**January 27, 1976 M29-1, Part 4**

**CONTENTS**

**CHAPTER 5. CHANGE OF PLAN (MEDICAL)**

PARAGRAPH PAGE\
5.01 General 5-1\
5.02 Initial Processing of Applications 5-1\
5.03 System Processing of Applications 5-1\
5.04 Clerical Processing of Applications 5-2\
5.05 Change of Plan-TDIP 5-3\
5.06 Maturing Endowments 5-4\
5.07 Disapproved Applications 5-6\
5.08 Withdrawal of Application 5-7\
5.09 Paid-Up Additions 5-7

**5-i**

**M29-1 Part IV**

**January 27, 1976**

**Chapter 5. CHANGE OF PLAN (MEDICAL)**

**5.01 GENERAL**

a\. A permanent plan policy in force, under premium paying conditions
may be exchanged from a higher to a lower reserve value, or a lower to a
higher reserve value sublet to certain restrictions and requirements.

b\. A VA Form 29-1549, Application for Change of Permanent Plan
(Medical) will be processed by the medical determination section. This
form must be used by the insured whenever a change of plan is made to a
policy having a lower reserve value.

c\. A VA Form 29.1550, Application for Change of Permanent Plan
(Nonmedical) must 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.

d\. 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 and the
request for a change to a policy with a lower reserve NSLI (National
Service Life insurance) or USGL (U.S. Government Life Insurance) the
insured must also furnish a complete examination report. If the change
is to a higher (NSLI only) the insured must also furnish a signed
statement certifying that he or she is not totally disabled.

e\. Additional rules and requirements for processing applications for
change of plan on NSLI and USG policies are found in M29-1, part l
chapter 19. The procedure for development of medical evidence are
provided for in M29-I, part V.

**5.02 INITIAL PROCESSING OF APPLICATIONS**

a\. When VA Form 29-1549 is received in the Medical Determination
Section, the LMA (Lay Medical Approver) will review the application to
determine if all the medical and monetary requirements have been met.

b\. If any additional evidence such as medical evidence or data is
necessary for determination of eligibility, the insured will be given an
opportunity to withdraw the application for the change of plan requested
on the original application.

c\. When supplemental information is necessary before approval of the
application can be made, a VA Form 29.5895a, pending Transaction input,
or VA Form 29.8526, Pending Transaction, transaction type 008 or 078,
win be prepared to insert or change a diary.

**5.03 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 following conditions exist, the application
for change of plan must be processed clerically:

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

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

\(3\) How Paid Code is 0 or the account is on 724 waiver.

\(4\) How Paid Code is 2 or 4 and the mode is 0.

\(5\) More than two policies.

**5-1**

M29-1, Part IV January 27, 1976

\(6\) Exchange of TDIP (Total Disability Income Provision) Age 60 for
TDIP Age 65.

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

\(8\) TDIP option 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 paidup 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.

\(11\) The policy contains paid-up additions and the plan is being
changed from an endowment plan to a limited pay life plan, and the
difference in reserve between the paid-up endowment and paid-up whole
life additions is paid in cash; or applied to pay premiums or applied
toward a loan.

\(12\) An endowment plan with paid-up additions is being changed to
another endowment plan.

\(13\) An endowment plan is changed on the date of maturity.

b\. If none of the above conditions exist, a VA Form 29-8520,
Underwriting, will be prepared. When this input is processed,
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 ilk master record is not 3 or 6, or if the policy callup is not
951. In addition, the system will:

\(1\) Calculate any cash dividend overpayment

\(2\) Establish lien

\(3\) 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 (RPO), reason
code 008, for clerical release of lien letter

\(7\) Establish a 6091609 pending transaction for the refund of the
difference in reserve and insert a frozen diary message for dividend
adjustment. Clerical processing is necessary to deduct the dividend
overpayment from the difference in reserve refund and to cause the
disbursement of the balance.

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

**5.04 CLERICAL PROCESSING OF APPLICATIONS**

a\. When the system cannot process an application for a change of plan
of insurance, the following input documents will be prepared:

\(1\) VA Form 29-8522, Policy, transaction type 022, to effect policy
changes.

\(2\) VA Form 29-8523, Premium/TDIP, transaction type 053, to insert or
change premium status, how paid code and mode in the master record.

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

**5-2**

**December 7, 1978 M29-1, Part IV**

Change 1

\(3\) VA Form 29-8527, Accounting Control, transaction type 089, to
effect miscellaneous accounting action.

\(4\) VA Form 29-8526, transaction type 098, to delete pending
transactions and/or diary messages.

\(5\) 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 input, the following forms, as applicable,
will also be prepared:

\(l\) VA Form 29-8528, Paid Dividend/Dividend History, when dividends
are adjusted.

\(2\) VA Form 29-5934, Change of Address for insurance Purpose, if
address is to be changed.

\(3\) VA Form 29-8525, Dividend/Loan/Lien, transaction type 004, \[005,
006,\] 084, \[085, or 086\] to insert or make changes to the dividend
credit/loan or lien segments or to adjust paid-up additions. VA Form
29-4459, Disposition of Dividends, or VA Form 29-l468b, Notice of
Approval of Policy Loan, or a lien letter will also be released as
applicable.

NOTE: If there is an outstanding loan at the time a change of plan from
a higher to a lower reserve value is made, the outstanding indebtedness,
plus interest, must be checked against the maximum loan value available
on the new contract as of the effective date of change. If the maximum
loan value on the existing plan is greater than that available on the
new plan, the existing loan must be reduced to an amount which will not
exceed the loan value available on the new plan. The reserve credit will
be used to reduce the loan balance incident to the change.

\(4\) VA Form 29-8531, TDIP, transaction type 007 or 027 to insert or
change data in the TDIP segment in the master record. When transaction
type 027 is used, the control sort field should be completed to assure
proper sequence of input 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, or
by allotment from service department active or retirement pay, 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
Philadelphia VA center.

5.05 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:

\(1\) 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, Revised, \[Section III,\] Table 1, (Paid-up 20 PL and 30
PL policies).

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

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

\(2\) Cancel the TDIP.

\(3\) If under 60 years of age, continue the age 60 rider.

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M29-1, Part IV December 7, 1978

Change I

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
is if total disability or death should occur before 65 years of age,
premiums which have been paid under 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 Total Disability Income Provision, for completion and
return.

f\. After a limited payment life contract becomes fully paid-up, the
insured may change the plan to one with a lower reserve value under the
NSLI program, provided all requirements are met. Also, if the paidup
limited payment life policy had TDIP attached which was also paid-up
when the plan was changed, the TDIP will be continued on the new plan as
a fully paid-up rider.

g\. In the case of a maturing endowment, \[ \] the folder will be
referred to the Actuarial Staff (299), VA center, Philadelphia, for
calculation of the TDIP premium and reserve, if any.

h\. If TDIP is to be added at the time the plan is changed, the
effective date of the TDIP will be the last premium due date.

i\. 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 O in
the TDIP code of 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 purge the TDIP
segment from tape.

5.06 MATURING ENDOWMENTS

a\. Six months prior to maturity date of an NSLI endowment policy, which
is in force by the payment of premiums, VA Form 29-\[8694\], Information
About (Reduction and Change of Plan\], is automatically released to the
insured by the system. This form offers the insured an opportunity to
change the plan of insurance to provide continued protection, and to
continue TDIP coverage, if in force, plus a refund of the difference in
reserve.

b\. All policies that mature as endowments are paid in a lump sum,
without prior election by the insured. However, if the amount payable is
more than \$2,500, the system will automatically release VA Form
29-5767, Matured Endowment Notification, 4 days prior to the maturity
date. This form advises the insured that proceeds of the endowment may
be made under installment payments and that if payment other than lump
sum is desired, the check for the endowment proceeds should be returned
for cancellation. On the reverse of the form, the insured may designate
a beneficiary to receive the unpaid guaranteed installments at the time
of his or her death.

c\. Additional rules and requirements for processing matured endowment
accounts are found in M29-1, part I, chapter 11 and M29-1, part II,
chapter 10.

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December 7, 1978 M29-1, Part IV

Change 1

d\. Formal applications with regard to a change of plan on matured
endowment accounts will be processed by the LMA as follows:

\(l\) If an application is received *before* the endowment maturity
date, the following action will be taken:

\(a\) Immediately prepare the appropriate input to insert a frozen
pending diary.

\(b\) If supplemental information is necessary, release a letter to the
insured and, as applicable, allow 31, 60 or 90 days from the date of the
letter to furnish the requested requirements.

\(c\) Upon receipt of the supplemental requirements or at the expiration
of the delimiting date of the policy, take final action as outlined in
paragraph \[5.03\] or \[5.04\].

\(2\) If an application is submitted *before* the maturity date, or
action date, but *after* the release of VA Form 29-5767, Matured
Endowment Notification, the following action will be taken:

\(a\) Immediately prepare the appropriate input to insert a frozen
pending diary.

\(b\) Release a letter to the insured giving information on the change
of plan requested as opposed to receiving payment of the endowment
proceeds so as to further clarify the applicant\'s desire for the
change. Also advise that if a reply is not received within 15 days from
the date of the letter, the matured endowment will be processed.

\(3\) If an application is submitted *before* the maturity date, but it
is received *after* the maturity or action date, the LMA will:

\(a\) Review the application thoroughly to assure that there is no
obvious reason to prevent approval of the requested change.

\(b\) Contact the Finance \[activity\] by telephone to stop payment(s)
of the award. Confirmation of this action will be made by a memorandum
and signed by the unit supervisor.

\(c\) If the above action is too late to stop payment, and there is no
obvious bar to approval of the change, a letter will be sent to the
insured advising that the check received for the matured policy should
be returned to the VA within 15 days from the date of the letter. The
insured should be further advised that return of the payment and
submission of any medical required evidence does not assure the change
of plan requested will be approved. Also, instruct the insured to return
the Treasury check, or other repayment of the matured endowment
proceeds, with the copy of the letter to the agent cashier.

e\. An inquiry, signed by the insured or an authorized representative,
which either directly states or implies interest in a change of plan,
postmarked during the final premium month of the endowment period, will
be considered an informal application for a change of plan. Informal
applications will be processed as follows:

\(1\) Prepare the appropriate input to insert a frozen pending diary.

\(2\) Release a letter to the insured with VA Form 29-1549, identifying
the form as *SUPPLEMENTAL* in the right margin on the face of the form.
The letter should allow the insured 31, 60 or 90 days, as applicable, to
return the completed form. The letter should also include the statement
that submission of the application does not, in itself, assure approval.

f\. When all the requirements are met and the application for the new
plan of insurance is approved, the following input documents will be
prepared to insert the new plan of insurance on tape:

\(l\) VA Form 29-5891a, Address \[or\] Trailer Input, transaction type
001.

\(2\) VA Form 29-5896a, Life Input, transaction type 000.

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M29-1, Part IV December 7, 1978

Change 1

NOTE: If the insured has an existing account other than the matured
contract which has been purged, the above input documents will not be
prepared.

\(3\) VA Form 29-8522, transaction type 002, to insert the new policy
segment.

\(4\) VA Form 29-8523, transaction type 003, to insert premium status.

\(5\) \[VA Form 29-8528, transaction type 004, to insert paid
dividend/dividend history (participating policies only).\]

\[(6)\] Prepare VA Form 29-328, Underwriting Worksheet.

\[(7)\] Prepare the necessary input documents to reverse all accounting
actions including the debit to

MCP (matured contracts payable) 13, that were taken at the time the
matured plan policy was purged and the award record established. The
required information for these documents will be available from the
transaction history list as well as the MCP record printout and the VA
Form 4-5851, Insurance Award Statement, filed in the insurance folder.

\[(8)\] VA Form 29-8526, transaction type 609, with callup code type
609, to refund the difference in reserve, if any.

NOTE: If, for some reason, the refund cannot be made by the preparation
of the above input, prepare VA Form 4-706, Notice of Refund and Refund
Worksheet, for off-tape refund.

\[(9)\] If a memorandum was previously sent to the Finance \[activity\]
as outlined in subparagraph d(3)(b) above, a subsequent memorandum will
be sent to that \[activity\] advising them to delete the endowment
contract from the award tape, as a change of plan has been effected in
lieu of payment of the matured proceeds.

5.07 DISAPPROVED APPLICATIONS

a\. 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:

\(1\) The application will be noted *DISAPPROVED,* and the reason for
disapproval, date and last name of the LMA taking action will be
inserted. The disapproved application will also be stamped Ready for
File, signed, dated and filed in the insurance folder.

\(2\) The applicant will be notified of the action taken and advised of
\[the\] reason for disapproval.

\(3\) If the application is rejected because the applicant failed to
meet health requirements as outlined in M29-1, Part V, a VA Form
29-4437, Underwriting Numerical Rating \[ \], will be prepared. In this
instance, in addition to advising the applicant of the reason for
disapproval, the veteran will be advised that he or she or an authorized
representative has the right to appeal. When possible, the applicant
will also be informed that reapplication may be favorably considered
after a waiting period, provided the insurance will not have matured in
the interim.

b\. If the application being disapproved is for a change of plan on a
matured endowment policy, the following actions will be taken in
addition to those outlined above:

\(1\) If a memorandum was previously sent to the Finance \[activity\],
as described in paragraph \[5.06\] d(3)(b), a followup memorandum will
be sent to that activity to advise them to reauthorize the recovered
endowment payment(s) and/or to resume installment payments.

\(2\) If the matured endowment account is still on the insurance master
record, and the pending frozen diary was inserted by the Medical
Determination Section, prepare the proper input document to lift the
freeze which will allow the system to routinely process the matured
endowment account.

5-6

**January 27,1976 M29-I Part IV**

**5.08 WITHDRAWAL OF APPLICATION**

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

b\. Acceptable requests for withdrawals will be processed by the LMA as
follows:

\(1\) If the original application has not been processed, it will be
approved and the insured advised.

\(2\) If the original application was processed from a higher to a lower
reserve plan and there is no evidence to indicate that the check for the
difference in reserve has been mailed, contact the Finance Division to
stop payment. If the check can be withheld, the change of plan will be
canceled and the contract restored to its status prior to the change and
the insured will be notified of the action taken.

\(3\) If the check has been mailed, the insured will be informed that
the request for withdrawal of the application for change of plan may be
granted, provided the check is returned or that a check in an equivalent
amount is remitted within 15 days from the date of the letter;
otherwise, the change of plan will remain in effect. Upon receipt of the
Treasury Department or replacement check, action will be taken to
restore the previous contract. The insured will be advised of the action
taken.

\(4\) If a matured endowment contract is involved and the check for the
proceeds was withheld, a VA Form 29-462, Authorization for Insurance
Payments, will be prepared and forwarded to the Voucher Audit activity
for review. The insured will be advised that the check for the proceeds
of the endowment will be forwarded under separate cover.

**5.09 PAID-UP ADDITIONS**

a\. When dividends are used to buy paidup 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 whole life additions on a
permanent plan policy (other than endowment)and the policy is changed to
an endowment plan, the paid-up whole life additions may be retained;
changed to paid-up endowment additions in a lesser amount; or changed to
paid-up endowment additions in the game amount by payment of the
difference in reserve.

c\. When dividends are used to buy paid-up endowment additions on an
endowment policy and the policy is changed to another permanent plan
(other than endowment), the difference in reserve between the paid-up
endowment and paid-up whole life additions may be paid to the insured in
cash, applied to premiums, or applied to an outstanding loan.

d\. 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. If the
plan is changed to an endowment plan with a lower reserve, the
difference in reserve on the paid-up endowment additions may be paid to
the insured in cash, applied to premiums or applied to an outstanding
loan. If the plan is changed to a higher endowment plan, 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.

**5-7**