Life insurers are asking Congress for an Internal Revenue Code change that could make annuities cheaper and easier to offer.
The insurers want Congress to recognize that bonds and notes are the beef and beans that fill the annuity burritos, not the stoves, ovens and other capital assets used to cook them.
The insurers are lobbying for the Secure Family Futures Act of 2025, a bill that would classify the bonds and notes in the insurers' portfolios as product ingredients that generate and consume ordinary income, not as capital assets that produce capital gains and losses.
Applying ordinary tax rules to the portfolios could make the investments in the portfolios much easier to hedge, according to a paper published in a Society of Actuaries journal.
What it means: If the bill becomes law, annuity operations might be more profitable, and publicly traded issuers might have an easier time selling annuities without big changes in the estimated value of their assets and annuity obligations putting net earnings on an investor-alienating rollercoaster.
Bill mechanics: Sen. Thomas Tillis, R-N.C., introduced the bill in April with Sen. Raphael Warnock, D-Ga.
Tillis also introduced an earlier version of the bill in the 118th Congress, and Rep. Randy Feenstra, R-Iowa, introduced a version in the House. Both 118th Congress versions of the bill had Democratic co-sponsors.
The American Council of Life Insurers is backing the bill with strong support from member companies.
Lobbying report records compiled by OpenSecrets.org show that at least 11 insurers and another trade group, the National Association of Mutual Insurance Companies, have been helping the ACLI support the bill.
Analysts from PwC have prepared an analysis showing that adoption of the proposal could cut federal income tax revenue by less than $700 million over 10 years.
Credit: Adobe Stock
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.