Commissioner of Internal Revenue v. Pacific Mutual Life Insurance Company

Before us is a petition by the Commissioner of Internal Revenue to review a decision of the Tax Court of the United States involving income taxes for the years 1958 through 1961, holding that the guaranteed renewable accident and health insurance contracts issued by the taxpayer, Pacific Mutual Life Insurance Company, were “issued or renewed for periods of five years or more” within the purview of Sec. 809(d) (5) of the Internal Revenue Code of 1954.

The following summary of facts is taken from the petitioner’s opening brief, to which taxpayer offers no dissent in its answer brief.

Taxpayer, a life insurance company, issued a guaranteed renewable accident and health contract providing disability income benefits which was available to insureds whose age did not exceed 59 years. Under the terms of the policy, the insured was given the right to renew the policy for consecutive periods of one year each to age 65 by payment of the renewal premium for each such term. Taxpayer reserved the right to change the amount of the renewal premium on the basis of its applicable rate tables in effect on the due date, provided, however, that (1) no change was made in the rate tables applicable to…