February 16th, 2021
New West Short
Changes to Section 7702

The Consolidated Appropriations Act, signed into law December 27, 2020, includes changes to the tax code that will reduce the minimum interest rate assumptions insurance companies may use. These changes will affect the definition of insurance including:
  • 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
Once implemented, the reduced interest rate assumptions will allow for increased premiums for new permanent life insurance policies sold utilizing these revised rates. This will allow more cash value to accumulate with less death benefit. As the first bit of good news for our industry in over some time, everybody is talking about it!
  • Bobby Samuelson is calling it a "Christmas Miracle."  Full Commentary
  • John Hancock's Carly Brooks did a short video outlining the basics of 7702 and how the changes will affect our industry.   Watch Video Now
From our Carriers  
Expect to see announcements by the end of the first quarter.  These could include updated illustration potential, new pricing, and new products.  So far we are being told the changes to 7702 will not impact inforce contracts, but that is not set in stone.   
New West will continue to monitor industry reactions to the rate changes as we move forward and keep our agents updated along the way.  

Melissa Church
Director of Marketing
208-622-5211 x 2
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