SECTION 5. ISSUE DATE OF

CONTRACTS

.01 For purposes of this notice, the date on which a contract was issued generally is to be determined according to the standards that applied for purposes

October 12, 2004 596 2004–41 I.R.B.

of the original effective date of section 7702. See H.R. Conf. Rep. No. 861, 98th Cong., 2d Sess. 1076 (1984), 1984–3 (Vol. 2) C.B. 330; see also 1 Staff of Senate Comm. on Finance, 98th Cong., 2d Sess., Deficit Reduction Act of 1984, Explanation of Provisions Approved by the Committee on March 21, 1984, at 579 (Comm. Print 1984). Thus, contracts received in exchange for existing contracts are to be considered new contracts issued on the date of the exchange. For these purposes, a change in an existing contract is not considered to result in an exchange if the terms of the resulting contract (that is, the amount and pattern of death benefit, the premium pattern, the rate or rates guaranteed on issuance of the contract, and mortality and expense charges) are the same as the terms of the contract prior to the change.

.02 Notwithstanding Section 5.01, if a life insurance contract satisfied Section 3.01 or Section 3.02 when originally issued, a change from previous tables to the 2001 CSO tables is not required if: (a) The change, modification, or exercise of a right to modify, add or delete benefits is pursuant to the terms of the contract;

(b) The state in which the contract is issued does not require use of the 2001 CSO tables for that contract under its standard valuation and minimum nonforfeiture laws; and

(c) The contract continues upon the same policy form or blank.

The changes, modifications, or exercises of contractual provisions referred to in this subsection include addition or removal of a rider, an increase or decrease in death benefit (if the change is not underwritten), and a change from an option 1 to option 2 contract or vice versa.