Section 7702 was added to the Internal Revenue Code in the mid 1980’s. It was the first formal attempt by the IRS to define what is (and isn’t) life insurance and entitled to the tax benefits associated with life insurance (tax deferred cash value buildup, tax free death benefits and non-taxable access to cash values via borrowing). It codified a definition for whole life (an existing life product) and created an totally new set of rules allowing for a new “universal” life product structure. Within a matter of a year or two “fixed” interest universal life products were introduced by a number of larger life insurance companies. Virtually all of these “first and second” generation fixed universal life (FUL) products ever issued have lapsed or will do so soon. Aside from those who insured people who have passed away. Low interest rates combined with ongoing actual attained age based term deductions to create policy death benefits make FUL policies a “buyer beware” product. There is no scenario where a FUL policy makes any sense to own in today’s economic world of low interest rates. Only if interest rates rise and remain at double digit levels once again should anyone consider buying or continuing to own a FUL product.