IRS deems change to insurance contract a 'new' contract

Insurance Tax Bulletin

In a recent private letter ruling, the IRS stated that a reduction in the face amount of a life insurance contract was not an alteration under the terms of the contract. Instead, the contract was treated as a new contract as of the date of alteration. This is important for insurance companies because the contract issue date determines which Commissioners Standard Ordinary mortality and morbidity tables (CSO tables) will be used to decide whether mortality charges are reasonable.

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