Section 7702 life insurance

A 7702 plan refers to a cash-value life insurance policy, which is a life insurance policy that has a cash value beyond the death benefit. When you pay premiums into these kinds of policies, some of the premium goes to the death benefit and some of the premium goes to the policy's cash value.

What type of life policy covers 2 lives?

Overfunded life insurance is when you pay more into a policy than is required. Permanent life insurance policies, such as whole life insurance or universal life insurance, have a cash value component. So, by overfunding your policy, you contribute more to the cash value.

Which type of policy is considered to be overfunded?

It is possible that a contract that requires seven level annual premiums will fail the 7-pay test because the statutory net level premium will be less than the actual premium paid. Once a policy has failed the 7-pay test, it becomes a MEC and remains a MEC for the life of the contract.

What happens if a life insurance policy failed the 7-pay test?

Life insurance for children is typically a term life insurance policy purchased by a parent or guardian as a safety net in case your child passes away while they're a minor.