Washington, D.C. (February 2, 2015) – As an industry that helps 75 million American families and thousands of businesses responsibly plan for their financial futures, the life insurance industry is deeply concerned about provisions in the administration’s proposed 2016 budget that amount to new taxes on products that provide security and peace of mind. 

The 2016 proposed budget reasserts two provisions—one on corporate owned life insurance (COLI) and one on life insurers’ dividends-received deduction (DRD)—that the administration has repeatedly proposed but Congress has wisely never accepted.

The COLI proposal would impose new taxes on life insurance used by businesses small and large. Many businesses use COLI to protect against financial or job loss stemming from the death of owners or key employees. COLI is also used to ensure business continuation. In addition, COLI is a widely-used funding mechanism for employee and retiree benefits. Congress affirmed the benefits and tax treatment of COLI and assured its responsible use in bi-partisan legislation enacted in 2006.

Another proposal would undercut longstanding rules regarding life insurers’ DRD that are designed to prevent double taxation of corporate earnings. The administration’s proposal would reduce the DRD that life insurers use in accounts that fund variable life insurance and variable annuity contracts—key products for financial and retirement security.

At the same time, the administration's re-issued proposal for additional limits on retirement would harm retirement savers and prevent more businesses from offering retirement plans to their workers. Millions of Americans are working hard to build their nest eggs for retirements that can last for decades. Limiting their ability to save in their retirement plans is a step in the wrong direction.

Also, for the first time, the administration has proposed funding – at $6.5 million -- to allow a limited number of states to implement state-based auto-enrollment Individual Retirement Accounts or 401(k) type programs. The proposal threatens to create a patchwork system and potentially weaken systems for millions of American workers in the private sector. Mandates under consideration in certain states would represent a wrong step in building Americans’ retirement security.

One retirement security proposal supported by Secure Family would provide incentives to businesses for voluntarily adopting automatic Individual Retirement Accounts for workers, as well as for businesses that choose to offer employer plans or switch to auto-enrollment.

The proposal, in addition to enhancing “start-up” tax credits for businesses, represents the type of encouragement needed to expand the successful employer-based retirement system.

As the proposed budget is reviewed by Congress, life insurance companies, agents and brokers look forward to working with the lawmakers to explain how industry products, services and financial advice benefit 75 million American families and thousands of businesses across the country.

The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with approximately 300 legal reserve life insurer and fraternal benefit society member companies operating in the United States. ACLI members represent more than 90 percent of the assets and premiums of the life insurance and annuity industry. In addition to life insurance and annuities, ACLI member companies offer pensions, 401(k) and other retirement plans, long-term care and disability income insurance, and reinsurance. ACLI's public website can be accessed at www.acli.com.

The Association for Advanced Life Underwriting (AALU) is the leading organization of successful life insurance professionals who are a trusted voice on the unique public policy issues involving the advanced life markets.  The AALU also offers professional development tools and learning opportunities to help members grow their practices. Founded in 1957, the AALU counts more than 2,200 insurance professionals as members. www.aalu.org.

GAMA International is a worldwide professional association serving 5,500 field leaders in the insurance and financial services industry. Its members recognize their critical role in finding, building and inspiring the next generation of top performers who will, in their turn, lead the industry into the future. To help build these leaders, the association provides its members with professional development resources and opportunities, including educational, networking and leadership. GAMA International’s website is located at www.gamaweb.com.

The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org.

The National Association for Fixed Annuities (NAFA) is a trade association exclusively dedicated to educating regulators, legislators, journalists and industry personnel about the value of fixed annuities and their benefits to consumers. NAFA's membership represents every aspect of the fixed annuity marketplace, covering 85 percent of fixed annuities sold by independent agents, advisors and brokers. NAFA was founded in 1998 and recently celebrated its 15th year of serving the fixed annuity industry. To learn more, visit www.NAFA.com.

The National Association of Independent Life Brokerage Agencies (NAILBA) is a nonprofit trade association with over 370 member agencies in the U.S. and Canada. NAILBA is the premiere insurance industry organization promoting financial security and consumer choice through the use of independent brokerage distribution. The purpose of NAILBA is to serve as the national association of life, health and annuity insurance distributors. www.nailba.org. 

Founded in 1890 as The National Association of Life Underwriters, the National Association of Insurance and Financial Advisors (NAIFA) is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every Congressional district in the United States. NAIFA members assist consumers by focusing their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members. www.naifa.org.