CONTENTS

CHAPTER 21. EXCHANGE-RS TOW AND K TERM TO SPECIAL
ENDOWMENT AT AGE 96 PLAN

	PARAGRAPH       PAGE

SUBCHAPTER I. EXCHANGE-RS TO W

	21.01   General 21-I    21.02   Requirements    21-1   21.03   Effective Date  21-2
   21.04   Withdrawal of Application       21-2   21.05   Insured incompetent     21-2

SUBCHAPTER ii. EXCHANGE-K TERM TO SPECIAL
ENDOWMENT AT AGE 96 PLAN

	21.06   General 21-2  21.07   Requirements    21.3

	21.08   Effective Date  21-3   21.09   Cancellation of Exchange        21-3
























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December 22,1978        M29-1, Part i  Change 8

CHAPTER 21. EXCHANGE-RS TO W AND K TERM TO SPECIAL ENDOWMENT AT AGE 96 PLAN

SUBCHAPTER I. EXCHANGE RS TO W

21.01   GENERAL

a.      MI insurance issued under the provisions of section 621 of the NSLI act was on the term plan and was prefixed by the letters RS. 1t was granted to veterans separated from service on or after April 25, 1951, and was not convertible until January 1, 1959. No new RS contracts could be issued after December 31, 1956.

b.      Insureds who had reached their 50th birthday when the law allowing conversion became effective were permitted to exchange to limited convertible term insurance (W)until September 1,1960.

c.      RS term insurance may be exchanged while on a premium-paying basis for a policy of limited convertible term insurance (W) issued under 38 U.S.C. 723(b). Insurance under this [subchapter] will be issued under the same terms and conditions as those contained in the standard policies of NSLI except as follows:

(1)     Limited convertible term insurance may not be issued or renewed after the insured's 50th birthday.

(2)     Premium rates for such convertible term insurance are based on Table X.18 (1950.54 intercompany Table of Mortality) and interest at the rate of 2-112 percent a year.

(3)     MI settlements on policies involving annuities on insurance issued under this [subchapter] will be calculated on the basis of the annuity table for 1949, and interest at the rate of 2-1/2 percent a year.

(4)    Collections for [W] insurance and TDIP will be credited directly to the Veterans Special [ ] insurance Fund (RS or W Fund).

(5)     W term insurance must be converted to a permanent plan of insurance before the end of the term period which expires on or after the insured's 50th birthday; otherwise, insurance protection ceases at the end of such term period.

21.02   REQUIREMENTS

The exchange will be made without medical examination upon complete surrender of the policy being exchanged while it is in force, by the payment or waiver of premiums. Exchange must be in multiples of $500, and no contract will be issued for less than $1,000.

a.      Application.  ] A written request, over the veteran's signature, containing the necessary information [is the only] application [required.]

b.      Premium. A remittance must accompany the application to pay the premium for the insured's attained age, on the amount of insurance exchanged for the month in which the application is made, except when premium waiver is effect.

c.      Reserve. The reserve, if any, on the term policy will be allowed as a credit and may be used for payment of premiums. However, if no premiums are due because of disability waiver (38 U.S.C. 712) or it is not administratively possible to apply the credit when premiums are being paid by allotment, deduction from benefit payments or payroll deduction accounts, the reserve credit (if $1 or more) will be paid to the insured. Any reserve that is less than $1 will be held as a premium credit.

21.03   EFFECTIVE DATE

The effective date for limited convertible term insurance will be the premium due date of the premium month in which the application is mailed or otherwise delivered to the VA.

21-I

M29-1, Part I   December 22,1978
Change 8

21.04   WITHDRAWAL OF APPLICATION

a.      When an application for exchange of RS insurance is received and the insurance, because of age, is restricted to one term period, the insured will be advised of the limitation and given the opportunity to withdraw the application. If he or she fails to reply, the exchange will be processed.

b.      If an insured, regardless of age, requests that the application for exchange be canceled and the RS insurance continued, [the insured] will be allowed 31 days to submit the money necessary to satisfy the difference between the RS and W premiums. If the required payment is not forwarded within the time limit, the exchange will be processed. The insured will be advised that since he or she did not comply with the requirements, it was necessary to process the application. A copy of the letter of notification will be filed in the insurance folder for record purposes.

21.05   INSURED INCOMPETENT

When an application is received on behalf of an incompetent veteran, the [legal] guardian and/or the veteran (when he or she understands the nature of the act in applying for exchange) will be advised of the advantages of conversion and will be furnished the necessary application. When the contract is not under  waiver, the case will be forwarded to the Insurance Claims Section for determination of entitlement to waiver of premium.


SUBCHAPTER II. EXCHANGE-K TERM TO SPECIAL ENDOWMENT AT AGE 96 PLAN

21.06   GENERAL

USGLI term insurance (K), while on a premium-paying basis, may be exchanged for a Special Endowment at Age 96 plan. The insurance will be issued under the same terms and conditions as standard policies on USGLI except as follows:

a.      The insurance could not have been exchanged prior to July 25, 1962 (PL 87-549) or before the insured's 65th birthday.

b.      The exchange may not be antedated.

c.      All rights to the total permanent disability benefits under the level premium term insurance and any total disability provision attached must be surrendered.

d.      A provision for waiver of premiums on account of total permanent disability at an additional premium, may be attached to the policy. However, it must be applied for at the same time as the application for the endowment plan; it may not be added later.

e.      The insured may have the premium waiver provision discontinued at any time. It may be reinstated at a later date by meeting reinstatement requirements.

f.      Endowment at Age 96 plan may not be changed to any other plan.

g.      Changes from other permanent plans to this plan are not permitted.











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June 1,1970     M29-I, Part


21.07   REQUIREMENTS

The exchange to the Endowment at Age 96 plan will be made without medical examination but the applicant may not be totally and permanently disabled on the effective date of change. The exchange must in multiples of $500 and not less than $1,000. Rerated term insurance may not be exchanged to the Endowment at Age 96 plan.
a.      Application. Application should be made on VA Form 29-358a, Application for Exchange to Special Endowment at Age 96 plan. However, a request in writing over the signature of the insured, containing the

necessary information may be considered as an application.

b.      Premium. A remittance must accompany flu application to pay the premium for the insured's attained age, on the amount of insurance exchanged, for the month in which the exchange will become effective.

c.      Reserve. Term reserve credit will not be allowed when exchanging to this plan of insurance.


21.08   EFFECTIVE DATE

The Endowment at Age 96 contract will be made effective as of the premium due date for the month in which the application is submitted, or as of the next monthly premium due date if the term premium has been paid.


21.09   CANCELLATION OF EXCHANGE

If it is subsequently found that prior to the exchange, the term insurance matured because of total permanent disability or that there was entitlement to total disability benefits under the total disability provision, the insured will be entitled to benefits under the old contract. In such cases the Endowment at Age 96 plan and the waiver of premiums provision, if any, must be surrendered. The cash value of the Endowment at Age 96 plan, less any indebtedness, as of the date that due proof is received, will be refunded together with any premiums paid on the Endowment at Age 96 plan after the receipt of due proof and any premiums paid on the total permanent disability (waiver of premiums). Premiums paid on the term contract are not refundable. (VA Regulation 3052)


























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M29-1, Part I
June 1, 1970


23.05   EFFECTIVE DATE OF CHANGE

a.      The "effective date of change" for reduction will be as follows:

(l)     Use the due date ()f the premium month in which the request for reduction was submitted if the premium for that month has not been paid, or allotment from service pay is on a month-to-month basis, aid there is no dividend credit available sufficient to complete the premium for the full amount of insurance for that month.

(2)     Use the due date of the next premium month:

(a)     1f the premium for the month in which the request is submitted has been paid, or there is dividend credit available sufficient to complete the premium for the full amount of insurance for that month.

(b)     If waiver of premiums is in effect, either under 38 U.S.C. 724 or 712.

(c)     1f insurance is in force under extended term insurance.

(d)     If the method of payment is by allotment and premiums are being paid in advance, or if premiums are being paid by deductions from VA benefit payments.

(3)     Use the premium due date indicated by the insured, if reduction is requested as of a future date and if premiums are paid to that date. Reduction may not be recorded until the premium month immediately preceding the effective date requested.

b.      The "effective date of change" for division will be the effective date of the contract being divided.


23.06   REDUCTION WITH TOTAL DISABILITY INCOME PROVISION

a.      Where addition of TDIP and reduction are requested at the same time and both applications are acceptable, the reduction will be effected first and then the TDIP added to the reduced policy.

b.      Where addition of TDIP and reduction are requested, with the reduction effective as of a future date, the TDIP will be added to the full amount of existing insurance.

c.      Where TDIP is to be continued on the reduced contract, the reduction of insurance and TDIP will be accomplished in one operation.


23.07   REINSTATEMENT AND REDUCTION

a.      If the insurance is in a state of lapse, reinstatement requirements must be met before reduction will be effected; except when reducing extended term insurance under a permanent plan policy which lapsed after having been in force at least 1 year, and no part is to be reinstated.

b.      If application for reinstatement and reduction are made in the same premium month and requirements for both have been met, the reinstatement and reduction will be processed simultaneously, regardless of the date of lapse.

c.      The effective date of reinstatement will be the due date of the premium month in which reinstatement requirements are met.





23-3

M29-1, Part I           June l, 1970


23.08   REDUCTION OF A CONTRACT IN FORCE AS EXTENDED TERM INSURANCE

j.      Extended term insurance resulting from a contract which lapsed after being in force 1 year or longer may be reduced reinstating any portion.

b.      Extended term insurance resulting from a contract which lapsed after being in inforce not less than 3 nor more than II months may not be reduced except when a part is reinstated or where it is necessary to discontinue a portion of the contract when superseded by new insurance.

c.      Surrender for cash of part of an insurance contract in force under extended term insurance constitutes forfeiture of all rights to the proportionate amount of the basic policy from which the extended insurance was derived, and precludes subsequent reinstatement thereof.

d.      When reinstating part of a contract in force as extended term insurance, no health statement or medical evidence is required when:

(l)     Application and tender of premiums with interest are made not less than 5 years before the date such extended term insurance will expire.

(2)     The extended term insurance under an endowment plan provides protection to the end of the endowment period.

e.      Where the insured submits an acceptable application for reduction in the amount of a policy in force under extended term insurance and indicates he desires to reinstate part of the policy and continue part on extended term insurance, the application for reduction will be held pending if additional evidence must be obtained in connection with the application for reinstatement. Similar action will be taken in cases where the insured indicates he desires to reinstate part of the policy and apply the cash value of the amount discontinued toward the cost of reinstatement and/or future premiums. If, upon receipt of the additional evidence, it is determined that the application for reinstatement is acceptable, the applications for reinstatement and reduction will be processed simultaneously and reduction effected. If the application for reinstatement is not acceptable, the application for reduction will be disapproved.

f.      The cash value of insurance in force as extended term insurance will be calculated as of the last day of the premium month in which the application is mailed or otherwise delivered to the VA, or the last day of a future premium month if so specified by the insured.

g.      If an insured applies for reinstatement of a reduced amount of a policy in force under extended term insurance, and payment in cash of the surrender value of the balance, the cash payment will be processed regardless of whether the application for reinstatement is or is not acceptable.


23.09   INDEBTEDNESS AT TIME OF REDUCTION

If the insured makes no provision for liquidating an indebtedness existing at time of reduction, by means of direct payment, policy loan, deduction from cash value, or otherwise, the following principles will govern:

a.      Where there is policy loan indebtedness, a proportionate part will be carried over on the retained amount of insurance.

b.      Where there is premium indebtedness including premium lien and shortage:

(l)     If the contract being reduced is term insurance, the entire indebtedness and interest will be transferred to the retained amount of insurance.

(2)     If the contract being reduced is a permanent plan and has been in force:



23-4
a.      Where there is policy loan indebtedness, a proportionate part will be carried over on the retained amount of insurance.

b.      Where there is premium indebtedness including premium lien and shortage:

(l)     If the contract being reduced is term insurance, the entire indebtedness and interest will be transferred to