Even though an independent insurance company was not utilized, the Court of Appeals for the Fifth Circuit recently held in Ross v. Odom that the proceeds from a state established and administered survivors' benefit program were tax exempt as proceeds of a life insurance contract under section 101(a)(1) of the Internal Revenue Code. This note analyzes and inquires into the ramifications of the court's rationale, which was based on a functional approach to the concept of insurance and an interpretation of the legislative history. Of particular interest is the extension of the Odom precedent to privately funded, self-administered insurance plans in private business.

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