PUBLIC LAW 97-248—SEPT. 3, 1982
96 STAT. 549
guideline single p r e m i u m s or guideline level p r e m i u m previously determined. "(3) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes of
this subsection— "(A) FLEXIBLE PREMIUM LIFE INSURANCE CONTRACT.—The
term s 'flexible p r e m i u m life insurance contract' and 'contract' mean a life insurance contract (including any qualified additional benefits) which provides for the payment of one or more p r e m i u m s which a r e not fixed by the insurer as to both timing and a m o u n t. Such term s do not include that portion of any contract which is treated under State law a s providing any a n n u i t y benefits other than as a settlement option. "(B) PREMIUMS PAID.—The term ' p r e m i u m s paid' means the p r e m i u m s paid under the contract less any a m o u n t s (other than a m o u n t s includible in gross income) to which section 72(e) applies. If, in order to comply with the requirements of paragraph (1)(A), any portion of any p r e m i u m paid during any contract year is r e t u r n e d by the insurance company (with interest) within 60 days after the end of a contract year— "(i) the a m o u n t so r e t u r n e d (excluding interest) shall be deemed to reduce the s u m of the p r e m i u m s paid under the contract during such year, and "(ii) notwithstanding the provisions of section 72(e), the a m o u n t of any interest so r e t u r n e d shall be includible in the gross income of the recipient. "(C) APPLICABLE PERCENTAGE.—The term 'applicable per-
centage' means— "(i) 140 percent in the case of a n insured with a n a t t a i n e d age a t the beginning of the contract year of 40 or less, and "(ii) in the case of a n insured with a n a t t a i n e d age of more than 40 as of the beginning of the contract year, 140 percent reduced (but not below 105 percent) by one percent for each year in excess of 40. "(D) CASH VALUE.—The cash value of any contract shall be determined without regard to any deduction for any s u r r e n d e r charge or policy loan. "(E) QUALIFIED ADDITIONAL BENEFITS.—The term
'quali-
fied additional benefits' means any— "(i) g u a r a n t e e d insurability, "(ii) accidental death benefit, "(iii) family term coverage, or "(iv) waiver of p r e m i u m. "(F) P R E M I U M PAYMENTS NOT DISQUALIFYING CONTRACT.—
The payment of a p r e m i u m which would result in the s u m of the p r e m i u m s paid exceeding the guideline p r e m i u m limitation shall be disregarded for purposes of paragraph (l)(A)(i) if the a m o u n t of such p r e m i u m does not exceed the a m o u n t necessary to prevent the termination of the contract without cash value on or before the end of the contract year. "(G) N E T SINGLE P R E M I U M. — I n c o m p u t i n g the n e t single
p r e m i u m under paragraph (1)(B)— "(i) the mortality basis shall be that g u a r a n t e e d under the contract (determined by reference to the
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