What is CVAT in insurance?

CVAT stands for Cash Value Accumulation Test. It is a test that is generally done to determine whether a financial product can be taxed as an insurance product rather than an investment. CVAT is used to test that the cash value of an insurance policy does not exceed the current value of all future premium payments on the policy.
If the cash value is more than the future payments then in that case that particular product is considered to be an investment product and not an insurance product. If a financial product does not pass the CVAT test and is determined as an investment product, then the product will be taxed at a higher tax price may be as ordinary income tax or capital gains tax.
The CVAT test is used when a person taking policy does not want himself to be limited in the number of premiums that has to be paid into the policy and wants to maximize the death benefit that can be prevailed.