In recent years, the sale of life insurance and annuity contracts "wrapped" around other investments has proliferated.  These arrangements seek to defer tax on the investment earnings of those contracts.  The Treasury Department believes that these life insurance contracts and annuity contracts are purchased primarily as a way to avoid current taxation on investment earnings and not for life insurance protection or a means of saving for retirement.  Revenue Ruling 2003-91 and Revenue Ruling 2003-92 will curtail the purchase of life insurance and annuity contracts primarily for tax avoidance purposes.

For more, see: http://www.ustreas.gov/press/releases/js591.htm

For the text of Revenue Ruling 2003-91, see: http://www.irs.gov/pub/irs-drop/rr-03-91.pdf

For the text of Revenue Ruling 2003-92, see: http://www.irs.gov/pub/irs-drop/rr-03-92.pdf