§1942 Plans of Insurance

Summary

Allows people who have a five-year level premium term life policy to change it into other kinds of government life insurance. They may convert to ordinary life, a twenty-payment life plan, an endowment that matures at age 62, or other forms the Secretary allows. Later, under rules the Secretary makes, the policy can be changed again to a higher premium rate or, if the person proves good health to the Secretary, to a lower premium rate. A policy cannot be changed back into a five-year level premium term policy. If someone is 65 or older and still paying premiums on a five-year term policy, they can trade it for a special endowment that pays at age 96. To do that they must apply in writing, pay the required premium, and give up the old policy and any total-disability part. If the Secretary later finds the old policy had already matured because of total permanent disability or the person should have received disability benefits before the trade, the person can return the endowment policy and get benefits under the old contract; the cash value of the endowment (minus debts) and any premiums paid for a waiver will be refunded. The special endowment is issued at the person’s current age and follows standard terms except it will not pay for total permanent disability, its premiums and values are set by the Secretary, it cannot be converted or exchanged, and the Secretary may make other reasonable changes. At the time of the exchange, the insured may buy a waiver-of-premiums for total permanent disability by paying an extra premium. The Secretary can require medical checks, limit retroactive waiver to one year before a claim, stop or deny waiver if the person isn’t cooperating or recovers, allow exceptions for delays beyond the person’s control, and allow a beneficiary one year (longer if a minor or insane) to file a late claim. Policies with a waiver may be treated separately for dividends.