copy of
the application will be sent **to** the **insured for** his or her
**records.** VA Form 29-5892a, Policy

15-10

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

Input, or VA Form 29-8530, Life/Miscellaneous, will be prepared to
insert the reel number into the master record **before** input is
prepared to convert the record to an Insurance Award master record.

*NOTE: If* one or more beneficiaries are named *and an* option is
selected, the designation will be considered complete.

15.10 OPTIONAL SETTLEMENT CLAUSES DEFINITIONS

a\. PER STIRPES-By or according to stock or root; by right of
representation. For example: When descendants take by representation of
their parent, they are said to take PER STIRPES; that is, children take
among them the share which their parent would have taken if living.
(This clause is acceptable.)

b\. BY REPRESENTATION-A fiction of the law, the effect of which is to
put the representative in the place, degree, or right of the person
represented. For example: The heir represents his ancestor. Used the
same as PER STIRPES. (This clause is acceptable.)

c\. PER CAPITA-When descendants take as individuals, and not by right of
representation (per? stirpes), they are said to take *PER CAPITA.* For
example: If a legacy be given to the issue of the insured and at the
time of his death he had two children and two grandchildren, his estate
shall be divided into four parts, and the children and the grandchildren
shall each have one of the parts. (This clause is acceptable.)

**d. LAWFUL** ISSUE-This term is used to give the same effect as heirs.
It **refers** to \`lawful children of the insured. (This clause is
acceptable.)

e\. FULL RIGHT OF WITHDRAWAL-Any beneficiary while entitled to receive
income payments may make withdrawals from the share of the fund held for
the benefit of such beneficiary. When this clause is used on a
designation, the insured will be advised that it is not acceptable and
if he desires to allow the beneficiary to withdraw all or part of the
proceeds, he should select option 1. The beneficiary then can receive
the entire proceeds in cash or elect to receive part in installments.

**f.** SPENDTHRIFT CLAUSE-Generally, this clause is defined in
commercial policies as follows: No beneficiary shall have the right to
commute, anticipate, encumber, alienate, withdraw or assign his share of
the net proceeds of a policy, or any interest or installment to become
due thereon, or any part thereof, and to the extent permitted by law, no
payments of interest or of principal shall be subject to such
beneficiary\'s debts, contracts, or engagements nor to any judicial
processes to levy upon or attach the same **for** payment thereof. When
this clause **is requested,** the insured will be advised that payment
of the proceeds of Government life insurance to a beneficiary is exempt
**from** claims of creditors and is not liable to attachment, levy, or
seizure by or under any legal or equitable process whatever, either
before or after receipt by the beneficiary. Since this provision is
specifically provided **for by** law, it is not necessary to include a
spendthrift clause in the settlement instructions.

15.11 MICROFILMING

a\. All incoming documents which contain an initial designation,
cancellation or change of a beneficiary designation and/or selection of
optional settlement will be microfilmed for security purposes with the
exceptions heretofore provided. The documents, regardless of whether the
beneficiary designation pertains to a principal or contingent
beneficiary, or both, will be microfilmed.

b\. The following documents, even though they are incomplete or require
clarification, will be included:

\(1\) VA Form 29-336.

\(2\) Any letter or other writing signed by the insured containing a
designation or change of beneficiary and/or selection of optional
settlement.

15-10a

M29-1, Part ll April 27,1972

Change 6

\(3\) **All** approved applications on which the beneficiary and
optional settlement spaces **are** completed. In **cases** of medical
applications, reproduce only part I of the application.

c\. Assemble documents accepted and assigned the current day\'s
beneficiary designation reference number daily and process as follows:

\(I\) Arrange documents by insurance file number in terminal digit
**order.**

\(2\) Check **for** unnumbered documents and numbers other than the
current day\'s number. Arrange documents having a beneficiary
designation reference number in terminal digit **order of insurance**
file **number** and microfilm as supplemental work groups to the
original microfilm reels.

15-lOb