26 U.S.C. § 816 — Life insurance company defined

(a) Definition. For this subtitle, “life insurance company” means an insurance company engaged in issuing life-insurance and annuity contracts, separately or with accident and health insurance, or noncancellable health-and-accident contracts, if its life-insurance reserves plus unearned premiums and unpaid losses on noncancellable life, accident, or health policies not in those reserves are more than 50 percent of its total reserves. “Insurance company” means a company whose business during the taxable year is more than half issuing insurance or annuity contracts or reinsuring risks underwritten by insurance companies. (b) Life-insurance reserves. (1) “Life insurance reserves” means amounts (A) computed or estimated from recognized mortality or morbidity tables and assumed interest rates, and (B) set aside to mature or liquidate, by payment or reinsurance, future claims not yet accrued under life, annuity, and noncancellable accident-and-health contracts, including combined contracts, involving life, accident, or health contingencies when the reserve is computed. (2) Except for weekly-premium policies combining life, accident, and health coverage for life without cancellation, and except as in (3), the reserves must also be required by law. (3) For an assessment life insurer or association, reserves include sums deposited with State officers by law as guaranty or reserve funds and funds kept under its charter, articles, or approved bylaws only to pay claims under assessment-plan membership certificates or policies and not available for another use. (4) For this subsection and (a) and (c), a reserve for a taxable year is the average of its beginning and ending amounts. (c) Total reserves. “Total reserves” means (1) life-insurance reserves; (2) unearned premiums and unpaid losses, whether determined or not, not included in life-insurance reserves; and (3) all other insurance reserves required by law. (d) Policy loans. Only to decide under (a) whether a company is a life insurance company, reduce both life-insurance reserves and total reserves by the average of the beginning and ending aggregate outstanding policy loans for contracts with life-insurance reserves. (e) Guaranteed renewable contracts. For this part, guaranteed renewable life, accident, and health insurance is treated like noncancellable insurance. (f) Other contracts. Only for the determination under (a), amounts held at interest to satisfy contracts without permanent guarantees about life, accident, or health contingencies are not included in the reserves described in (c)(1) or (c)(3). (g) Funeral insurers. A burial or funeral-benefit company directly making funeral supplies or providing funeral services is not taxed under this part; it is taxed under section 831. (h) Deficiency reserves. For this section and section 842(b)(2)(B)(i), “life insurance reserves” and “total reserves” do not include deficiency reserves.