In the early years of Single Premium Life (endowments),
producers sold the heck out of them. It took a while before the feds figured
out they were being used as tax-shelters. That epiphany led to the resurrection
of the decades old debate about taxing the inside build-up in a life insurance
contract, a war NAIFA has been fighting since 1913. And won every battle.
But this time a law was even closer to being enacted, a law that
would cause the taxation of inside build-up in all life insurance policies. And
the lawmakers were not going to “grandfather” older contracts. Producers feared
the end of their careers! NAIFA’s PAC swung into action once again and, with
the ACLI and other advocates, convinced the itchy-fingered representatives in
Washington, DC to avert the disaster.
The result was the Technical Corrections Act of 1988 (H.R 4333,
S. 2238) and the Modified Endowment Contract, or MEC. The MEC is a cash value
life insurance contract where the premiums paid have exceeded the amount used
to keep the full tax treatment of a cash value life insurance policy. Anyone
that sells permanent life insurance knows about the MEC. It’s important to
remember that NAIFA was a key player in negotiating the legislation that saved
the beloved life insurance contract from being taxed as was the original plan
of said lawmakers.
NAIFA, on both the State and Federal level, continues to fight
battles to preserve this noble business. If the life insurance industry is to
survive, we need Advocates. The PAC sustains our Advocates in Olympia and DC
which means NAIFA represents you and your clients. Which really means NAIFA and
IFAPAC work to assure that your career is allowed to continue. IFAPAC has been
called “Career Insurance” and it is! That’s why I continue to contribute to the
PAC after 42 years in the business. That’s why Alex Collins and I urge you to
contribute to IFAPAC monthly, by bank draft.
$8.50/month makes you a Century Club member. Do it! It won’t
hurt. In fact, it will help your career.
Richard Ek
NAIFA member since 1975
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