Definition
DAC Tax
The Deferred Acquisition Cost tax carriers embed in policy pricing under §848.
Full definition
Under IRC §848, life insurance carriers must capitalize a percentage of specified insurance premiums and amortize the deduction over 10 or 15 years. The economic cost is typically passed through to policyholders as a small load on premium. PPLI's institutional pricing makes the DAC-tax load visible and negotiable in a way retail products rarely do.
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