What We Advocate
Benefits of Life Insurance Products
Life insurance is one of the best financial protection and long-term savings tools available to families and businesses. By enhancing Americans’ economic security, life insurance products reduce the burdens on federal programs. Only life insurance products protect against an unexpected death or debilitating injury or illness and provide guaranteed income in retirement.
Businesses use life insurance to continue operating efficiently after the death of a key owner or employee, provide smooth ownership transitions, and recruit and retain key employees, and fund important health and retirement benefits.
Seventy-five million American families rely on life insurance for their retirement security. The life insurance industry is responsible for $20 trillion of financial protection in force and pays out $1.7 billion every day.
Unfortunately, too many Americans are underinsured. About 40% of American families do not have any life insurance coverage. While those families who do have coverage have less than they need. Most experts recommend coverage that is at least seven to ten times annual income.
Further, America faces a number of retirement challenges, and American families worry about retirement savings. According to a 2017 Gallup Economy and Personal Finance poll, 54 percent of Americans are worried about not having enough money for retirement, and 40 percent are worried about not being able to maintain their standard of living. The fact that fewer workers have traditional pension plans to rely on for lifetime income, combined with the growing strain on government programs like Social Security and Medicaid, adds to Americans’ concerns.
Life insurance products are well-suited, and in some cases uniquely suited, to address America’s retirement challenges. In fact, $1 out of evert $6 of long-term savings is invested in life insurance and retirement annuities, the only financial products that ensure retirees cannot outlive their savings by guaranteeing a paycheck for life.
Importance of Certainty and Permanence for Long-Term Planning
Successfully planning for your financial future and that of your family and business over a lifetime requires certainty. Effective planning also needs predictability that shouldn’t be undercut by recurring changes in the tax code.
In the area of estate and business succession planning, uncertainty with respect to tax rules has been shown to reduce incentives for thoughtful decision making and led to unsuccessful transfers to succeeding generations and problems for the family members, employees, and businesses affected. Frequent changes to the tax regime discourage or disrupt the effective planning currently done to help ensure that businesses, farms, and other assets are passed on and remain viable from one generation to the next. On the other hand, a reasonable and durable estate tax regime provides the predictability to use effective planning tools that protect the family, the business, and the employees by providing liquidity to manage the transition that must occur when a founder or owner passes, as well as cover applicable taxes.
Regulation of Life Insurance Professionals
As life insurance professionals, AALU members work in the best interest of their clients every day.
Our work helps individuals and families secure their retirement and maintain financial independence in the face of potential catastrophe. AALU members also work with businesses large and small to protect their employees, finance benefit plans, and provide liquidity in a crisis to preserve the business as an ongoing concern.
Life insurance professionals currently operate under a robust regulatory regime that includes State Insurance Commissioners, multiple professional licensing organizations, State and federal consumer protection regulators, and federal securities regulators. In addition, they are subject to detailed requirements by the carriers with whom they work and robust internal supervisory procedures by the broker-dealers with which they are affiliated. They also face frequent and comprehensive regulatory examinations by the regulators who exercise jurisdiction over them.
AALU members’ success is derived from building trusted relationships with their clients. We want the best for our clients. However, sometimes misguided regulation can result in limiting the marketplace and cutting off services from those who need financial guidance and product choice the most. It is essential to ensure product choice and access to professional financial advice is not reduced for American families.