What does TAMRA or the seven-pay test mean with regards to permanent life insurance? On June 21st, 1988, the Technical and Miscellaneous Revenue Act (TAMRA) was passed.
As it relates to whole life insurance, it’s known as the seven-pay test. This means you could no longer pay a single premium upfront; you had to spread it out over seven years. The fastest way to fund a whole life policy was in seven payments.
This is different for Universal Life. You could actually fund a Universal Life policy in five installments. By paying a premium of 20% each year for the first four years, and then one day into the fifth year, you’ve satisfied TAMRA for Universal Life.
So, they are not synonymous terms. The seven-pay test applies to Whole Life, while Universal Life can be funded faster, within five years.
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