Tax Treatment of Life Insurance and Annuity Products
The present budget realities and focus on tax expenditures endanger the tax rules applicable to the insurance and annuity products that NAIFA members use every day to help secure long-range financial security for 75 million American families.
The tax code should not create disincentives for long-term savings and risk-shifting. Congress should reaffirm the current tax rules to encourage individuals to put and keep money aside in permanent life insurance and annuities, as well as to replace income and protect retirement savings with disability income and long-term care insurance. These vehicles guarantee long-range financial security to families and businesses, and also benefit the national budget and economy.
- SecureFamily.org: Financial Security and Peace of Mind Are More
Important Than Ever
- Retirement Coalition Tax Reform Letter to Senators
- SecureFamily.org Tax Coalition Letter to Senators
The Affordable Care Act
Since the passage of the Patient Protection and Affordable Care Act (ACA) in 2010, NAIFA and its coalition partners have worked to ensure that the law’s goal of expanding health insurance coverage to millions of Americans can be achieved in a manner that is truly affordable, and does not jeopardize choice, quality, or access to care. NAIFA advocates for targeted, bipartisan reforms that improve the affordability and sustainability of private insurance choices, and ensure that consumers have access to professional services offered by licensed and regulated insurance agents.
Financial Services Regulatory Reform
Implementation of the Dodd-Frank Wall Street Reform Act enacted in 2010 continues to be a major focus for NAIFA. The Act called for various investor protection-related studies that will inform federal and state legislators and regulators about gaps in the regulation of financial services professionals that should be addressed. NAIFA will continue our efforts to educate officials and the public about the unique role our members serve in providing affordable investment options to Main Street investors. NAIFA is concerned that the economic impact of excessive and duplicative regulation will result in higher costs to consumers and an erosion of affordable advice and services for the middle class.
NAIFA’s chief securities concern is the potential impact on middle-market consumers of the possible implementation of an SEC rule imposing a fiduciary standard of care on the activities of registered representatives.
Additionally, NAIFA is actively engaged on issues such as proposed amendments to SEC Rule 12b-1, potential new broker-dealer disclosure requirements, the registration requirements of municipal advisors, the establishment of a Self-Regulatory Organization (SRO) for Investment Advisers, and the SEC’s “pay-to-play” rule.
- NAIFA-The American College Uniform Fiduciary Standard Survey
- Registration of Municipal Advisors White Paper
- Self-Regulatory Organization for Investment Advisers White Paper
Retirement Savings Regulation
The Department of Labor (DOL) is expected to re-propose an expanded definition (under ERISA) of “fiduciary” that would apply to anyone who provides investment recommendations to employee benefit plan sponsors or participants, or even IRA holders.
A “seller’s exception” may exclude many commission-based advisors, but there are serious questions about how broad or workable this exception could be. A fiduciary under ERISA or the tax code cannot receive commission-based compensation unless the DOL grants a “prohibited transaction exemption” (PTE), which usually includes numerous conditions and additional paperwork requirements. ERISA fiduciaries are also subject to personal liability for failing to act solely in the interests of participants and beneficiaries.
NAIFA is concerned the re-proposal will turn 35 years of precedent in the retirement savings market on its head, and subject brokers for IRA accounts to ERISA fiduciary regulations for the first time. NAIFA is working with the investment and retirement savings community to persuade DOL to remove IRAs from any proposed definition, and to instead include a new definition for employer-provided retirement plans that will ensure that consumers do not lose access to affordable professional investment education and guidance.
Insurance Regulatory Reform
NAIFA supports insurance regulatory reform and modernization that helps American families and businesses achieve financial security. Such proposals should promote consumer protections, streamline agent licensing, improve product speed-to-market, and strengthen competitiveness of the insurance industry, both domestically and internationally.
NAIFA is firmly committed to its support of state-based insurance regulation while continually looking for ways to improve and advance such regulation to enhance consumer protections. NAIFA supports federal agent licensing reform legislation known as NARAB II. NAIFA is also open to the concept of optional insurance regulation at the federal level provided very specific conditions are met.
- Insurance Regulatory Reform and Modernization White Paper
- National Association of Registered Agents and Brokers
- NAIFA Survey: Impact of Multi-State Licensing Requirements on Producers
State Action on STOLI
Acting in cooperation with our coalition partners, NAIFA, our state associations and their members continue to pursue aggressively legislation in numerous states to stop the spread of stranger-originated life insurance (STOLI) transactions. Despite intense opposition and large expenditures of both human and financial resources by STOLI proponents, over half of the states have acted to protect seniors and stop STOLI.
Regulating the Use of Designations
Legislators, regulators and the media have raised concerns in recent months that senior citizens are being misled and harmed by the use of certain designations and certifications by insurance agents and advisors that may imply the existence of a level of expertise in senior affairs and financial matters that, in fact, does not exist. These types of allegations are potentially damaging to NAIFA members because they affect the reputation of all agents and advisors and could compromise the public’s trust in insurance agents..