§1942 Plans of insurance

Summary

Owners of a five-year level premium term policy may change that policy into ordinary life, twenty-payment life, an endowment that pays at age sixty-two, or other common types the Secretary allows. They can later change those converted policies to a higher premium rate or, if they prove good health to the Secretary’s satisfaction, to a lower premium rate. They cannot change a policy back into a five-year level premium term policy. If someone age sixty-five or older has a five-year level premium term policy in force, they may swap it for a special endowment that pays at age ninety-six by applying in writing, paying the required premium, and giving up the old policy and any attached total disability provision. If it is later shown that the old term policy had already matured because of total permanent disability or that the person was entitled to disability benefits before the swap, the person can return the endowment policy (and any waiver-of-premiums provision) and get the prior-contract benefits. The special endowment is issued at the person’s current age and follows standard Government Life Insurance rules except: it will not pay or mature for total permanent disability; the Secretary sets its premiums and values; it cannot be exchanged or converted again; and the Secretary can make other reasonable changes. When swapping, the person may buy a waiver-of-premiums for total permanent disability by applying and paying an extra premium. That waiver only covers disabilities that start after the application and while the policy is in force. The Secretary may require exams, deny waiver for lack of cooperation, stop waiver if disability ends, refund premiums for months covered by waiver, allow late claims when delay was beyond the person’s control, and let a beneficiary file a waiver claim within one year after the insured’s death (or after a legal disability ends). Policies with this waiver can be treated separately for dividends.