As I’m sure you know, President Obama recently proposed raising money for an overhaul of the U.S. health care system through $58 billion in new taxes affecting several segments of the financial sector, including life insurance products.
The proposed changes would affect tax rules when policyholders sell their coverage to investors in order to receive immediate benefits, while diminishing a deduction claimed by insures when they manage assets in separate accounts.
Criticism for the plan arose quickly among some industry leaders, with Frank Keating, president of the American Council of Life Insurers, one of the first to speak out. “Seventy-five million American families rely on the products offered by life insurers for their financial and retirement security. This is absolutely the wrong time to make it more expensive for families to obtain the security and peace of mind our products provide.”
Obviously, these taxes would only make the process of selling life insurance more difficult during an already trying time. And it’s one more added expense for American families, as well. Keating categorizes this as “the wrong time,” but is there ever really a right (or popular) time to raise taxes? It’s one thing if you simply don’t think it will work, but few would argue that something has to change in the health care system. Is this the beginning of a possible solution? Are the proposed changes and their potential for improving the health care system worth the possible harm to other industries? Either way, would the administration be better served to attempt something like this when Americans are less fragile? Let’s face it, there isn’t a lot of good news out there right now.