101 – IRC – Internal Revenue Code

(p65) - TEFRA Definition
- Prior to the enactment of the Tax Equity and Fiscal Responsibility Act ("TEFRA") , there was substantial doubt whether universal life insurance should be treated as life insurance for tax purposes.
  - In addition, there was concern that universal life insurance could be used to produce unduly investment-oriented forms of life insurance.
- To reconcile the legitimate uses of flexible premium life insurance with the need to place some limitation on the tax avoidance potential of this new product, Congress enacted section 101 (f) of the Internal Revenue Code as part of TEFRA.
  - This section provided that universal life insurance would be treated as life insurance for tax purposes if certain conditions were satisfied. The definition was made effective only for policies issued prior to January 1, 1984.