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 years the first variable universal life product was introduced by Equitable Life Assurance Society. This version of UL made “mutual fund like” investment options (called separate accounts) available to create cash value growth. Variable products today offer an incredible selection of stock based investment separate account options. Cash values are subject to dramatic market swings, as are any form of stock market investment at any given time.