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ARTICLE · 26 FEBRUARY 2021

New Law Changes May Make Life Insurance More Attractive

Buchanan Ingersoll & Rooney
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In response to the COVID-19 pandemic, Congress passed the Consolidated Appropriations Act, 2021 (Act), one of the largest spending bills in history.

United StatesInsurance
Elizabeth Carrott Minnigh
Elizabeth Carrott Minnigh
Joshua Headley
Joshua Headley
Daniel J. Walters
Daniel J. Walters
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In response to the COVID-19 pandemic, Congress passed the Consolidated Appropriations Act, 2021 (Act), one of the largest spending bills in history. Although the Act focuses primarily on providing relief to those negatively impacted by the pandemic, there was a historic change made to Internal Revenue Code Section 7702. Section 7702 defines "life insurance contract" and sets forth the requirements for such a contract. Section 7702 has remained unchanged since its enactment in 1984, but the Act changed the guaranteed insurance rate for cash value accumulation from 4% to 2% for 2021, and a variable rate will be used thereafter. This change comes in light of historically low interest rates and will certainly have an impact on the life insurance industry.

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