My company wants to make the death benefits be return of premium plus interest on both a single premium whole life and 5-pay whole life product for the first two policy years. After that, the death benefit would be level. I don't see how return of premium death benefit feature in the first two years could both pass IRC 7702 and satisfy the standard nonforfeiture law.
If the 7702 Cash Value Accumulation Test is performed for the first two years assuming a level return of premium death benefit, the cash values required to pass would be very low - obviously lower than the cash values required under the standard nonforfeiture law.
Maybe I am missing a piece of information that would make this product design possible. Any insight would be appreciated.
There is a similar thread to this for whole life payment products: http://ift.tt/1rUh1KY
If the 7702 Cash Value Accumulation Test is performed for the first two years assuming a level return of premium death benefit, the cash values required to pass would be very low - obviously lower than the cash values required under the standard nonforfeiture law.
Maybe I am missing a piece of information that would make this product design possible. Any insight would be appreciated.
There is a similar thread to this for whole life payment products: http://ift.tt/1rUh1KY
Return of Premium Death Benefit and IRC 7702 for SPWL and Limited Pay Whole Life
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