Some NAIFA members may not know this, but for members of Congress, they are the ideal constituents because they possess six qualities that are near and dear to lawmakers. These qualities were identified and described by ACLI President and CEO Governor Dirk Kempthorne during the NAIFA Congressional Conference currently under way in Washington, D.C.
As NAIFA members, Kempthorne said:
- You are believers. You reflect the belief of a great man from history, Winston Churchill, who said: If I had my way, I would write the word, insure, upon the door of every cottage … because I am convinced, for sacrifices so small, families can be protected against catastrophes which would otherwise smash them up forever.”
- You are articulate. You explain in simple, easy-to-understand language the beauty and the benefits of life insurance and financial security products.
- You advocate. Whether you are on Capitol Hill, in a meeting for the first time with a prospect or for the 50th time with a longstanding customer, you are advocating for long-term sensible solutions for financial security.
- You are personable. That is obvious, he said, because you would not be at the conference as a NAIFA member if you weren’t.
- You are likable. If you were not likable, you would not be able to convince anyone to trust you—not the folks back home on Main Street, or the members of Congress on Capitol Hill.
- You are dedicated. If you were not dedicated to your job, your clients and your great cause, you would not be here this week at the conference.
In addition to possessing these great qualities, NAIFA members talk to people about important issues every day, he added, and sometimes, their good advice falls on deaf ears. But they should always look on the bright side. After all, he said, “you’re always going to be more popular than Congress.”
The timing of their visit to Capitol Hill is perfect because of the tax proposal introduced by Rep. Dave Camp (R-MI) earlier this year. “His proposal was serious and significant,” Kempthorne said.
Although the proposal would not tax the inside build-up in financial products, it proposes a wide range of new taxes on the life insurance industry and on retirement savings.
Using government numbers, he said, the Camp proposal would lower corporate taxes to 25 percent, which would save the life insurance industry as much as $20 billion over 10 years. But at the same time, it could add $50 billion to life insurers’ tax bills—a net negative of $30 billion. This will hurt companies and their customers.
Although these proposals will not become law this year, Camp’s ideas are now out there and will be used as a guide for future tax proposals. These new taxes on companies would lead to higher prices for clients and make it more difficult for Americans to prepare for a financially secure future.
Lawmakers on Capitol Hill will know this, and what will really impress them, he said, is hearing this from you—advocates from all across this great nation, all carrying the same message.
A history of tax proposals
This is not the first time the industry has faced tax proposals, he reminded the audience. In fact, he said, they have been around for more than a century, and the principles of life insurance taxation were established during the Civil War.
When a tax on life insurance premiums was considered to fund the Civil War, Senator Charles Sumner said: “Here, you are proposing to tax those who have taxed themselves … that the nation might not have to support them.” His argument carried the day, Kempthorne said.
And in 1866, the Treasury Department reaffirmed the importance of life insurance by ruling that life insurance death benefits are not subject to taxation.
Over a century later, this remains a fundamental principle of tax policy, and it should never change, Kempthorne added. “Society benefits when people are encouraged to take personal responsibility and save.”
Retirement issues
Taxes are not the only issue the industry should advocate because the industry is uniquely positioned to address the growing challenge of the country’s aging population.
Over the next 16 years, Kempthorne said, 10,000 Americans each day will reach age 65. A 65-year-old, on average, can expect to live about 20 more years, one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past the age of 95.
He shared with attendees the story of a 73-year-old man who had to go back to work after retiring at 70 because his wife had developed a chronic illness and they needed the money. How many 73-year-olds will have to return to work eight years after retiring? he asked.
These people need help, and their plight should be part of policy-makers’ discussions. In addition, “the life insurance industry—and all of you here—have the experience and knowledge to aid in those talks,” he said. “The industry will rise to the challenge because we’ve been helping people plan and prepare for their future since the country’s founding."
The power of life insurance
To illustrate this point, he told the story of how following the American Revolution, the King of France, Louis XVI, was not eager to let a renowned sculptor, Jean-Antoine Houdon, sail the Atlantic to visit America to create a likeness of General George Washington.
So as a condition for Houdon going to America, the King demanded that a life insurance policy be purchased. The policy was eventually secured and the image was made by Houdon. His masterpiece now permanently resides at George Washington’s beloved home at Mount Vernon.
Houdon was able to travel to America because of the power of a life insurance policy, Kempthorne said. “Life insurance is a true and noble calling, deeply embedded in our nation’s history and absolutely essential for America’s future,” he said.