In this month's discussion, I posed questions to three top producers regarding some of the practicalities and issues surrounding the use of life insurance in tax planning. (Click here to read part I and part II.)
Q. What do you view as the most significant threats to the way life insurance is currently treated and to the use of life insurance in tax planning? Further, what steps are you taking to help ensure that the threats are minimized?
William M. Upson, CLU, ChFC, Walnut Creek, Calif., founder of Strategic Asset Management Group: I think the greatest concern I have today is the cavalier attitude the Congress and the respective legislative bodies of the respective states have, where they've been so paralyzed with politics, they have not given the public any clear agenda for proper investing, necessary insurance coverage and estate planning. We are looking at a very uncomfortable future if we do not address the need for a consistent tax program the public can understand and embrace. The last four years showed us how minimally educated working adults could lose everything because they were not dealing with true investment advisors in the process. Education is the only solution that will help all of us — the advisors and the public — do better in the future.
William H. Black Jr., CLU, Winter Park, Fla., president of W.H. Black and Company and PensionSite.org: The first thing that comes to mind is the relentless attack on the inside buildup of the policy cash value. There are reasons cash value growth is untaxed, and it deals historically with public policy and the basic reason for the life insurance: providing the beneficiary with monies to assist in the financial implications of the loss of the insured. However, some will position this untaxed buildup of cash value as a loophole. How do I ensure the threats are minimized? That's very difficult to do out here by oneself in the wilderness. That is why I belong to NAIFA and joined MDRT many years ago. There is strength in numbers.
Douglas R. Peete, CLU, ChFC, Overland Park, Kan., founder of Douglas R. Peete & Associates: I am mostly concerned with the no-load offshore-type of insurance planning, which is obviously designed to avoid taxation. To minimize the concerns, we don't sell edgy concepts that would potentially put our clients at risk.
