PUBLIC LAW 98-369—JULY 18, 1984 separately under subsection (d)(l) from any other reserve under the contract. "(B) QUALIFIED SUBSTANDARD RISK.—For purposes of subparagraph (A), the term 'qualified substandard risk' means any substandard risk if— "(i) the insurance company maintains a separate reserve for such risk, "(ii) there is a separately identified premium or charge for such risk, "(iii) the amount of the net surrender value under the contract is not increased or decreased by reason of such risk, and "(iv) the net surrender value under the contract is not regularly used to pay premium charges for such risk.
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"(C)
LIMITATION ON AMOUNT OF LIFE INSURANCE RE-
98 STAT. 731
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SERVE.—The amount of the life insurance reserve determined for any qualified substandard risk shall in no event exceed the sum of the separately identified premiums charged for such risk plus interest less mortality charges for such risk.
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"(D) LIMITATION ON AMOUNT OF CONTRACTS TO WHICH
PARAGRAPH APPLIES.—The aggregate amount of insurance in force under contracts to which this paragraph applies shall not exceed 10 percent of the insurance in force (other than term insurance) under life insurance contracts of the company.
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"(6) SPECIAL RULES FOR CONTRACTS ISSUED BEFORE JANUARY i,
1989, UNDER EXISTING PLANS OF INSURANCE, WITH TERM INSURANCE OR ANNUITY BENEFITS.—For purposes of this part— "(A) IN GENERAL.—In the case of a life insurance contract issued before January 1, 1989, under an existing plan of insurance, the life insurance reserve for any benefit to which this paragraph applies shall be computed separately under subsection (d)(1) from any other reserve under the contract. "(B) BENEFITS TO WHICH THIS PARAGRAPH APPLIES.—This
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paragraph applies to any term insurance or annuity benefit with respect to which the requirements of clauses (i) and (ii) of paragraph (3)(C) are met. "(C) EXISTING PLAN OF INSURANCE.—For purposes of this paragraph, the term 'existing plan of insurance' means, with respect to any contract, any plan of insurance which was filed by the company using such contract in one or more States before January 1, 1984, and is on file in the appropriate State for such contract.
"(f) ADJUSTMENT FOR CHANGE IN COMPUTING RESERVES.— "(1) 10-YEAR SPREAD,—
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"(A) IN GENERAL.—For purposes of this part, if the basis for determining any item referred to in subsection (c) as of the close of any taxable year differs from the basis for such determination as of the close of the preceding taxable year, then so much of the difference between— "(i) the amount of the item at the close of the taxable year, computed on the new basis, and "(ii) the amount of the item at the close of the taxable year, computed on the eld basis.
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