TEFRA – DEFRA – TAMRA

  • 1981-1982 – ERTA  – Economic Recovery Tax Act of 1981 – H.R.4242 – 97th Congress 
  • 1982 – TEFRA – Tax Equity and Fiscal Responsibility Act of 1982
    • https://www.congress.gov/bill/97th-congress/house-bill/4961
  • 1983 – Life Insurance Tax Act of 1983
  • 1984 – DEFRA – Deficit Reduction Act of 1984
  • 1986 – Tax Reform Act of 1986
  • 1988 – TAMRA –  Technical and Miscellaneous Revenue Act of 1988 
  • 1983 – LR – Federal Taxation of Life Insurance Companies: The Evolution of a Tax Law Responding to Change, by Keith A. Tucker, J. Dale Dawson, and Thomas M. Brown – 51p 
  • 1985 – LR – TEFRA’s Response to Short-term Abuses of Insurance Annuity Policies – 20p 
  • 1985 – LR – Federal Income Taxation of Life Insurance Products after the Tax Reform Act of 1984, by Rex P. Cornelison III – 21p
  • 1987 – LR – Tax Planning with Life Insurance, by William L. Haas – 31p
    • The Tax Reform Act of 1986 maintains the importance of insurance for risk protection and it enhances it’s value for savings,
      investment, and tax purposes
  • A number of imaginative approaches in product structure are possible which may alleviate some of the restrictiveness of the TEFRA limits.
  • Contracts in which the current death benefit is the cash value plus a specified amount will generate a larger premium limit than those where the death benefit is equal to the specified amount.
  • Such contracts utilize the full amount at risk allowable under TEFRA’s computational rules.

—  James M. Robinson, Sentry Life

1983 – Universal Life (RSA83V9N212), Society of Actuaries – 24p

https://www.govinfo.gov/content/pkg/GPO-CRECB-1984-pt6/pdf/GPO-CRECB-1984-pt6-6.pdf

  • UL products go the complete spectrum of selling low premiums or high premiums.
  • There is a company that is issuing a UL product that is a level premium for 30 years.
  • Since the advent of the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), many companies and agents are apprehensive about selling a high premium product.
  • Basically, the high premium product is used to imitate the participating product.
  • We’ve gone away from that, in trying to go in for low premiums and for longer durations.
  • It’s very possible to have a 25-year term with zero cash value, using a UL product.
  • We all understand the opposite effect, of how everybody is trying to use the UL as a cash accumulator, using it as an investment and trying to maximize the contribution that can be put into it.
  • Tax law, valuation law, compensation, all  tend to regulate the product, not the function.
  • And, with the advent of TAMRA, we are regulating how much money can go into a life product at specific durations at least for the first seven years and the combination of annuities and/or premium paid in advance, and shifting the cost between them to minimize the tax effect to the insured.

—  Lawrence Silkes

1990 – SOA – Life Product Development Update, Society of Actuaries – 20p

  • What did Congress do to life insurance products in the 1984 law?
  • Well, in DEFRA there was still concern that insurance products, aside from universal life, which was regulated by a definition of life insurance, could be used for investment purposes, not the purposes for which the tax benefits were given under the laws.
  • And the same is true for annuities.
  • There also remained concern about the favorable treatment of group term life insurance. DEFRA provided a comprehensive definition of the term “life insurance contract,” expanding on the 101(F) rules to give mathematical tests for all insurance contracts issued after 1984.

1985 – SOA – Federal Income Taxes — Insured and Annuitant Perspective, rsa85v11n4a16 – Society of Actuaries – 18p