Andrew Strelka


This Comment discusses the current tax methods being applied to the disability waiver of premium rider, an optional addition to life insurance policies' that waives subsequent annual premiums in the event the policyholder becomes disabled. This Comment will show that the seminal case regarding the taxation of disability waiver of premium riders, Estate of Wong Wing Non v. Commissioner, has been misconstrued by both the IRS and the insurance industry. This has allowed for the existence of two scenarios where a disabled policyholder is subjected to an unexpected tax liability he would have avoided but for the onset of disability. Finally, the correct holding from Wong Wing Non will be analyzed and constructed: waived premiums constitute a constructively received disability benefit that should be excluded from taxation under § 104 of the Code. Model legislation will also be proposed as an alternative to a subsequent judicial challenge to Wong Wing Non.