Exceptions
In the case of an employer-owned life insurance contract with respect to which the notice and consent requirements of paragraph (4) are met, paragraph (1) shall not apply to any of the following:
(A) Exceptions based on insured’s status
(A)Exceptions based on insured’s status#
Any amount received by reason of the death of an insured who, with respect to an applicable policyholder—
(i) was an employee at any time during the 12-month period before the insured’s death, or
(ii) is, at the time the contract is issued— (I) a director, (II) a highly compensated employee within the meaning of section 414(q) (without regard to paragraph (1)(B)(ii) thereof), or (III) a highly compensated individual within the meaning of section 105(h)(5), except that “35 percent” shall be substituted for “25 percent” in subparagraph (C) thereof.
(A)(i)#
was an employee at any time during the 12-month period before the insured’s death, or
(A)(ii)#
is, at the time the contract is issued—
(I) a director,
(II) a highly compensated employee within the meaning of section 414(q) (without regard to paragraph (1)(B)(ii) thereof), or
(III) a highly compensated individual within the meaning of section 105(h)(5), except that “35 percent” shall be substituted for “25 percent” in subparagraph (C) thereof.
(A)(ii)(I)#
(B)Exception for amounts paid to insured’s heirs#
Any amount received by reason of the death of an insured to the extent—
(i) the amount is paid to a member of the family (within the meaning of section 267(c)(4)) of the insured, any individual who is the designated beneficiary of the insured under the contract (other than the applicable policyholder), a trust established for the benefit of any such member of the family or designated beneficiary, or the estate of the insured, or
(ii) the amount is used to purchase an equity (or capital or profits) interest in the applicable policyholder from any person described in clause (i).
(B)(i)#
the amount is paid to a member of the family (within the meaning of section 267(c)(4)) of the insured, any individual who is the designated beneficiary of the insured under the contract (other than the applicable policyholder), a trust established for the benefit of any such member of the family or designated beneficiary, or the estate of the insured, or
(B)(ii)#
the amount is used to purchase an equity (or capital or profits) interest in the applicable policyholder from any person described in clause (i).