Trumping Repeal: The Sales Shouldn’t Stop!

Trumping Repeal: The Sales Shouldn’t Stop!

​Robots have rules to live by; or so we were first told by author Isaac Asimov in his 1942 science fiction short story, Runaround.

His Three Laws of Robotics dictated:  1) A robot may not injure a human or allow a human to come to harm.  2) A robot must obey the orders given it by humans except where such orders would conflict with the First Law.  3) A robot must protect its own existence as long it does not conflict with the First or Second Laws.

​If only all things in life were attended by such an uncomplicated litany to guide behavior.

​In two articles we have addressed the brouhaha surrounding the future of the federal estate, gift and generation-skipping transfer tax laws under the  new administration, including discussions on the likelihood of repeal and what might be left in their place if repeal was accomplished.

The heart of matter for insurance advisors is the effects any changes will have on the volume of large-case sales where coverage is purchased to pay unavoidable anticipated death taxes.

And the good news is that not much changes if “anticipated” means what might be expected rather than simply the levy under the current loi du jour within the Internal Revenue Code.

Consider our suggestions for rules by which to conduct your business in the unchanged fluidity of the laws by which we must attempt to help clients best plan for their financial affairs.

The Six Semi-Unassailable Principles Of Life Insurance In A Changing Tax Environment:
  1. The Rule of Law is gone.  Nothing is permanent.  Don’t ever plan for a client based on the current tax law, but rather on the worst that might be anticipated.
  2. Chances are a client’s insurability will not improve with time.
  3. Chances are that many of the current favorable product designs for policies will be unavailable with time.
  4. Chances are the cost of coverage will increase with time.
  5. In view of Principals ##1-4 existing coverage held for anticipated death tax liability should not be surrendered because of current favorable tax law changes.
  6. In view of Principals ##1-4 the purchase of coverage to pay death taxes should not be postponed because of a current favorable change in the tax law.

The story goes that a hopping-mad Asimov came out of his first viewing of the film 2001: A Space Odyssey in which the mainframe computer, HAL, did away with one of the space station’s astronauts. To the surrounding crowd in the theater lobby he excoriated the film’s director, Stanley Kubrick, saying, “He broke the first rule!  He broke the first rule!”  One bystander replied, “Why don’t you just strike him dead, Isaac?”

​Contact us for a brand-able and free two-page summary of the possibilities regarding changes in the tax law that would be helpful in your discussions with concerned clients.