By Michael L. Kerley
Securing Tax Benefits
NAIFA has been working with other groups to make sure Congress will not tax
April 15 is here. Very few taxpayers who file taxes this month will
notice that there is no line on
their returns where they have to calculate the incremental increase in the cash
value of their permanent life insurance
policies or annuities and declare the
gain as taxable income. Or, in a smaller
number of cases, taxpayers who have
received the death benefits of a life insurance policy will not be required to report
those as taxable income.
Security American Families Count On.
Life Insurance, Annuities, Long-Term
Care and Disability Income Insurance
75 million American families count on
the life insurance industry to protect
their financial future.
Life is unpredictable. That’s why American families include life insurance, annuities,
long-term care and disability income insurance in planning their financial future.
Whether acquired individually or at work, life insurers’ products help protect 75 million
American families against economic uncertainty — providing peace of mind, long-term
savings and a guarantee of lifetime income when it’s time to retire.
Life Insurance, Annuities, Long-Term Care and Disability
Income Insurance: Security American Families Count On.
As insurance professionals, NAIFA
members know only too well what
wonderful benefits those owners and
beneficiaries of life insurance policies
and annuities have received. Hopefully,
NAIFA members understand that these
tax benefits did not just magically appear
in the tax code in 1913 and remain in
the code to the present day. Hopefully,
they also know that there have been
many instances since 1913 when they
have had to reinforce to Congress why
these tax benefits should remain in place.
Given the climate in Congress today, it is
quite likely that reinforcement is going to
be required again—soon.
Paid for by the Life Insurance Industry
tax-free death benefits are such places—
to the tune of a projected $150 billion of
untaxed income over the next five years
in the case of inside build-up. There are
more such places in the insurance world:
$628.5 billion in employer-provided
health-care and long-term care insurance; $631.9 billion in capital gains for
investment products; $24.3 billion in
self-employed health care and LTCI;
$607.3 billion in employer-provided
SecureFamily.org. No fewer
than 75 million American families
depend on the financial security of
products provid ed by the insurance
companies and agents/advisors of
the organizations involved. The goal
SecureFamily.org is to make sure
families now and in the future get the
same chances at financial security as
those befo re them.
Why? The U.S. government is running
trillion-dollar budget deficits and has
nearly 12 trillion dollars in accumulated national debt. Only time will tell
whether the huge “bailout” and economic “stimulus” bills that Congress
has passed in the last six months will
jolt the U.S. economy back on track.
Whatever the bills’ impact, what is sure
to remain is a huge blob of red ink that
sooner or later will have to be cleaned
up. NAIFA always assumes that it will
be sooner and plans accordingly.
Protecting financial security
Though standing at the ready to defend insurance tax incentives has been
NAIFA’s No. 1 job since 1913, NAIFA
and other life insurance industry organizations have been working together
for more than two years to prepare a
plan to defend insurance tax incentives as economic and political storm
clouds have gathered overhead.
SecureFamily.org consists of
insurance agents/advisors who are
members of NAIFA and other producer orga nizations. Nobody ever
wins a major legislative or political
battle without a strong component of
grassroots constituent lobbyists. In
every state and congressional district,
NAIFA members are ideally situated
as voters, taxpayers and job creators
to provide the grassroots ingredient to
bring home the win.
The reason NAIFA does that is
because when Congress is considering ways to increase revenue, it always
looks first at places where income that
could be taxed is not being taxed. Life
insurance, annuity inside build-up and
The group, which includes NAIFA,
the American Council of Life Insurers, the Association for Advanced
Life Underwriting, GAMA International and the National Association of
Independent Life Brokerage Agencies, has come together under the
But will NAIFA members step up
when needed? The opposition bets
no. NAIFA is “all in” on NAIFA members. Time will tell who’s right.
Michael L. Kerley is senior vice president,
Federal Government Relations. Contact
him at 703-770-8155.
56 ADVISOR TODAY | April 2009