Limited increases in death benefit are permitted under 7702 using the Cash Value Accumulation test under both B and C below.
Does anyone know if both B AND C must be met, or can either B OR C be met?
Obviously an AND is used, but I wonder if an OR was intended.
(B) for purposes of the cash value accumulation test, the increase described in subparagraph (A) may be taken into account if the contract will meet such test at all times assuming that the net level reserve (determined as if level annual premiums were paid for the contract over a period not ending before the insured attains age 95) is substituted for the net single premium, and
(C) for purposes of the cash value accumulation test, the death benefit increases may be taken into account if the contract—
(i) has an initial death benefit of $5,000 or less and a maximum death benefit of $25,000 or less,
(ii) provides for a fixed predetermined annual increase not to exceed 10 percent of the initial death benefit or 8 percent of the death benefit at the end of the preceding year, and
(iii) was purchased to cover payment of burial expenses or in connection with prearranged funeral expenses.
For purposes of subparagraph (C), the initial death benefit of a contract shall be determined by treating all contracts issued to the same contract owner as 1 contract.
Does anyone know if both B AND C must be met, or can either B OR C be met?
Obviously an AND is used, but I wonder if an OR was intended.
(B) for purposes of the cash value accumulation test, the increase described in subparagraph (A) may be taken into account if the contract will meet such test at all times assuming that the net level reserve (determined as if level annual premiums were paid for the contract over a period not ending before the insured attains age 95) is substituted for the net single premium, and
(C) for purposes of the cash value accumulation test, the death benefit increases may be taken into account if the contract—
(i) has an initial death benefit of $5,000 or less and a maximum death benefit of $25,000 or less,
(ii) provides for a fixed predetermined annual increase not to exceed 10 percent of the initial death benefit or 8 percent of the death benefit at the end of the preceding year, and
(iii) was purchased to cover payment of burial expenses or in connection with prearranged funeral expenses.
For purposes of subparagraph (C), the initial death benefit of a contract shall be determined by treating all contracts issued to the same contract owner as 1 contract.
Limited increases in death benefit permitted under 7702
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