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TITLE 26-INTERNAL REVENUE CODE AMENDMENTS 1959-Pub. L. 86-69, § 2(a), June 25, 1959, 73 Stat. 112, amended analysis of Part I and subparts general- ly. PART REFERRED TO IN OTHER SECTIONS This part is referred to in section 1016 of this title. SUBPART A-DEFINITION; TAX IMPOSED Sec. 801. Definition of life insurance company. 802. Tax imposed. AMENDMENTS 1959-Pub. L. 86-69, § 2(a), June 25, 1959, 73 Stat. 112, amended analysis generally. 1958-Pub. L. 85-345, § 2(b), Mar. 17, 1958, 72 Stat. 37, eliminated "for 1955 and 1956" following the words "Tax imposed" in item 802. 1956-Act July 24, 1956, ch. 696, § 2(a), 70 Stat. 633, inserted "and 1956" in item 802. Act Mar. 13, 1956, ch. 83, § 2, 70 Stat. 36, amended analysis generally. § 801. Definition of life insurance company (a) Life insurance company defined For purposes of this subtitle, the term "life insurance company" means an insurance com- pany which is engaged in the business of issu- ing life insurance and annuity contracts (either separately or combined with health and acci- dent insurance), or noncancellable contracts of health and accident insurance, if- (1) its life insurance reserves (as defined in subsection (b)), plus (2) unearned premiums, and unpaid losses (whether or not ascertained), on noncancella- ble life, health, or accident policies not in- cluded in life insurance reserves, comprise more than 50 percent of its total re- serves (as defined in subsection (c)). (b) Life insurance reserves defined (1) In general For purposes of this part, the term "life in- surance reserves" means amounts- (A) which are computed or estimated on the basis of recognized mortality or morbid- ity tables and assumed rates of interests, and (B) which are set aside to mature or liqui- date, either by payment or reinsurance, future unaccrued claims arising from life in- surance, annuity, and noncancellable health and accident insurance contracts (including life insurance or annuity contracts com- bined with noncancellable health and acci- dent insurance) involving, at the time with respect to which the reserve is computed, life, health, or accident contingencies. (2) Reserves must be required by law Except- (A) in the case of policies covering life, health, and accident insurance combined in one policy issued on the weekly premium payment plan, continuing for life and not subject to cancellation, and (B) as provided in paragraph (3), in addition to the requirements set forth in paragraph (1), life insurance reserves must be required by law. (3) Assessment companies In the case of an assessment life insurance company or association, the term "life insur- ance reserves" includes- (A) sums actually deposited by such com- pany or association with State officers pur- suant to law as guaranty or reserve funds, and (B) any funds maintained, under the charter or articles of incorporation or asso- ciation (or bylaws approved by a State in- surance commissioner) of such company or association, exclusively for the payment of claims arising under certificates of member- ship or policies issued on the assessment plan and not subject to any other use. For purposes of this part, the rate of interest assumed in calculating the reserves described in subparagraphs (A) and (B) shall be 3 per- cent. (4) Deficiency reserves excluded The term "life insurance reserves" does not include deficiency reserves. For purposes of this subsection and subsection (c), the defi- ciency reserve for any contract is that portion of the reserve for such contract equal to the amount (if any) by which- (A) the present value of the future net premiums required for such contract, ex- ceeds (B) the present value of the future actual premiums and consideration charged for such contract. (5) Amount of reserves For purposes of this subsection, subsection (a), and subsection (c), the amount of any re- serve (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. (c) Total reserves defined For purposes of subsection (a), the term "total reserves" means- (1) life insurance reserves, (2) unearned premiums, and unpaid losses (whether or not ascertained), not included in life insurance reserves, and (3) all other insurance reserves required by law. The term "total reserves" does not include defi- ciency reserves (within the meaning of subsec- tion (b)(4)). (d) Adjustments in reserves for policy loans For purposes only of determining under sub- section (a) whether or not an insurance compa- ny is a life insurance company, the life insur- ance 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 insur- ance reserves are maintained. (e) Guaranteed renewable contracts For purposes of this part, guaranteed renew- able life, health, and accident insurance shall Page 495 § 801