Industry Should Consider Education Campaign On Estate Tax Repeal
The life insurance industry should consider a major public education campaign to alert its customers to the realities of the ephemeral estate tax repeal recently signed into law.
A loud and clear message that the word “repeal” does not mean what it says in this context is vital not only for the well-being of the industry, but for consumers as well.
It is hard to imagine a more tragic result of the illusion surrounding the estate tax provision in the $1.35 trillion tax reduction bill than consumers mistakenly believing they no longer have to worry about estate planning.
Policyholders may allow carefully designed life insurance policies to lapse, or delay the purchase of life insurance to their own detriment, unless they are forced to face up to the reality that the estate tax will not actually be repealed permanently.
It will only be suspended for one year before coming back with a vengence on Jan. 1, 2011, absent new legislation.
This is particularly important in the life insurance context. Delaying the purchase of life insurance could force consumers to bear unnecessary costs, since the protection will cost more for older purchasers.
And of course, some consumers may become medically uninsurable in the interim, thus undermining any effort to use life insurance to protect an estate.
The problem is that without an ongoing effort to remind consumers about how the new estate tax law is structured, the sunset provision that will bring the tax back into existence may quickly be forgotten.
There were certainly some articles in the general news media mentioning the sunset provision, but by and large, the references were made only in passing.