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While you are correct, I would challenge this. Every IUL (and a couple of WL companies) have this on their policies and have for many years. All state departments of insurance have approved these policies for sale in their state. These companies know that the policies are being sold for retirement purposes (and for industry preservation to avoid phantom income tax issues on so many policies that would otherwise lapse).Yet to be validated by the IRS or courts.
The industry is so far down the road on this... that if the IRS were to weigh in negatively on this, the industry would simply sue and make it a class action lawsuit to protect policyholders and the insurance industry. NAIFA, Finseca, NAFA, and other associations would all join in on that lawsuit.
Then yes, the courts would weigh in. And the fact is, these riders are a consumer protection device and I would argue that the courts would rule in favor for consumer protection provisions, especially since the consumer isn't the drafting party of these contracts. (A handy consumer protection when considering the law.)
And yet, if the lawsuit fails... policyholders and industry advocates would then probably need to sue all 50 state regulators and the insurance companies themselves for approving these policies for sale knowing the implications on consumers.
Looking at the reality... these riders are staying.