Tax Bills Come And Go, Insurers Say, But VAs Are Here To Stay

Annuities are a long-term investment that extend a lot longer than the five years the dividend tax change will be in effect until it sunsets in 2008, he adds.

Distributors are saying there will not be a long-term impact, he adds. Part of the reason, he says, is that more than half of Hartford Financials sales are in qualified accounts and IRAs will not be affected, Walters adds.

Long-term planning will continue to be emphasized in the sale of the product because “it is risky to change the way you are selling a product because of a temporary tax change,” he continues.

Walters says that “we are reaffirming buying [VAs] for reasons other than tax deferral.”

For instance, he notes the demand for guarantee features. Over 80% of those buying VAs from Hartford buy additional features including guarantees, according to Walters.

And, he continues, the industry is seeking more equitable tax treatment in other tax bills or potential legislation such as a Lifetime Annuity Payout proposal.

Efforts will continue to be made to seek more favorable tax treatment for VAs, according to Bryan Haviland, a spokesman for Nationwide Financial Services, Columbus, Ohio.

“Weve known for a long time that VAs have valuable features aside from tax deferral and that we have and will continue to promote these features. VAs are a unique way to save for retirement,” he adds.

Reproduced from National Underwriter Edition, June 9, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.