Organizations that represent insurance agents and other financial professionals say they are happy with what President Bush left out of his State of the Union address Tuesday as well as what he put in.
The groups say they like the president’s health finance reform proposals and are relieved that he made no mention of taxing annuities or life insurance policies.
Here is a sampling of the groups’ reactions:
- The National Association of Insurance and Financial Advisors, Falls Church, Va., says it is happy that the president left the sweeping changes recommended in 2005 by a key federal tax reform panel out of the State of the Union address.
The tax reform panel had suggested that the government consider taxing some health insurance benefits and the buildup of at least some of the cash value within life insurance and annuity contracts. The panel said Congress should replace many current tax breaks, including those that now protect inside buildup, with a new system of broadly based savings accounts.
When the tax reform panel issued its report, some observers said Bush might include the panel’s recommendations in policy proposals that would appear in the State of the Union address.
“NAIFA is encouraged that it does not appear that the Bush administration will pursue tax reform initiatives that would undermine the ability of Americans to achieve financial and retirement security,” NAIFA says in its statement.
Taxing the “inside buildup” of life insurance and annuity contract values “would discourage Americans from purchasing the only products guaranteed to last a lifetime,” NAIFA says. “Families need to save, but they also need to protect against the financial loss at death at any age through permanent life insurance. And they must guard against outliving their retirement savings through the guarantees only annuities can provide. The [tax reform panel proposals] would needlessly make millions of families vulnerable to the financial risks associated with death while also exposing millions of older Americans to the threat of outliving savings.”
NAIFA members organized a massive letter-writing campaign against the tax reform panel’s savings plan recommendations, and it also worked closely with other industry groups, including the American Council of Life Insurers, Washington, and a key NAIFA affiliate, the Association for Advanced Life Underwriting, to keep the proposals from moving forward, NAIFA says.
“While President Bush did not indicate he will pursue fundamental tax reform in 2006, NAIFA is by no means claiming victory,” NAIFA says. “The president could raise the issue again in his annual budget message, scheduled for Feb. 7.”
- The Association of Health Insurance Advisors, an arm of NAIFA, is supporting the president’s call for affordable health care.