The American Council of Life Insurers (ACLI) has endorsed new bipartisan legislation proposed by Senator Bob Casey, D-PA, and Senator Thom Tillis, R-NC, which aims to modernize the tax code in relation to life insurer investments.
The proposed law would assist life insurance companies in maintaining their role as crucial capital providers for various areas such as innovation, education, infrastructure, agriculture, residential mortgages, and job creation.
ACLI noted that life insurers contribute $584 million each day to the US economy through investments in corporate bonds, municipal bonds, and various types of mortgages. These investments generate returns that help ensure life insurance remains affordable and accessible.
It was pointed out that life insurers uphold their guarantees on long-term commitments, offering products like life insurance for financial protection and annuities for guaranteed lifetime income. For instance, about 75% of bonds purchased by life insurers have a maturity of 10 years or more at the time of acquisition.
According to the trade body, the Secure Family Futures Act of 2024 aims to update the outdated capital tax treatment for debt investments held by life insurers, applying ordinary tax treatment to bonds. This change would align the tax treatment of these investments with that of a manufacturer’s inventory, which already receives ordinary tax treatment.
“Without the adjustment proposed in the legislation, the ability of life insurers to continue their distinctive, long-term investments in communities throughout America would lessen substantially,” ACLI president and chief executive Susan Neely (pictured) stated.
“Closing the financial protection coverage gap for families and communities most in need could be hampered due to higher costs on consumers if Congress fails to enact the legislation.
ACLI also highlighted that, as of the end of 2022, life insurers had a substantial impact on Pennsylvania’s economy by investing $244 billion; paying out $11.7 billion in life insurance and annuity benefits; and creating 128,500 jobs.
In North Carolina, life insurers had invested $180 billion; paid out $7.8 billion in life insurance and annuity benefits; and generated 79,000 jobs.
Nationwide, life insurers have $7.5 trillion invested in the economy, paid out nearly $200 billion in benefits, and added 2.8 million jobs in 2022.
“With their legislative proposal, Senators Casey and Tillis are providing important, bipartisan leadership for communities and families,” Neely said.
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