§1942 Plans of Insurance

Summary

You may change a five-year level premium term life policy into other kinds of coverage. The law lets you convert it into ordinary life, twenty-payment life, an endowment that matures at age sixty-two, or other common plans the Secretary allows. You can later change those converted policies to a higher premium or, if you prove you are in good health to the Secretary’s satisfaction, to a lower premium under the Secretary’s rules. You cannot convert back into a five-year level premium term policy. If you are 65 or older and still paying premiums on a five-year level policy, you can 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 the Secretary later finds the old term policy had already matured because of total permanent disability or the insured was entitled to total disability benefits before the swap, the insured can return the endowment and get the benefits from the old policy; the cash value of the endowment minus any loan will be returned, plus any premiums paid for a waiver. The special endowment is issued at your current age and follows government life policy terms except it will not pay for total permanent disability; its premiums, values, and other details are set by the Secretary; and it cannot be changed into another plan. At the time of exchange, you may buy, for an extra premium, a waiver that stops premiums during total permanent disability that starts after your application and while the policy is in force. The Secretary will set rules for claims, exams, refunds, time limits (one year), and may deny or end waiver if disability ends or if you don’t cooperate; beneficiaries have one year after death (or after removal of a legal disability) to file waiver claims. Policies with a waiver can be treated separately for dividend purposes.