insurance interest rate
(11) Insurance interest rate For purposes of this section— (A) In general The term “insurance interest rate” means, with respect to any contract issued in any calendar year, the lesser of— (i) the section 7702 valuation interest rate for such calendar year (or, if such calendar year is not an adjustment year, the most recent adjustment year), or (ii) the section 7702 applicable Federal interest rate for such calendar year (or, if such calendar year is not an adjustment year, the most recent adjustment year). (B) Section 7702 valuation interest rate The term “ section 7702 valuation interest rate” means, with respect to any adjustment year, the prescribed U.S. valuation interest rate for life insurance with guaranteed durations of more than 20 years (as defined in the National Association of Insurance Commissioners’ Standard Valuation Law) as effective in the calendar year immediately preceding such adjustment year. (C) Section 7702 applicable Federal interest rate The term “section 7702 applicable Federal interest rate” means, with respect to any adjustment year, the average (rounded to the nearest whole percentage point) of the applicable Federal mid-term rates (as defined in section 1274(d) but based on annual compounding) effective as of the beginning of each of the calendar months in the most recent 60-month period ending before the second calendar year prior to such adjustment year. (D) Adjustment year The term “adjustment year” means the calendar year following any calendar year that includes the effective date of a change in the prescribed U.S. valuation interest rate for life insurance with guaranteed durations of more than 20 years (as defined in the National Association of Insurance Commissioners’ Standard Valuation Law). (E) Transition rule Notwithstanding subparagraph (A), the insurance interest rate shall be 2 percent in the case of any contract which is issued during the period that— (i) begins on January 1, 2021 , and (ii) ends immediately before the beginning of the first adjustment year that beings after December 31, 2021 .