IRS SUPPLEMENTS SCHEDULES OF PREVAILING STATE ASSUMED INTEREST RATES FOR INSURANCE RESERVE COMPUTATION.
Rev. Rul. 96-2; 1996-1 C.B. 141
- Institutional AuthorsInternal Revenue Service
- Cross-Reference
Communications Division
Part I
Section 807. -- Rules for Certain Reserves
- Code Sections
- Subject Areas/Tax Topics
- Index Termsinsurance companies, life, reserves
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 95-11227 (7 original pages)
- Tax Analysts Electronic Citation95 TNT 246-10
Rev. Rul. 96-2
For purposes of section 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 1994, this ruling supplements the schedules of prevailing state assumed interest rates set forth in Rev. Rul. 92-19, 1992-1 C.B. 227. This information is to be used by insurance companies in computing their reserves for (1) life insurance and supplementary total and permanent disability benefits, (2) individual annuities and pure endowments, and (3) group annuities and pure endowments. As section 807(d)(2)(B) requires that the interest rate used to compute these reserves be the greater of (1) the applicable federal interest rate, or (2) the prevailing state assumed interest rate, the table of applicable federal interest rates in Rev. Rul. 92-19 is also supplemented.
Following are supplements to schedules A, B, C, and D to Part III of Rev. Rul. 92-19, providing prevailing state assumed interest rates for insurance products with different features issued in 1995 and 1996, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rate under section 807(d) for 1995 and 1996. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.
This is the fourth supplement to the interest rates provided in Rev. Rul. 92-19. Earlier supplements were published in Rev. Rul. 93-58, 1993-2 C.B. 241 (interest rates for insurance products issued in 1992 and 1993), Rev. Rul. 94-11, 1994-1 C.B. 196 (1993 and 1994), and Rev. Rul. 95-4, 1995-1 C.B. 141 (1994 and 1995).
Part III. Prevailing State Assumed Interest Rates -- Products Issued
in Years After 1982. /*/
Schedule A
STATUTORY VALUATION INTEREST RATES
BASED ON THE 1980 AMENDMENTS TO THE
NAIC STANDARD VALUATION LAW
A. Life insurance valuation:
Guarantee Duration
(years) Calendar Year of Issue
__________________ ______________________
1996
10 or fewer 5.50**
More than 10 5.25**
but not more than 20
More than 20 4.50**
Source: Rates calculated from the monthly averages, ending June 30, 1995, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
** As the applicable federal interest rate for 1996 of 6.63 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under section 807 is 6.63 percent.
FOOTNOTE TO SCHEDULE A
/*/ The terms used in the schedules in this ruling and in Part III of Rev. Rul. 92-19 are those used in the Standard Valuation Law; the terms are defined in Rev. Rul. 92-19.
Part III, Schedule B
STATUTORY VALUATION INTEREST RATES
BASED ON THE 1980 AMENDMENTS TO THE
NAIC STANDARD VALUATION LAW
B. Single premium immediate annuities and annuity benefits involving
life contingencies arising from other annuities with cash settlement
options and from guaranteed interest contracts with cash settlement
options:
Calendar Year of Issue Valuation Interest Rate
1995 7.25*
Source: Rates calculated from the monthly averages, ending June 30, 1995, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates. The terms used in this schedule are those used in the Standard Valuation Law as defined in Rev. Rul. 92-19.
* As this prevailing state assumed interest rate exceeds the applicable federal interest rate for 1995 of 6.99 percent, the interest rate to be used for this product under section 807 is 7.25 percent.
Part III, Schedule C13 - 1995
STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 1995 CALENDAR YEAR BUSINESS
GOVERNED BY THE 1980 AMENDMENTS
C. Valuation interest rates for other annuities and guaranteed
interest contracts that are valued on an issue year basis:
Valuation
Cash Future Interest Rate
Settlement Interest Guarantee Duration For Plan Type
Options? Guarantee? (years) A B C
__________ __________ __________________ ____________________
Yes Yes 5 or fewer 7.25 6.25* 5.75*
More than 5, but 7.00 6.25* 5.75*
not more than 10
More than 10, but 6.25* 5.50* 5.25*
not more than 20
More than 20 5.25* 4.75* 4.75*
Yes No 5 or fewer 7.50 6.50* 6.00*
More than 5, but 7.25 6.50* 6.00*
not more than 10
More than 10, but 6.50* 5.75* 5.50*
not more than 20
More than 20 5.50* 5.00* 5.00*
No Yes or No 5 or fewer 7.25
More than 5, but 7.00
not more than 10 NOT APPLICABLE
More than 10, but 6.50*
not more than 20
More than 20 5.50*
_____________________________________________________________________
Source: Rates calculated from the monthly averages, ending June 30, 1995 of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
* As the applicable federal interest rate for 1995 of 6.99 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under section 807 is 6.99 percent.
Part III, Schedule D13 - 1995
STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 1995 CALENDAR YEAR BUSINESS
GOVERNED BY THE 1980 AMENDMENTS
D. Valuation interest rates for other annuities and guaranteed
interest contracts that are contracts with cash settlement options
and that are valued on a change in fund basis:
Valuation
Cash Future Interest Rate
Settlement Interest Guarantee Duration For Plan Type
Options? Guarantee? (years) A B C
__________ __________ __________________ ____________________
Yes Yes 5 or fewer 8.25 7.50 6.00*
More than 5, but 8.00 7.50 6.00*
not more than 10
More than 10, but 7.25 7.00 5.75*
not more than 20
More than 20 6.25* 6.25* 5.25*
Yes No 5 or fewer 8.50 8.00 6.25*
More than 5, but 8.25 8.00 6.25*
not more than 10
More than 10, but 7.50 7.25 6.00*
not more than 20
More than 20 6.50* 6.50* 5.50*
_____________________________________________________________________
Source: Rates calculated from the monthly averages, ending June 30, 1995, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
* As the applicable federal interest rate for 1995 of 6.99 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under section 807 is 6.99 percent.
Part IV. Applicable Federal Interest Rates.
TABLE OF
APPLICABLE FEDERAL INTEREST RATES
FOR PURPOSES OF SECTION 807
Year Interest Rate
____ _____________
1995 6.99
1996 6.63
Sources: Rev. Rul. 94-73, 1994-2 C.B. 197 for the 1995 rate and Rev. Rul. 95-79, 1995-49 I.R.B. 4 (at 6) for the 1996 rate.
EFFECT ON OTHER REVENUE RULINGS
Rev. Rul. 92-19 is supplemented by the addition to Part III of that ruling of prevailing state assumed interest rates under section 807 for certain insurance products issued in 1995 and 1996 and is further supplemented by an addition to the table in Part IV of Rev. Rul. 92-19 listing applicable federal interest rates. Parts I and II of Rev. Rul. 92-19 are not affected by this ruling.
DRAFTING INFORMATION
The principal author of this revenue ruling is Ann H. Logan of the Office of Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling contact her on (202) 622-3970 (not a toll-free call).
- Institutional AuthorsInternal Revenue Service
- Cross-Reference
Communications Division
Part I
Section 807. -- Rules for Certain Reserves
- Code Sections
- Subject Areas/Tax Topics
- Index Termsinsurance companies, life, reserves
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 95-11227 (7 original pages)
- Tax Analysts Electronic Citation95 TNT 246-10
