TEFRA, DEFRA & TAMRA: How Three Laws Shape Life Insurance Taxes
TEFRA (1982), DEFRA (1984), and TAMRA (1988) are three federal laws that decide what counts as life insurance for tax purposes and how fast you can fund a policy. DEFRA's CVAT and GPT tests keep a contract classified as life insurance; TAMRA's seven-pay test decides whether it becomes a Modified Endowment Contract. Carriers enforce all three — so you almost cannot fail them by accident.
Life insurance enjoys some genuinely unusual tax benefits, but it also lives inside limits set by three pieces of legislation we shorthand as TEFRA, DEFRA, and TAMRA. Together they define what you can and cannot do with a life insurance policy — and if you are buying whole life or indexed universal life to build cash value, the rules are worth understanding before you fund anything.
These three laws gave the industry the vocabulary you will run into on any illustration: 7702 qualification, the Cash Value Accumulation Test (CVAT), the Guideline Premium Test (GPT), the corridor, the seven-pay test, and the Modified Endowment Contract (MEC). Below is what each of them actually means, and how the rules can help or quietly hurt the way a policy gets built.
The three laws and the tests they created
- TEFRA (1982): Settled that universal life is, in fact, life insurance, and defined the baseline characteristics a contract must have.
- DEFRA (1984): Added two limits on how much premium and cash a policy can hold relative to its death benefit — the CVAT (mainly whole life) and the GPT / corridor test (mainly universal life). Fail either and the contract stops being life insurance for tax purposes.
- TAMRA (1988): Added the seven-pay test. Overfund a policy in its first seven years and it becomes a MEC — still life insurance, but lifetime distributions are taxed LIFO (gains first) instead of FIFO.
- Who this matters for: If you want plain death-benefit coverage, essentially none of this touches you. If you are maximizing cash value, it governs how the policy has to be designed.
- The reassuring part: Carriers test every policy and every premium. They will not issue a contract that fails CVAT or GPT, and they refund premium that would break the limit — so accidental failure is rare.
You Can't Really Fail These Tests by Accident — and That's the Point
After years of designing these policies, the honest thing to say about TEFRA, DEFRA, and TAMRA is that the acronyms sound far scarier than the reality. They are not traps waiting to spring on an unsuspecting policyholder. They are guardrails, and the carrier holds them for you.
- The carrier won't let you fail the DEFRA tests. It will not issue a contract that fails CVAT or GPT, and it rejects or refunds premium that would break the limit. You essentially cannot destroy your policy's life-insurance status by writing too big a check — the check comes back.
- A MEC is the one status you can choose — and only on purpose. Single-premium policies are MECs by design, with a signed disclosure. Nobody ends up with an accidental MEC without first ignoring a written notice from the carrier.
- The real skill isn't avoiding the limits — it's designing right up to them. Maximum funding without crossing the line is where an experienced designer earns their keep, and where the gap between a mediocre cash-value policy and an excellent one actually lives.
The foil here isn't the products or the people who own them — it's the mystique. Treating these rules as arcane dangers is what keeps people from funding a policy properly, and underfunding is the one mistake in this area that genuinely costs them.
First, the Tax Benefits These Laws Limit
Life insurance carries more than a handful of tax advantages. The four that matter for making sense of TEFRA, DEFRA, and TAMRA are:
- Tax-deferred growth of cash value
- First-in-first-out (FIFO) treatment of distributions — you recover your basis tax-free first
- Income-tax-free policy loans
- An income-tax-free death benefit
Life insurance has enjoyed most of these benefits for decades. What changed over the last forty years is not how those benefits flow through the tax code — it is how much money you are allowed to put into a policy in the first place. That single lever is what all three laws pull.
Life Insurance Before the Rules
There was a time when you could, in theory, place an unlimited amount of money into a life insurance contract. No rule prevented it, and if you managed it, you kept every one of the tax benefits above.
The only problem was that no mechanism existed to actually do it. Traditional life insurance was rigid and did almost nothing to accept extra cash. Then the 1970s arrived and brought a genuine industry innovation: universal life insurance.
It is hard to appreciate what universal life changed if you entered the business after it existed. Picture a world where your only permanent options were whole life (much as we know it, minus a few riders — chief among them the paid-up additions rider), endowment contracts, and an early product called variable life. All of them shared one rigid feature: a fixed premium over a fixed period that you could not change without changing the death benefit. No adding money, no skipping payments, no reducing premium.
Universal life broke that open. Its defining feature was that there was no fixed premium — only an ongoing expense the policyholder had to meet, either with premium or with cash already in the policy. Suddenly you could pay as much or as little as you liked.
The industry's original intent was probably just to give policyholders flexibility. But the shrewd noticed a side effect: if you paid in a lot more than the policy required, you could house a large amount of cash inside a life insurance wrapper — and collect all of its tax-friendly treatment. It did not take long before agents were selling tiny death benefits (a few thousand dollars) stuffed with tens or hundreds of thousands in cash. That practice raised a fair question: was this even life insurance anymore? Congress decided to answer it.
Settled the question: universal life is life insurance. Defined the baseline characteristics a contract must have. Impact on funding: minimal — it set the stage.
Added the first real limits: the CVAT and the GPT / corridor test cap how much cash and premium a policy can hold relative to its death benefit. Break the limit and the contract stops being life insurance for tax purposes.
Added the seven-pay test. Overfund inside the first seven years and the policy becomes a MEC — still life insurance, but lifetime distributions are taxed LIFO (gains first), with a 10% penalty before age 59½.
Each act tightened how fast money could go into a policy — not whether the tax benefits existed.
Act 1: TEFRA (1982)
The Tax Equity and Fiscal Responsibility Act of 1982 established that universal life insurance was, in fact, life insurance — but it also spelled out characteristics a contract had to have to earn that label. Beyond that, TEFRA is a fairly dull piece of legislation as far as life insurance goes. Many in the industry held their breath while it was written, but its direct impact was minimal. It was two years later that lawmakers used TEFRA's language, plus new rules, to fit life insurance with its first real set of handcuffs.
Act 2: DEFRA (1984) — CVAT and GPT
The Deficit Reduction Act of 1984 built on TEFRA to draw specific lines around what was and was not life insurance. After DEFRA, we had concrete limits on premium size relative to the death benefit that qualified or disqualified a contract.
It is easiest to think of these as tests: fail one and the premium is outside the allowable limit, and that limit is a function of the size of the death benefit. There are two of them.
The Cash Value Accumulation Test (CVAT)
The CVAT was built mainly to govern how whole life insurance qualifies as life insurance. It is straightforward: it tests the level of cash that can exist inside the policy relative to the outstanding death benefit. Stay under that line and the policy passes and remains a life insurance contract.
The Guideline Premium Test (GPT) and the Corridor
The GPT was built mainly to govern universal life (though UL can also qualify using the CVAT). It has two parts.
Part one is a limit on premium relative to the death benefit. If a policy has a $1 million death benefit and the calculated guideline premium is $20,000 per year, the policyholder can pay no more than $20,000 in a given year. There is an allowance for either a single one-time payment or an ongoing annual payment — but choosing the one-time payment means that is all the premium allowed into the policy.
Part two is a required ratio of death benefit to cash value that shrinks as the insured ages. That cushion is called the corridor, which is why the GPT is sometimes called the corridor test.
| Test | Law | What it limits | Mainly applies to | What failing means |
|---|---|---|---|---|
| CVAT | DEFRA 1984 | Cash value relative to the death benefit | Whole life | Contract loses life-insurance status; gains taxed as ordinary income each year; no 1035 exchange |
| GPT / Corridor | DEFRA 1984 | Premium relative to the death benefit, plus a death-benefit-to-cash corridor | Universal life (incl. IUL) | Same as a CVAT failure — the contract stops being life insurance for tax purposes |
| Seven-Pay Test | TAMRA 1988 | Cumulative premium paid during the first seven years | All cash value life insurance | Becomes a MEC — keeps life-insurance status, but distributions are taxed LIFO with a 10% penalty before 59½ |
A policy passes CVAT or GPT (it uses one or the other, not both) to qualify as life insurance under DEFRA; separately, it must also stay under the TAMRA seven-pay limit to avoid MEC status. The two questions are independent.
What Happens If a Policy Fails the DEFRA Test
Failing the test to qualify as life insurance means the contract is no longer treated as life insurance at all. Instead, U.S. tax law treats it much like an ordinary taxable account — a brokerage or savings account.
Any gain becomes immediately taxable as ordinary income, and each year's earnings are taxable in that year, just like interest on a CD. The death benefit is income-tax-free to the beneficiary only for the portion that represents true death benefit. And because the contract is no longer life insurance, the owner cannot move the funds to another policy through a tax-favored 1035 exchange.
These rules were designed to shut down the use — some would say abuse — of life insurance purely as a tax shelter, and they largely worked. But they did not fully stop the practice, so Congress acted once more.
Act 3: TAMRA (1988) — the Seven-Pay Test and the MEC
The Technical and Miscellaneous Revenue Act of 1988 added one more restriction: a test that limits premium paid in the early years to roughly what it would take to cover all of the policy's guarantees over a seven-year period. That is why it is usually called the seven-pay test.
Break that rule by paying in more than the limit and you do not lose the policy's status as life insurance. Instead, it is reclassified as a Modified Endowment Contract (MEC).
A MEC is still life insurance. What it loses is the FIFO treatment of distributions — it must instead use last-in-first-out (LIFO), which means any distribution beyond basis, including loans and collateral assignments, carries an income tax bill (plus a 10% penalty before age 59½). Cash value still grows tax-deferred, the death benefit is still income-tax-free, and a MEC can still be 1035-exchanged — but because the money came from a contract that failed the seven-pay test, the new policy is automatically a MEC too.
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What This Means in Practice
If you are buying plain, no-frills whole life for the death benefit alone, none of this matters much — it is nearly impossible for that kind of policy to come anywhere near violating either test.
But if you are building a policy to maximize cash value, understanding these rules is not optional. When an illustration flags that the policy violates CVAT, GPT, or the seven-pay test in a given year, that is your signal to be certain you actually intend to fund it that way. Otherwise the design needs adjusting — usually a larger death benefit or a resized premium — to let the planned money in without the adverse consequences.
Failure Is Almost Never Actually an Option
It is extremely rare for a carrier to let a policyholder fail the DEFRA qualifying tests. No company we are aware of (outside of Gerber) will put a policy in force if it fails, and most will simply reject a premium payment that would break the limit.
A lot of that comes down to administrative burden. If a policy fails and is reclassified out of life-insurance status, the carrier is now on the hook for producing 1099s every year to report the earnings — a job most insurers want no part of. The result is a system where the guardrails are enforced on your behalf, whether you are paying attention or not.
MECs Don't Happen by Accident
Insurers also test for TAMRA compliance as premiums come in. If a payment would break the seven-pay limit, the carrier notifies the policyholder and offers to return the offending amount. If that happens to you, be responsive — time is of the essence, and the window to refund is real but not indefinite.
An accidental MEC almost always starts with an ignored notice. When a carrier flags an overage and offers the refund, take it unless you specifically want a MEC — and do it inside the window. Waiting is what turns a routine flag into a permanent status you cannot reverse.
Carriers usually require additional attestation paperwork if a policyholder chooses to create a MEC on purpose. Single-premium policies are the classic example: because a single premium always fails the seven-pay test, most insurers require a signed disclosure spelling out the consequences of MEC status before they will issue the contract.
The 2021 Update You Should Know About
The rules are not entirely frozen in the 1980s. The Consolidated Appropriations Act of 2021 updated the interest-rate assumptions baked into IRC Section 7702, lowering the minimum assumed rate from 4% to 2%. In plain terms, that raised the guideline premium and seven-pay limits on policies issued since 2021 — you can now put somewhat more premium into a policy before tripping the DEFRA or TAMRA lines than you could under the old assumptions. It does not change the structure of the tests; it just moved the numbers in a direction that helps cash-value designs.
Limits, Not Elimination
TEFRA, DEFRA, and TAMRA put real limits on life insurance, and they meaningfully reduced the number of people buying policies purely to shelter money from taxes. In truth, the industry has always frowned on buying life insurance for that reason alone.
What the rules did not do is eliminate the legitimate use of whole life and universal life as a way to accumulate value and plan for retirement while keeping the favorable tax treatment life insurance carries. Securities-based investments have their place in a broader plan; this simply is not that conversation. As long as you know the rules and agree to design within them, cash value life insurance remains a viable option for tax-favored savings — and the rules, far from being a threat, are mostly the carrier's job to enforce, not yours to fear.
TEFRA, DEFRA & TAMRA FAQ
What is the difference between TEFRA, DEFRA, and TAMRA?
They are three federal laws passed in sequence. TEFRA (1982) established that universal life is life insurance and defined baseline characteristics. DEFRA (1984) added the CVAT and GPT tests that cap how much cash and premium a policy can hold relative to its death benefit. TAMRA (1988) added the seven-pay test, which determines whether an overfunded policy becomes a Modified Endowment Contract. Each one tightened how quickly money can be paid into a policy.
What is the difference between the CVAT and the GPT?
Both are DEFRA tests a policy uses to qualify as life insurance, and a contract uses one or the other, not both. The Cash Value Accumulation Test (CVAT) limits how much cash value can exist relative to the death benefit and mainly governs whole life. The Guideline Premium Test (GPT) limits how much premium can be paid relative to the death benefit and requires a death-benefit-to-cash corridor; it mainly governs universal life. Failing either strips the contract of its life-insurance tax status.
What is the corridor test?
The corridor is the second part of the Guideline Premium Test: a required ratio of death benefit to cash value that must be maintained, and which decreases as the insured gets older. Because the GPT enforces this cushion between the death benefit and the cash value, the GPT is sometimes referred to as the corridor test. It ensures a policy keeps enough "insurance" in it to remain life insurance rather than a pure investment account.
What happens if a policy fails the DEFRA test?
It stops being treated as life insurance for tax purposes and is taxed like an ordinary account. Gains become immediately taxable as ordinary income, each year's earnings are taxable that year, only the true death-benefit portion passes to a beneficiary income-tax-free, and the owner loses the ability to do a 1035 exchange. In practice this almost never happens, because carriers will not issue a failing contract and reject premium that would break the limit.
Is failing the seven-pay test the same as failing CVAT or GPT?
No, and this is the most common point of confusion. Failing CVAT or GPT means the contract is no longer life insurance at all. Failing the seven-pay test (a TAMRA rule) means the contract is still life insurance but becomes a Modified Endowment Contract, which loses FIFO distribution treatment and is taxed LIFO. The DEFRA tests decide whether you have life insurance; the TAMRA test decides whether that life insurance is a MEC.
Can I accidentally create a MEC?
It is very difficult. Insurers test every premium against the seven-pay limit and notify you if a payment would break it, offering to refund the excess. An accidental MEC almost always requires ignoring that notice. Intentional MECs, on the other hand, are common and legitimate — single-premium policies are always MECs by design, and carriers require a signed disclosure before issuing one.
Did the 7702 rules change recently?
Yes. The Consolidated Appropriations Act of 2021 updated the interest-rate assumptions inside IRC Section 7702, lowering the minimum assumed rate from 4% to 2%. The practical effect was to raise the guideline premium and seven-pay limits on newly issued policies, so you can fund a policy somewhat more aggressively before triggering the DEFRA or TAMRA thresholds. The structure of the tests did not change.
Do these rules mean cash value life insurance is a bad way to save?
No. TEFRA, DEFRA, and TAMRA limit how much you can overfund a policy relative to its death benefit; they do not remove the tax-deferred growth, FIFO access, tax-free loans, or income-tax-free death benefit that make properly designed whole life and indexed universal life useful accumulation tools. Securities-based investments have their own place in a plan. The rules simply require that a cash value policy be designed and funded correctly — which is the whole job of a good policy design.
Building a policy for cash value? The design is where these rules bite.
Getting maximum funding without tripping CVAT, GPT, or the seven-pay test is the difference between a policy that works and one that quietly underperforms. If you want a second set of eyes on how a policy is designed — or how an existing one was — we can walk through it in about 30 minutes. No sales pitch.
Schedule a 30-minute call or send us a messageHow cash value actually works
TEFRA, DEFRA, and TAMRA are the guardrails; the mechanics inside them are where the value gets built. Our whole life insurance resource walks through policy design, cash value, and rate of return end-to-end, and the indexed universal life resource covers how these same rules apply to UL. For the MEC side specifically, see our full guide to Modified Endowment Contracts.
- Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA): Public Law 97-248 — established universal life as life insurance and defined baseline contract characteristics. congress.gov
- Deficit Reduction Act of 1984 (DEFRA): Public Law 98-369 — created the CVAT and GPT definitions of life insurance under IRC Section 7702. congress.gov
- Technical and Miscellaneous Revenue Act of 1988 (TAMRA): Public Law 100-647 — created the seven-pay test and the Modified Endowment Contract under IRC Section 7702A. congress.gov
- Internal Revenue Code Section 7702: the statutory definition of life insurance (CVAT and GPT). Cornell LII
- IRS Revenue Ruling 2005-6: IRS guidance on the tax treatment of contracts that fail to qualify as life insurance. irs.gov
- Consolidated Appropriations Act of 2021: Public Law 116-260, Section 205 — updated the interest-rate assumptions inside IRC Section 7702, effective January 1, 2021. congress.gov
This post is general education about how federal tax law treats life insurance, not tax or legal advice. The application of TEFRA, DEFRA, TAMRA, and IRC Sections 7702 and 7702A to a specific policy depends on the contract, the insured's age and health, the death benefit, the funding schedule, and prevailing law at the time. Illustrative premium and death-benefit figures are simplified examples. Consult your policy contract, your carrier's illustration, and a qualified tax professional before making decisions that affect a policy's tax qualification or MEC status.
TEFRA, DEFRA & TAMRA on the Podcast
We talk through the same three laws conversationally — how universal life set the whole thing in motion, what CVAT, GPT, and the seven-pay test actually police, and why the rules end up protecting policyholders more than they threaten them. A good companion if you'd rather hear it than read it.
Thank you for an informative ste. As a newer agent in the field I have lots of questions. My question concerns the cash value accumulation test requirements. After a period of time the cash surrender value increases, over time does not the amount at risk decrease? And so my confusion revolves around this. If the cash value is steadly increaseing how can the client possibly pay an increaseing premium to fulfill the requiremen? Obviously the cost of insurance factors into this but I am not understanding how? Rspectfully.
Hi Joaquin,
The CVAT allows for a higher percentage of cash value to death benefit as the insured ages, and this would theoretically callow for an increasing premium.
At the same time, paid-up additions have a death benefit associated with them, and this is how one would increase his or her premium on the policy, so the net amount at risk may remain constant rather than go down given the increasing death benefit from the paid-up additions.
Thanks for stopping by.
Dear Mr. Roberts—I have managed a portfolio of UL and VUL policies over many years to maximize the “investment” aspect. After the 15 year anniversary date, I exercised the option to reduce the face for a number of them, which in some cases has resulted in “negative guideline premium.” One carrier appears to be of the view that the negative amount can be amortized (over my actuarial life), while others interpret the “force out” to require return of premium immediately. Since the minimum guaranteed rate on most of these policies is well above current money market rates, amortization would be better for me. There appears, however, to be no uniform rule, and the methodology used by each after a face amount reduction is a “black box”. Is there some a software application you are aware of that has been blessed by the IRS?
Can a failed gpt be managed short of default? If premiums are frozen and you want to reduce DB in latter years what can be done???
Hi Frank,
I’m not sure I understand what you mean by “managed.” If the policy fails GPT, then it’s automatically reclassified and taxes due on gains. It can remain in force. And it can pay a death benefit (taxability of the death benefit changes to a degree).
Great Article – I’ll bet most Agents who Sell Whole Life do not know this!
Hey thanks! I’ll bet you’re right about that, and it makes me think we should have a deeper dive resource available on the subject.
Brandon: My wife has an old UL policy issued by Aetna that is now administered by Lincoln Financial. It has a face amount of $50,000, was issued in 1985 and my wife is now age 71. In the past we always paid a pretty much minimal premium and the CV at the end of 2019 was only $2,600. The currently monthly COI is at $90 and we’ve only been paying $200/month into the contract the past several years, since it almost lapsed in 2018. When we recently tried to pay an additional $2,750 they denied $1,100 as exceeding DEFRA. Additionally, they will not accept any future payments this year and will start billing us for $45/month beginning next year. This pretty much assures this policy will lapse in the near future. I’ve written to them for specifics, but never got a definitive answer as to the details of their calculation — they continue to just say it exceeds DEFRA guideline premiums. Any advice on our options, or who we can contact for a review? e.g. insurance commissioner??
Hi John,
There are times when a long time underfunded UL policy can fall into a situation where the premium needed to save the policy from lapse goes beyond the allowable guideline premium. The warning Lincoln is giving you is most likely related to this. The Guideline Premium Test (most likely) used to qualify this policy as life insurance allows for a smaller death benefit relative to cash value as the insured ages, which is advantageous for people who intentionally seek to build up as much cash value as possible in their policies. But it also places smaller limits on allowable premium payments, especially at advanced ages for some circumstances, which you could very well fall into.
You could always ask Lincoln to confirm the calculation of the guideline premium in this case, to ensure an error hasn’t been made. Beyond that, there may be little you can do to rectify this. It’s certainly unfortunate that no one called your attention to this possibility earlier.
I don’t see a complaint to the DOI getting you anywhere.
Your premium payment does not violate DEFRA limits. They need to accept your premium. Tell them in writing to accept your premium. File a DOI complaint if they don’t.
There are two reasons why your premium should be accepted. First, the guideline level premium limitation says that the SUM of your premiums cannot exceed the SUM of the guideline level premiums. Any single premium payment can exceed a single guideline level premium as long as your cumulative premiums are less than the cumulative guideline level premiums. Since you’ve been making minimal payments, I highly doubt your cumulative premiums exceed the limit. Ask them for a demonstration that your premium will violate the test.
Second, IRC Section 7702(f)(6) says you can disregard the guideline premium test if your premium is needed to prevent the policy from terminating.
If you really do fail the GLP test, then you need to ask the insurer to tell you the exact premium that will keep the policy inforce because the 7702(f)(6) exception requires you to make the smallest possible premium and end the contract year with no cash surrender value. You will have to do this each year.
Also, just to have fun with them. Tell them you want them to show exactly how they computed the guideline level premium. Your policy was issued before October 21, 1988, and the mortality rules were a little different back then. If they don’t remember that mortality rules changed, then they are going to have an actuary spend a whole day (or two) trying to figure it out.
Thank you. This was very helpful!!!
Thanks for this information. The sum of premiums paid cannot exceed the sum of GLPs. I have heard this before, but many sources have been excluding this piece.
this EXACT thing is happening to me with Lincoln Life. I am very glad you posted this. It’s awful to have paid into this policy since I was 19 years old and they project not accepting premiums when I am 75.
Great article. I have been specializing in max cash accumulation policies and understanding these IRS rules is a must for myself and my clients.
Excellent article. I am preparing for an industry exam. I have to read a very long and technical document on this subject. It was incomprehensible. But now that I read your article, I see the big picture, and the difficult document has become much easier. Thanks.
Hey Ryan,
You’re welcome and thanks for the feedback. Happy we could help make things a bit clearer. Good luck on the exam!
Great article. I was researching because I received a DEFRA refund after making an extra payment last years by mistake.
You should have mentioned TRA 1986. It introduced the passive activity loss rules which pretty much wiped out the tax shelter industry, allowing life insurance producers tout life insurance as the last tax shelter — which prompted the creation of the MEC in TAMRA.
Hello,
My wife has two paid up life insurance policies dated 1988, pre-TAMRA.
Are there any tax advantages that are grandfathered in because of the date of these policies? I’m interested in possibly overfunding these policies if that is allowed? Any advice would be sincerely appreciated. Thank you.
Hi Tim,
If these are truly paid-up policies it’s unlikely that you’ll be able to put any additional money into them. The mechanism through which you would make these overfunding payments no longer exists.
If, however, these policies are not technically paid-up and still have the ability to receive payments, her policies should be grandfathered from the Modified Endowment Contract rules so long as you do not make a material change (nor ever made one) to the policy. At this age of the policy, there may not be a huge upside to this fact all on its own as the MEC limitations tend to be more restrictive earlier in the policy’s life. However, a policy this age could have a substantially higher guaranteed rate of accumulation that could be better than the non-guaranteed rates available on a new product–and certainly higher than current market rates. So if you do have the ability to put more money into the policies, you may have an opportunity to benefit from an old interest rate established under very different economic assumptions.
First of all, many thanks to Brandon. 🙂
Hi Tim,
You may also look into other options that can meet your needs and bring more value and benefits to your family.
For example, recently I helped a friend to change her Paid-Up Whole Life policy to an Indexed Universal Life policy by using 1035 exchange. She had two options to select from:
1. She may simply transfer the cash value from the current whole life policy into the new policy without adding any single dollar. The added benefits include: increased face amount/death benefit, the cash value growing with the linked index strategies and guaranteed 0% floor, living benefits including tax-free withdrawal to supplement retirement income and 0%-0.9% net interest rate if taking loan for flexible use (My friend’s previous policy has an 8% interest rate) , added cash indemnity Long Term Care benefits, Extended No Lapse Guarantee Rider (if she wants).
2. If she still wants to fund more, she can increase the face amount, then all benefits mentioned in the option 1 will also be increased.
Everyone’s situation is unique. The best way is to examine all aspects of family financial needs and tax planning strategies, and then make a comprehensive and informative decision afterwards.
I hope this post by no means offends Brandon (I highly respect you and learned a lot from you. I just wanted to share a recent experience or provide any help in case needed. 🙂
Well done podcast!
I have been involved in the life insurance business since the early 80’s and this was a great history refresher.
Thanks