816(a) LIFE INSURANCE COMPANY DEFINED. --For
purposes of this subtitle, the term "life insurance company"
means an insurance company which is engaged in the business
of issuing life insurance and annuity contracts (either separately
or combined with accident and health insurance), or noncancellable
contracts of health and accident insurance, if --
816(a)(1) its life insurance
reserves (as defined in subsection (b)), plus
816(a)(2) unearned premiums,
and unpaid losses (whether or not ascertained), on noncancellable
life, accident, or health policies not included in life insurance
reserves,
comprise more than 50 percent of its total reserves
(as defined in subsection (c)). For purposes of the preceding
sentence, the term "insurance company" means any company
more than half of the business of which during the taxable year
is the issuing of insurance or annuity contracts or the reinsuring
of risks underwritten by insurance companies.
816(b) LIFE INSURANCE RESERVES DEFINED.
--
816(b)(1) IN GENERAL. --For
purposes of this part, the term "life insurance reserves"
means amounts --
816(b)(1)(A) which are computed
or estimated on the basis of recognized mortality or morbidity
tables and assumed rates of interest, and
816(b)(1)(B) which are set
aside to mature or liquidate, either by payment or reinsurance,
future unaccrued claims arising from life insurance, annuity,
and noncancellable accident and health insurance contracts (including
life insurance or annuity contracts combined with noncancellable
accident and health insurance) involving, at the time with respect
to which the reserve is computed, life, accident, or health
contingencies.
816(b)(2) RESERVES MUST BE REQUIRED
BY LAW. --Except --
816(b)(2)(A) in the case of
policies covering life, accident, and health insurance combined
in one policy issued on the weekly premium payment plan, continuing
for life and not subject to cancellation, and
816(b)(2)(B) as provided in
paragraph (3),
in addition to the requirements set forth in
paragraph (1), life insurance reserves must be required by law.
816(b)(3) ASSESSMENT COMPANIES. --In
the case of an assessment life insurance company or association,
the term "life insurance reserves" includes --
816(b)(3)(A) sums actually
deposited by such company or association with State officers
pursuant to law as guaranty or reserve funds, and
816(b)(3)(B) any funds maintained,
under the charter or articles of incorporation or association
(or bylaws approved by a State insurance commissioner) of such
company or association, exclusively for the payment of claims
arising under certificates of membership or policies issued
on the assessment plan and not subject to any other use.
816(b)(4) AMOUNT OF RESERVES.
--For purposes of this subsection, subsection (a), and subsection
(c), the amount of any reserve (or portion thereof) for any
taxable year shall be the mean of such reserve (or portion thereof)
at the beginning and end of the taxable year.
816(c) TOTAL RESERVES DEFINED.
--For purposes of subsection (a), the term "total reserves"
means --
816(c)(1) life insurance reserves,
816(c)(2) unearned premiums,
and unpaid losses (whether or not ascertained), not included
in life insurance reserves, and
816(c)(3) all other insurance
reserves required by law.
816(d) ADJUSTMENTS IN RESERVES FOR POLICY
LOANS. --For purposes only of determining under subsection
(a) whether or not an insurance company is a life insurance
company, the life insurance reserves, and the total reserves,
shall each be reduced by an amount equal to the mean of the
aggregates, at the beginning and end of the taxable year, of
the policy loans outstanding with respect to contracts for which
life insurance reserves are maintained.
816(e) GUARANTEED RENEWABLE CONTRACTS.
--For purposes of this part, guaranteed renewable life, accident,
and health insurance shall be treated in the same manner as
noncancellable life, accident, and health insurance.
816(f) AMOUNTS NOT INVOLVING LIFE, ACCIDENT,
OR HEALTH CONTINGENCIES. --For purposes only of determining
under subsection (a) whether or not an insurance company is
a life insurance company, amounts set aside and held at interest
to satisfy obligations under contracts which do not contain
permanent guarantees with respect to life, accident, or health
contingencies shall not be included in reserves described in
paragraph (1) or (3) of subsection (c).
816(g) BURIAL AND FUNERAL BENEFIT INSURANCE
COMPANIES. --A burial or funeral benefit insurance
company engaged directly in the manufacture of funeral supplies
or the performance of funeral services shall not be taxable
under this part but shall be taxable under section 831.
816(h) TREATMENT OF DEFICIENCY RESERVES.
--For purposes of this section and section 842(b)(2)(B)(i),
the terms "life insurance reserves" and "total
reserves" shall not include deficiency reserves.
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