Tax Reform Act Of 1984
Legislation that raised taxes on life insurers and further defined life insurance. Because the tax equity and financial responsibility act of 1982 and 1983 (TEFRA) failed to raise the amount of revenue the U.S. Treasury wanted, the 1984 Act again raised the corporate tax on life insurance companies. It also expanded the definition of life insurance to all life insurance contracts, rather than just those with flexible premiums that had been addressed in the Tax Reform Act of 1982. For flexible premium contracts, the 1982 Act established the death benefits had to represent a certain percentage of the cash value, which declined as the policyholder got older. The 1984 Act raised that ratio. For example, at age 40, the death benefit must be at least 250% of cash value for the product to qualify as life insurance. This act also attempted to redistribute the tax burden between mutual and stock life insurance companies. It also replaced a three-tier structure for taxing life insurance companies with a single-phase structure.
Popular Insurance Terms
Intent to defraud. An insured is required to answer truthfully all questions on the application. The insurance company can void a contract if it would not have issued a policy had it known ...
Liability reserve, establishment required by the national association of insurance commissioners (naic), the purpose of which is to accumulate realized capital gains and losses resulting ...
Life insurance policy in which the cash value and in some circumstances the death benefit will vary according to the investment performance of an underlying portfolio usually comprised of ...
Same as term Commutation Right: right of a beneficiary of a life insurance policy to exchange the future installments due that beneficiary for a lump sum distribution. ...
Tenant's modifications of leased space to fit his particular needs. Up to 10% of contents coverage inside the structure may be applied to insure against damage or destruction of ...
Same as term Date of Issue: date when an insurance company issues a policy. This date may be different from the date the insurance becomes effective. ...
Arrangement between the seller and the buyer in which the buyer has the right to buy (call option) or sell (put option) a security at some time in the future at a price stipulated at ...
Legal instrument posted by a contractor or craftsman to guarantee that completed work is free of flaws and will perform its intended function for a specified period of time. ...
Method of investing that staggers the maturities of a group of bonds. As a bond matures, the investor can reinvest the proceeds in either short- or long-term bonds depending on the interest ...
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