May 10, 1971 M29-1, Part 11\
Change 1

CONTENTS\
CHAPTER 19. LIMITED PAYMENT LIFE ACCOUNTS\
PARAGRAPH PAGE\
19.01 General 19-I\
19.02 Processing by the System 19-1

19.03 Release of VA Form 29-5885, Information\
About Your Insurance 19-2

19.04 Clerical Processing of Generated Record\
Print Outs 19-2

19-i

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

CHAPTER 19. LIMITED PAYMENT LIFE ACCOUNTS

19.01 GENERAL

a\. National Service Life Insurance limited payment life accounts are
processed automatically by the system at the end of the premium-paying
period (20 or 30 years) if certain conditions are met. If the conditions
are not met, input documents must be clerically prepared to process the
account. The conditions are listed in the following paragraphs. United
States Government Life Insurance policies are not processed
automatically by the system.

b\. Limited payment life policies are issued as 20-Payment Life and
30-Payment Life only.

c\. How paid code 0 indicates premiums have been paid and earned to the
end of the premium-paying period.

19.02 PROCESSING BY THE SYSTEM

a\. The system will automatically process cases meeting the following
conditions at the end of the premium-paying period which is indicated by
a 901 callup (callup for non deduction accounts):

\(I\) The final premium is paid and earned.

\(2\) Tl\~ how paid code is 9 (direct pay) or 5 (disability waiver) (38
U.S.C. 712).

\(3\) A combination of loan and dividend credit balance does not exist.

\(4\) There is no lien or other indebtedness.

\- (5) The dividend option is other than premium.

\(6\) The current dividend has been authorized.

\(7\) There are no transaction types 203 pending.

\(8\) (Deleted.)

\(9\) fife account is not a USGLI policy.

NOTE: Tile system will not automatically process a deduction type
account (how paid \[ \] 3, deduction from benefits or how paid f j 6,
allotment) or an employer payroll deduction (how paid \[j 8, payroll
deduction). However, when the deduction discontinuance is posted, either
by the system or clerically, and the how paid code is changed to 9,
system processing will then take place provided all other conditions are
met. if not, a VA Form \[29-5886b, Insurance\] Record Printout (RPO),
with reason code 901, will be generated. In these cases, an (AT
(automatic typewriter) letter\] will be released to the insured.

b\. The system will, if all conditions in subparagraph a above are met:

\(l\) Change flee how paid code to 0 and flu last transaction date to
the anniversary date following the end of the premium-paying period.

\(2\) Delete pending transactions in flee 200 series, unless one of the
transactions is transaction type 203, or, in a multiple policy case, the
pending transaction has no policy number.

\(3\) Insert a 609/609 pending disbursement to refund the deleted
pending transactions (plus any premium overage or minus any premium
shortage).

19-\'

M29-I, Part II May 12, 1980

Change 16

\(4\) On how paid 5 cases, generate an RPO with reason code DWT or STOP
WAIVER to be sent to the Insurance Claims Section, delete the 944 diary,
and turn off the reimbursable bit, if this bit is set.

\(5\) Release VA Form 29-5885, Information About Your Insurance, to the
insured, with the following message:

WE ARE PLEASED TO TELL YOU THAT THE PREMIUMS ON YOUR LIMITED PAYMENT
LIFE POLICY MAINTAINED IN FORCE UNDER THE PREMIUM WAIVER PROVISION ARE
NOW COMPLETELY PAID.

19.03 RELEASE OF VA FORM 29-5885, INFORMATION ABOUT YOUR INSURANCE

a\. VA Forms 29-5885, with ilk following messages, are generated by the
system when the final premiums on a how paid code 9 limited payment life
policy is automatically applied:

l\. Direct payment

Your payment of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ dated
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ paid the final premium due on
policy \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ No further premium
payments are necessary.

\(2\) Direct payment-TDIP payments continue

The payment of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ dated
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ paid the final premium due on
the life insurance on policy However, premiums on your total disability
income provision are payable to age 65. The next

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ TDIP premium of
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ is due
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ . TDIP premiums may be paid
monthly, quarterly, semiannually, annually, or for longer periods.
Information will be supplied on request.

\(3\) Statements similar to flu above are released when dividends are
applied under the dividend premium option with modifications to
substitute dividend for payment.

\(4\) The following additional statements are added to flu VA Form
29-5885:

\(a\) Participating policy

Dividends continue on paid-up accounts. However, the amount may change
from year to year.

\(b\) All VA Forms 29-5885

The face value of the policy, less any indebtedness, is payable to the
beneficiary at your death. Cash values are shown in the table of
guaranteed values in your policy. The cash value for any future year
will be quoted upon request.

b\. When a how paid 9 account must be clerically updated at the time the
final premium is paid \[an AT (automatic typewriter)\] letter will be
released to the insured.

19.04 CLERICAL PROCESSING OF GENERATED RECORD PRINTOUTS

a\. When all conditions are not met for the automatic processing of a
limited payment life policy for a non deduction type policy, an RPO,
reason code 901, is generated. Upon receipt of this RPO, take the
following actions:

\(l\) The life and, if appropriate, the TDIP how paid code will be
changed to 0, the last transaction date to the anniversary date
following the end of the premium-paying period and the freeze on the
master record will be removed.

\(2\) Pending remittances, plus premium overages or minus shortages,
will be refunded.

\(3\) lf flare is a dividend credit balance and an indebtedness, the
insured will be advised that the dividend credit can be applied to pay
or reduce the indebtedness.

19-2

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

\(4\) If the dividend option is premium, take the following action:

\(a\) If no loan indebtedness exists, the dividend option will be
changed to credit.

\(b\) If a loan indebtedness exists on the policy, the option will be
changed to the indebtedness option provided there are no other policies
on a premium-paying basis; otherwise, the option will be changed to
credit.

\(c\) No change of option will be made if TDIP premiums are payable
beyond the premium-paying period of the life contract.

\(d\) FL 29-658 \[or an AT\] letter, as appropriate will be used to
advise the insured of the action taken, the status of the insurance and
other dividend options available.

b\. An RPO, reason code 273, is generated when a Collections item is
processed and one of the following conditions exists:

\(I\) Payment was applied and paid premiums to the end of flu
premium-paying period with a shortage. The insured will be advised of
the status of the policy.

\(2\) Payment made pending as premiums are already paid through the end
of the premium-paying period.

\(a\) If premiums on TDIP are paid to the cancellation date and the life
contract is still on a premium-paying basis, apply any overage or
pending remittance to the life premiums only. Change the how paid code
for TDIP to 0 to prevent the system from freezing the policy. The
insured will be advised of flu status of the policy.

\(b\) If premiums on flu life contract are paid through the
premium-paying period but premiums continue on TDIP, change the how paid
code for the life contract to 0. Apply the remainder of ilk remittance,
if any, to the TDIP. The insured will be advised of the status of flu
policy.

c\. When premiums are paid by deduction (allotment, deduction from
benefits, employer payroll) and the computer system 4s unable to make
the required processing 4 months prior to the end of the premium-paying
period, an RPO, reason code 911, will be generated for clerical
processing.

\(I\) Allotment Accounts

\(a\) If flu insured has only one policy, and is competent, a VA Form
29-1588, Request for Allotment Deduction Change, is prepared by the
system to discontinue or decrease ilk allotment. In addition, the system
prepares a VA Form 29-8348, Information About Your Insurance, with the
following message:

THE FINAL PREMIUM ON YOUR POLICY IDENTIFIED ABOVE IS DUE
\_\_\_\_\_\_\_\_\_\_\_\_\_ . WE HAVE REQUESTED THE SERVICE DEPARTMENT TO
DISCONTINUE YOUR ALLOTMENT EFFECTIVE WITH PAYMENT OF THE FINAL PREMIUM
ON THIS POLICY.

A 95 l callup, with a callup date l month after flu end of the
premium-paying period also is automatically established.

\(b\) If the insured has multiple policies, ilk VA Form 29-1588 will be
prepared clerically. A 953 nonfreeze diary will be established with a
callup date l month after the end of the premium-paying period. The
diary message is 1588 (Month No.). The insured will be advised of the
action taken to decrease or discontinue flu allotment.

\(2\) Deduction From Benefit Accounts

\(a\) Four months before the last premium is due, VA Form 29-5885.
Information About Your Insurance, is generated by the computer system
for release to the insured informing him \[or her VA\] will discontinue
the deductions that pay premiums on the policy.

\(b\) If flare is a loan segment of \$100 or more, another paragraph is
added, stating: However, your deduction can be used to repay your loan.
If you wish to do this, please tell us within 15 days.

19-3

M29-1, Part II May 12, 1980

change 16

[l]{.underline}. If a reply is received in sufficient time to prevent
flu release of the VA Form 29-5926, Request for \[DFB Action\], to

discontinue the premium deduction and the transaction does not involve a
change in the amount of the current deduction, the mechanically prepared
VA Form 29-5926 will be obtained from flu Input \[activity\], DPC, and
routed to the Policy Service

\[technician\]

[2]{.underline}. The clerk will destroy the mechanically prepared VA
Form 29-5926 and insert a 971 nonfreeze diary using the legend, PREM TO
LN (Month No.). The callup date will be the 20th day of the month
following the change from premiums to loan effective month.

[3]{.underline}. VA Form 29-5923, Allotment/DFB Input Card, will be
prepared as input to redistribute the deduction amount to the loan
account and insert or increase the deduction amount in the loan
repayment field of the loan segment and delete the on-tape diary.

[4]{.underline}. An off-tape diary will be established, by month, using
the prepared input for diary purposes. The diary date will be the
premium-to-loan effective month.

[5]{.underline}. Release the prepared input for processing on the first
workday of each diary month.

\(c\) If a reply is received from the insured in time to prevent the
discontinuance of the current premium deduction, and tl\~ transaction
involves an increase or a decrease in the deduction amount, the
mechanically prepared VA Form 29-5\'926 will be obtained from the Input
\[activity\] , DPC, and routed to the Policy Service \[technician\] .
\[He/she\] will destroy the mechanically prepared VA Form 29-5926 and
prepare a new VA Form 29-5926 to increase or decrease the deduction with
card column 31 appropriately coded.

\(d\) If the reply from the insured is not received in time to prevent
release of the VA Form 29-5926 to discontinue the current premium
deduction, a VA Form 29-5926 will be prepared and released to increase,
decrease or reestablish flu deduction with card column 31 appropriately
coded. The regular diary message will be inserted.

\(e\) In all instances, the insured will be notified of flu action taken
either by release of a VA Form 29-5707, Acknowledgment-Request for
Deductions from Benefit Payments, \[AT\] or dictated letter, which ever
is appropriate.

\(f\) When an RPO, reason code 911, is generated because the computer
system is unable to process the action, clerical action will be
initiated. VA Form 29-5926 will be prepared to take whatever action is
appropriate. A nonfreeze diary will be inserted with a callup date 1
month after the end of the premium-paying period. The diary message to
be inserted is 5926 (Month No.). Advise the insured of the status and
flu action taken.

\(3\) Employer Payroll Accounts

A local form letter or an (AT\] letter will be released to the insured
requesting discontinuance or decrease of flu deduction, as appropriate.
A 970 nonfreeze diary will be inserted with a callup date 1 month after
the end of flu premium-paying period. An appropriate diary message will
be inserted.

d\. RPO, reason code 921, is generated l month after the end of the
premium-paying period for deduction accounts (allotment, DFB and
employer payroll) if the deduction discontinuance 1\~s not been
processed on the master record. Followup action to discontinue or
decrease the deduction will be taken if necessary. If a followup request
is made, input will be prepared to advance the 921 callup in the master
record 120 days for allotment accounts and 75 days for DFB and employer
payroll deduction accounts. The 953 diary is automatically updated by
the system; The diary on payroll deduction accounts will be clerically
updated to the same date as the 921 callup date.

19A

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

\(3\) Employer Payroll Accounts

A local form letter or an MTST letter will be released to the insured
requesting discontinuance or decrease of the deduction, as appropriate.
A 970 nonfreeze diary will be inserted with a callup date l month after
the end of

the premium-paying period. An appropriate diary message will be
inserted.

d\. RPO, reason code 921, is generated 1 month after the end of the
premium-paying period for deduction accounts (allotment, DFB and
employer payroll) if the deduction discontinuance has not been processed
on the master record. Followup action to discontinue or decrease the
deduction will be taken if necessary. If a followup request is made,
input will be prepared to advance the 921 callup in the master record
120 days for allotment

accounts and 75 days for DFB and employer payroll deduction accounts.
The 953 diary is automatically updated by the system. The diary on
payroll deduction accounts will be clerically updated to the same date
as the 921 callup date.

19-5