The Importance Of Trust

I thought the message was timely because so much of our business is based upon trust. We are not a transactional business. We require an interface with clients who trust us with their financial and personal information so that we may help them find their way to satisfying their goals and objectives. Other disciplines, which are essentially transactional, are not skilled in the myriad directions that problem solving and service may take.

People want to do business with someone they can trust rather than being overwhelmed by reams of material they do not understand. I often wonder how many people comprehend, or even read, a prospectus they get in the mail or at point of sale.

Following Powell, the meeting progressed with fine presentations and excellent workshops. I particularly was impressed with Ed Slott, CPA, who revealed the vast opportunity available in helping people make wise choices in the distribution of their IRAs. That session alone was worth the price of admission.

The meeting was great, but I do have one concern that you may characterize either as a gripe or constructive criticism. I prefer the latter. My concern is the heavy presence of organizations marketing life settlements in the exhibit area. The legitimate buying and selling of “used” policies can no doubt benefit investors and may be of value to some policyholders, but I believe the practice poses a danger to our business. Some have been critical of life settlements because of the potential for abuse by the so-called “sleaze” element, not unlike some elements of the “used car” business. My concern is more fundamental.

The tax advantages of life insurance are bestowed in support of social policy at the expense of economic policy. The tax-free build-up and non-taxable death benefit of life insurance rests upon three premises. First, the insured is a human life (not an investment fund). Second, the beneficiary, whether a family or business, is dependent in some way upon the insured. Third, the insured is of more value to the beneficiary alive than deceased. Life settlements fail all three tests. Should this practice continue to proliferate, economic policy could prevail over social policy and our so-called “tax expenditures” could be lost in whole or in part. We have plenty of examples that demonstrate when we “stretch the envelope” too far, both we and our policyholders lose. When tax advantages are lost, no one has more to lose than members of AALU.

We hold these tax advantages in trust for future generations of policyholders and our business. If that trust is violated, everyone loses.

I thought the message was timely because so much of our business is based upon trust. We are not a transactional business. We require an interface with clients who trust us with their financial and personal information so that we may help them find their way to satisfying their goals and objectives.”