PUBLIC LAW 104-191—AUG. 21, 1996
110 STAT. 2069
certified by a physician as having an illness or physical
condition which can reasonably be expected to result in
death in 24 months or less after the date of the certification.
"(B) CHRONICALLY ILL INDIVIDUAL. —The term 'chronically ill individual' has the meaning given such term by
section 7702B(c)(2); except that such term shall not include
a terminally ill individual.
"(C) QUALIFIED LONG-TERM CARE SERVICES.—The term
'qualified long-term care services' has the meaning given
such term by section 7702B(c).
"(D) PHYSICIAN.— The term 'physician' has the meaning
given to such term by section 1861(r)(l) of the Social Security Act (42 U.S.C. 1395x(r)(l)).
"(5) EXCEPTION FOR BUSINESS-RELATED POLICIES. —T h is subsection shall not apply in the case of any amount paid to
any taxpayer other than the insured if such taxpayer has
an insurable interest with respect to the life of the insured
by reason of the insured being a director, officer, or employee
of the taxpayer or by reason of the insured being financially
interested in any trade or business carried on by the taxpayer.",
(b) EFFECTIVE DATE. —The amendment made by subsection (a) 26 USC loi note.
shall apply to amounts received after December 31, 1996.
SEC. 332. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED
ACCELERATED DEATH BENEFir RIDERS.
(a) QUALIFIED ACCELERATED DEATH BENEFIT RIDERS TREATED
AS LIFE INSURANCE.— Section 818 (relating to other definitions and
special rules) is amended by adding at the end the following new
subsection:
"(g) QUALIFIED ACCELERATED DEATH BENEFIT RIDERS TREATED
AS LIFE INSURANCE.— For purposes of this part—
"(1) IN GENERAL.— Atiy reference to a life insurance contract
shall be treated as including a reference to a qualified accelerated death benefit rider on such contract.
"(2) QUALIFIED ACCELERATED DEATH BENEFIT RIDERS.— For
purposes of this subsection, the term 'qualified accelerated
death benefit rider' means any rider on a life insurance contract
if the only payments under the rider are pa5nnents meeting
the requirements of section 101(g).
"(3) EXCEPTION FOR LONG-TERM CARE RIDERS.— Paragraph
(1) shall not apply to any rider which is treated as a longterm care insurance contract under section 7702B.".
(b) EFFECTIVE DATE.—
26 USC 8i8 note.
(1) IN GENERAL.— The amendment made by this section
shall take effect on January 1, 1997.
(2) ISSUANCE OF RIDER NOT TREATED AS MATERIAL
CHANGE. —For purposes of applying sections 101(f), 7702, and
7702A of the Internal Revenue Code of 1986 to any contract—
(A) the issuance of a qualified accelerated death benefit
rider (as defined in section 818(g) of such Code (as added
by this Act)), and
(B) the addition of any provision required to conform
an accelerated death benefit rider to the requirements of
such section 818(g),
shall not be treated as a modification or material change of
such contract.
�
