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I need a 10-second lesson on what the heck QABs are. something about the level of DB, something about the inclusion of premiums, and 7702 treats them differently than 7702A. I can memorize the list of QAB riders and non-QAB riders, but what's the real heart of the lesson here?
10-26-2008, 09:57 AM
Both guideline premiums and the NSPs under the CVAT are computed by reference
to the contract's "future benefits," including charges for QABs.
The legislative history of section 7702A states that, for purposes of the 7-pay test,
riders on a base contract are not tested separately but are to be "considered part of
the base insurance contract for purposes of the 7-pay test."
Conceptually, a contract with a non-QAB can be viewed as consisting of two elements:
a life insurance contract and another contract.
The actuarial limitations for both sections 7702 and 7702A are based on the life insurance contract only.
The existence of the non-QAB contract will have no effect on the guideline premiums, NSPs, or 7-pay premiums of the life insurance contract.
Copied directly from here:
QAB= Qualified Additional Benefits
Whether a rider is a QAB or a non-QAB, the premium paid will be counted in the total premiums paid into the contract. However, the 7702/7702A premium limits will be raised by that premium for a QAB; the premium limits will not be raised by a non-QAB rider.
10-26-2008, 05:49 PM
The Guideline single premium is the Actuarial Present Value of (Benefits + Endowment + Expenses + Charges for QAB)
The Guideline level premium is the calculated similarly, but obviously a level premium.
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