Definition

IRC §7702

The federal tax definition of a life insurance contract — the gateway to all life-insurance tax benefits.

Full definition

Section 7702 defines what qualifies as life insurance for federal tax purposes. A contract must satisfy either the Cash Value Accumulation Test (CVAT) or the Guideline Premium/Corridor Test (GPT) and maintain a minimum corridor of death benefit above cash value. Failing §7702 unwinds tax deferral and the income-tax-free death benefit.

Related terms

DEFRA

The Deficit Reduction Act of 1984, which enacted §7702 and defined life insurance for federal tax purposes.

GPT / CVAT

The two §7702 tests a life insurance contract can use to qualify.

IRC §817(h)

The diversification requirement for variable insurance separate accounts.

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