According to recent figures produced by ACLI – The American Council of Life Insurers- around 75 million American families rely upon life insurance products for security in retirement and for other pressing financial requirements in the future.
ACLI, as well as the Association for Advanced Life Underwriting (AALU), GAMA International, The National Association of Insurance and Financial Advisors (NAIFA) and the National Association of Independent Life Brokerage Agencies (NAILBA) have written a letter to congress in the light of concerns about government proposals to change the rules regarding the tax code – rules which may affect current benefits on the kinds of private financial products offered by life insurance companies.
Congress is planning Changes to the Tax Code in order to Reduce National Debt
The reason behind the proposed changes is part of the government’s urgent goal of reducing the national debt.
In the letter ACLI state that while they appreciate that “The huge national debt is a crisis that must be addressed” their (the government’s) plans to replace this crisis with “a new crisis that damages the financial protection and retirement plans of millions of Americans would be misguided.”
“As changes are considered to the tax code … the vital role life insurers’ products play in the lives of 75 million American families must be recognized.”
Life Insurance Protects Against the Risks of Death of Wage Earners
Life insurance has long been recognized as providing an essential public service, protecting American families from the early death of a breadwinner, as well as providing a security net for the longer term – as people live longer, or need financial support through illness or disability. ACLI has stated that rather than undermining the public’s efforts to provide for themselves via private means, the “use of safe and secure financial products like those offered by life insurers…should be encouraged”.
A Change in the tax code could discourage rather than encourage members of the American public to “explore private retirement income options, whether individually or through the workplace”
Changing the Tax Code Unfair on Individuals who have acted prudently
The letter to congress also points out that changing the system now would be especially unfair on the millions of Americans who took “thoughtful and reasonable steps to protect their families. Years of personal sacrifice and careful financial planning could be undermined by such an abrupt change.”
What the government plans to do still remains to be seen – but what is certain is that the Life Insurance industry are prepared to do whatever it takes to persuade the American Government to call a halt to plans to change the tax code as regards life insurance products.
Source: Insurance news.net, targeted news service Nov 15