What is TEFRA?
A. The TAX EQUITY AND FISCAL REFORM ACT OF 1982 AND TAX REFORM ACT OF 1984 is referred to as TEFRA. The IRS Rules provide two alternative tests to check for TEFRA: The Guideline Premium Test (GPT) and Cash Value Accumulation Test (CVAT). These tests help determine the future pattern of death benefits and the maximum premium amount that may be paid into a policy in order to qualify as life insurance. The election of the test to be applied to the policy must be made at issue and cannot be changed. CVAT may not be available on all products or in all states.
