I'm reading through the text book SOA published on 7702, but can't seem to find the answer to this scenario.
With CVAT, it only need to abide by the 7-pay test to avoid MEC status. So what's preventing someone from dumping massive amount of premium into a policy after 7 years?
Obviously I'm missing something since the entire point of 7702 is to prevent abusing life insurance to dodge investment taxes. What am I missing?
Also, from what I found, it seems CVAT is often used with VULs. Why is that?
With CVAT, it only need to abide by the 7-pay test to avoid MEC status. So what's preventing someone from dumping massive amount of premium into a policy after 7 years?
Obviously I'm missing something since the entire point of 7702 is to prevent abusing life insurance to dodge investment taxes. What am I missing?
Also, from what I found, it seems CVAT is often used with VULs. Why is that?
7702 and CVAT, what am I missing?
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