TEFRA - DEFRA - TAMRA

  • 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
  • 1988 -  Technical and Miscellaneous Revenue Act of 1988 (TAMRA),
  • 1983 - Federal Taxation of Life Insurance Companies: The Evolution of a Tax Law Responding to Change - 51p 
  • 1985 - TEFRA's Response to Short-term Abuses of Insurance Annuity Policies - 20p 
  • 1985 - Federal Income Taxation of Life Insurance Products after the Tax Reform Act of 1984 - 21p
  • 1987 - Tax Planning with Life Insurance - 31p
  • 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 - 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 - Federal Income Taxes -- Insured and Annuitant Perspective, Society of Actuaries - 18p