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Year-End Potpourri

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In the course of a year events occur and issues arise that are worthy of comment but not enough for a full treatment. Therefore, I like to use this first column of the new year to make brief observations regarding such issues.

Most laughable event of the year. Steve Piontek’s column in the Aug. 8 issue of National Underwriter delivered a very pointed and well-deserved barb at Robert Hunter, insurance spokesman for the Consumer Federation of America and perennial insurance gadfly. The column was critical of Hunter’s longstanding anti-insurance stance and ended by stating, “He should just shut up.”

The laughable part was Hunter’s response, which was printed in the Sept. 5 issue of NU. In responding to the charge that he always took positions contrary to the insurance industry, Hunter said, “That is simply untrue. I actually agree with most of what the industry does. My silence frequently means agreement.”

Silence is not always golden, however. Mr. Hunter should not “hide his light under a bushel.” If something is 95% good and 5% bad and all you ever hear about is the 5%, then it takes on the appearance of being all bad. Everyone has a right to be heard, but you have to earn the right to be taken seriously. Consumers need to hear positive news as well as the negative, and Hunter could improve his credibility if he would break his “silence” more often.

Most worrisome issue of the year. Our tax code is probably the No. 1 whipping boy around and the urge to “reform it” periodically seems to be irresistible. The last time we had a major reform, the primary result was the failure of a large number of our savings and loan institutions. The cost of that debacle was in the billions of dollars and was, of course, eventually borne by taxpayers.

Provisions in some of the proposals now being offered could do great harm to products sold by the life insurance business for more than 125 years. Permanent cash value life insurance has served well the long-term interests of the public and the broader interests of society. Reform proposals would encourage alternatives ill-suited to the long-term savings needs of most people.

When will we finally acknowledge that our tax code is complicated because we have a complex society with numerous essential objectives to be encouraged? Home ownership, charitable giving, retirement plans, health insurance programs and investment are but a few of those objectives that have been stimulated by the present code. It may not be perfect–but it is better than the alternatives being considered.

Best lesson I learned this year. One of the pleasures I have enjoyed the past couple of years has been learning more about the history of our great country–things I was not taught in school. In the last few years I have read biographies of John Adams and Benjamin Franklin and last year Ron Chernow’s great book on Alexander Hamilton.

Chernow has written extensively about the bitter feud between Hamilton on one side and Madison and Jefferson on the other. Jefferson and Madison favored an agrarian society for the future of our country whereas Hamilton pushed for an emphasis on manufacturing to better enable us to compete in world markets and be less dependent upon Europe for essential goods. At every turn, Hamilton’s view and initiatives prevailed, particularly with President Washington, much to the chagrin of Jefferson and Madison and later Monroe.

According to Chernow, Hamilton’s antagonists could see no other way to save the country from Hamilton’s ideas but to destroy him. And so began one of the bitterest campaigns of personal attacks that our political system has ever launched on a single individual. While Chernow’s book dealt extensively with this issue, the other biographies also alluded to the feud.

Fortunately, Hamilton survived this and his initiatives are credited with laying the groundwork for the great nation we have today. Lesson learned: pay more attention to ideas and actions and less to political polemics.

Tidbits during the year. The exodus continues. On Nov. 5, an article in the Wall Street Journal announced that J.P. Morgan Chase had put its life insurance and annuity businesses on the auction block. The article went on to say, “The move reflects the latest acknowledgement by a big bank that consumers don’t want to buy all of their financial services from the same company.” Little by little people are beginning to understand that life insurance is still sold rather than bought. As I have stated often, the essential sale is the creative plan the agent proposes. The insurance is merely the funding mechanism for the plan.

Pension plans were awash in controversy this year. On the one hand, a report released this year by the U.S. Government Accountability Office contends that cash balance pension plans that became popular 15 years ago have reduced corporate liabilities but have not been beneficial to retirees, particularly older workers. This has prompted some companies to take a fresh look at defined benefit plans, while cash-strapped companies are scrambling to find ways to reduce their pension liabilities further, albeit to the detriment of their employees.

I don’t know how this will play out in the future, but one thing is certain–people need to make sure their personal efforts take up any slack in what the companies provide. What a great challenge and opportunity for agents going into year 2006.


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