WASHINGTON BUREAU — Insurance experts are still trying to decide just how beneficial the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 will be for life insurers and their customers.

President Obama today brought the act to life by signing H.R. 4853, a bipartisan bill that passed in the Senate Wednesday and in the House Thursday.

The act provides for preserving extended unemployment insurance benefits for 13 H.R. 4853more months and renewing many tax incentives created by the Economic Growth and Tax Relief Reconciliation Act of 2001 for 2 more years.

The act will set the personal estate tax exemption at $5 million for 2 years and the top estate tax rate at 35%, and it will reunify estate and gift taxes.

Observers say the act will let settlors, or families that owe estate taxes, buy insurance policies tax-free and, over time, use the policies to help estate beneficiaries escape having to pay estate taxes.

Some insurance policy experts have called the act a bonanza for estate planners and their clients. Other experts have been more skeptical and are suggesting that, in the long run, the contents of the box may prove to be less alluring than the shiny wrapping paper.

Sarah Spear, director of policy and public affairs at the Association of Advanced Life Underwriting (AALU), says passage of the act represents only a temporary victory.

“We are very pleased with the reunification of the estate and gift taxes ? an issue the AALU has championed the last 4 years,” Spear says. “It simplifies estate planning and removes an artificial barrier to intergenerational transfers of business interests and other assets.”

But the AALU would like to see permanent, sustainable estate tax reform in the range of the 2009 law, Spear says.

Similarly, Marvin Tuttle Jr., executive director of the Financial Planning Association (FPA), Denver, says the FPA is happ to see the act create some short-term certainty.

“”However, this bill should be considered a critical first step to finding a permanent, workable solution to our nation’s tax laws,” Tuttle says. “It is imperative that Congress seriously consider longer term fixes to our tax code problems versus stringing together a series of short-term patches.”

Michael Ban, a principal Ernst & Young L.L.P., New York, says the act will provide for more clarity in estate planning, and especially when it comes to allocation of generation-skipping tax (GST) exemptions in life insurance trust arrangements.

But “I am somewhat skeptical that its a clear win for the life insurance industry that would drive significant sales,” Ban says. “While life insurance trusts are popular, I don’t know

that uncertainty or inability to allocate GST would prevent a sale.”

Meanwhile, the increase in the 2011 estate, gift and GST exemptions to $5 million, from $1 million if Congress had failed to act, may reduce the need for insurance, Ban says.

“Fewer estates will presumably be paying tax, and many will pay less due to the higher exemption,” Ban says. “That said, the legislation is active for 2 years, which certainly leaves the door open for significant changes to the estate and gift area in the future. I feel planners should consider the current environment as well as the potential for future increases when advising clients on the amount and structure of life insurance in estate planning. This is particularly important given the potential changes that can occur over time relating to a client insurability and related costs.”