Quick overview: on December 27th, 2020, The Consolidated Appropriations Act, signed into law changes to the tax code reducing the minimum interest rate assumptions insurance companies may use affecting the definition of insurance:
- The Guideline Premium Test and the Cash Value Accumulation Test under Internal Revenue Code (IRC) Section 7702 and;
- Modified Endowment Contracts under IRC Section 7702A
These changes will allow products to accept larger premium amounts and to accumulate more cash value while maintaining a lower death benefit.
