Filed Under:Life Insurance, Life Products

Life insurers launch "fly-in" to prevent fade out

The life industry tries to sell certainty when nothing in Washington is certain. (AP photo/J. Scott Applewhite)
The life industry tries to sell certainty when nothing in Washington is certain. (AP photo/J. Scott Applewhite)

With sequestration nigh, and everything on the table for discussion, insurers are not taking any chances in Washington under any Congressional fiscal deal that could be worked out. 

A coalition group called Americans to Protect Family Security, a partnership across insurance industry associations, including agents and financial advisors, organized a "fly-in" of more than 140 life insurance professionals and agents this week in Washington. 

The people on the frontline of the industry descended upon Capitol Hill offices in Congress Feb. 28 to emphasize the importance of their products and make sure they were seen as essential, not tangential, as Congress tries to slash spending and increase revenue.

The group association members are American Council of Life Insurers (ACLI), Association for Advanced Life Underwriting (AALU), GAMA International, the Insured Retirement Institute (IRI), National Association of Independent Life Brokerage Agencies (NAILBA) and National Association of Insurance and Financial Advisors (NAIFA).

The agents and insurance executives are not lobbying for a specific piece of legislation or regulatory policy point. Instead, they were trying to drive home the message that families turn to life insurance companies, agents and advisors to protect their financial futures at a time when “everything is on the table” to be cut, as one insurance industry representative said. 

Products represented included life insurance, annuities, long-term care and disability income insurance.

If anything happened to the “inside build up” of life insurance products, the industry would have to radically change its actuarial assumptions and pricing, jeopardizing access to products that are envisioned to provide financial security in an age when pension plans no longer fill the bill.

Specifically, insurers are concerned about the Congressional Joint Committee on Taxation (JCT). As lifehealthpro.com contributor Robert Lehmert, principal of National Advanced Planning, a consulting firm specializing in services to life insurance carriers and advanced market practitioners, stated in an article last month. The JCT “has, for many years, classified the exclusion of the inside buildup as a major tax expenditure.”

Lehmert pointed out, "for fiscal year 2014, exclusion of the inside buildup of insurance products was reported by JCT as foregone revenue of some $29.1 billion, ranking it No. 13 on a list of approximately 200 identified tax expenditures. ... To a revenue-starved Congress, this may be a tempting target.”

Fly-in participants stressed to Congress that at a time of strained federal entitlement programs, as well as state and local programs, industry products represent solutions to Americans’ financial and retirement security concerns, the ACLI stated.

“We think all good ideas should be on the table to address the nations fiscal dilemmas. But any proposal that suggests making it harder for American families to build their financial and retirement security should be left off the table,” said ACLI President and CEO Dirk Kempthorne.

The message is that 75 million American families count on life insurers’ products for peace of mind, long-term savings and a guarantee of lifetime income when it’s time to retire. These products pay out $1.5 billion every day through payments from life insurance, annuities and other retirement products, long-term care insurance, and disability income insurance, the coalition says.

Savings in permanent life insurance and annuities represent more than 20 percent of Americans’ long-term savings.

"This coalition has a broad focus – our message is about providing financial security. And annuity products are having a big part in helping American families secure their financial futures. As we work with our partners to start a national dialogue focused on retirement security, who better than America's financial advisors and agents to carry this message forward and educate our policymakers ...The initial feedback we have received has been positive, and we believe our message is coming across loud and clear," stated Cathy Weatherford, IRI president and CEO.

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