One highlight of the annual meeting of the Association for Advanced Life Underwriting is when members assemble to visit Capitol Hill and speak with senators, representatives and their staffs to advance positions of top concern to the organization.
Some 900 members conveyed this year’s action items, which included codification of the best industry practices on corporate-owned life insurance; reform of the estate tax; restrictions on investor-owned life insurance; and the implementation of AALU-supported guidelines respecting insurance producer disclosure, life insurance valuation and deferred compensation.
To achieve these objectives, AALU President-elect Roger Sutton also stressed the importance of strengthening the organization’s own political muscle.
“We have twin challenges before us,”
Sutton said during an interview with National Underwriter. “[They entail] successfully addressing several important issues per year while [building] on our political strength and industry unity.”
The AALU seeks to cap the lifetime estate tax exemption at $2.5 million and a 45% top rate. These levels would eliminate estate tax for 99.8% of Americans, according to the AALU. In 2003, when the exemption was $1 million, 30,522 of 2.5 million decedents (or approximately 1.2%) had estate tax liability.
The current law repeals the estate tax for one year in 2010. After that, the estate tax reverts to the pre-2001 level. The Joint Committee on Taxation estimates that making estate tax repeal permanent beyond 2010 would cost $289 billion from 2005 to 2015.
AALU President Gus Comiskey Jr. expressed optimism that Congress will ultimately favor reform over repeal. But he warned that a final bill could produce such a high exemption level (and/or low tax rate) as to make the cost of reform nearly as great as that of repeal.
“The AALU supports reasonable, sustainable and permanent estate tax reform and has vigorously educated key legislators on this issue,” said Comiskey. “Given the deficit and competing national priorities, permanent reform at a sustainable level is realistic, whereas the cost of repeal is so high that it likely could not be sustainable for the multi-decade periods during which families plan their estates.”