Has the life insurance industry abandoned the middle class?

By Paul Wilson

ProducersWEB


Over the years, the life insurance industry has received beneficial treatment when it comes to taxes, largely because of its historical role in protecting middle class families who have lost a chief breadwinner.

But according to a recent article in The Wall Street Journal, statistics now show that life insurance companies have moved away from the middle-class, focusing instead on selling large policies to the rich as part of elaborate estate plans.

Could the combination of a move away from the “industry’s backbone” and the fact that the U.S. is increasingly strapped for cash mean that Congress will be successful in their latest attempt to increase taxes within the industry?

You do have to wonder if the news that life insurance ownership recently reached a 50-year low will help provide Congress with the ammunition it needs to bring about a major change. That and the estimated $265 billion that would be generated through the elimination of tax preferences within permanent life and annuities are bound to catch the eye of some pretty influential people.

But is the industry really sitting at a major crossroads, or is this just the latest occurrence in a predictable cycle? Have you seen an effort within the industry to step up sales to middle-income Americans? Or, as a producer, is it in your best interest  to simply embrace the move towards affluent clients? What issues do you believe are going to have the largest impact going forward? Are factors such as estate planning and STOLIs really to blame, or does it all just boil down to a matter of cold, hard cash (or should I say a lack thereof)?