New Law Changes Interest Rate Assumptions for Life Insurance

Corporate partner Bryan Bloom coauthored an article with Michael Liebeskind for Wealth Management titled, “New Law Changes Interest Rate Assumptions for Life Insurance,” that addresses a recent and significant change to the interest rate assumptions underlying Internal Revenue Code Section (IRC) 7702.

In the article, the authors explain how the impact of the change to IRC Section 7702 interest rate assumptions applies to life insurance policies issued on or after Jan. 1, 2021. The article goes into detail about how the change will drive an increase in premium deposit capacity and lower costs for Private Placement Life Insurance (PPLI) policies, two favorable outcomes for PPLI policies.

The authors also discuss the possibility that Congress will enact legislation in 2021 to increase income tax rates and decrease estate and gift exemption amounts for high net worth families, which could encourage families that have been considering the acquisition of PPLI policies to do so.