IRS Explains Rules For Unisex And Smoker Tables

The IRS already has issued some advice about how to use the new, 2001 mortality tables in Notice 2004-61. IRS Notice 2006-95 was developed to address some of the concerns raised in responses to the 2004 notice, Logan writes in the new notice.

One provision in the new notice modifies the rules for gender-based and smoking-based tables so that they apply only to policies that use the 2001 CSO tables.

Another notice provision eliminates the use of the concept of "underwriting" in the rule for determining the issue date of a policy that undergoes a change in the death benefit.

Under the rules in the new notice, for example, an insurer can use the 2001 CSO Gender-Blended Mortality tables to calculate reasonable mortality charges for female insureds as long as the issuer's state regulators permit use of the gender-blended tables in calculations of minimum nonforfeiture values and as long as the insurer also uses the tables to determine mortality charges for male insureds.

Similarly, if a state lets an insurer use the 2001 CSO Smoker and Nonsmoker Mortality tables to compute minimum nonforfeiture values, the insurer can use the smoker tables to compute reasonable mortality charges for smoker insureds as long as it also uses the nonsmoker tables to compute reasonable mortality charges for nonsmokers, Logan writes.