Life Settlements – How do we best serve our policyholders?

Reserve your seat now for the January 10 Market Connection teleconference. COSS’ guest speaker, John Skar, FSA, CLU, ChFC, Senior Vice President and Chief Actuary of MassMutual will discuss life settlements.

The life settlement market is growing at a rate of just under 20% per year. Depending on who you talk to for financial advice, you will get different opinions on whether life settlements are a good option. Mr. Skar will analyze life settlements and explain the advantages of keeping a life policy. He will also provide information and key questions that should be addressed when handling these discussions with clients.

Register here for Market Connection on January 10.

Articles by Mr. Skar as well as general information and research on life settlements can be accessed at lifesettlementseducation.com.

John Skar is a Senior Vice President and Chief Actuary at Massachusetts Mutual Life Insurance Company. Mr. Skar has held actuarial positions with several life insurance companies in a career spanning over 30 years. He has been a chief actuary since 1986. Mr. Skar’s career has centered around individual life insurance with particular emphasis on product development and marketing issues. He is a CLU and ChFC as well as a Fellow in the Society of Actuaries and a member of the American Academy of Actuaries.

Tax Reform - $10,000 Contribution Limit
By Chris W. Kite, MBA, Vice President-Strategic Relations
December 23, 2005

At the December NAIC meetings, the Tax Policy Task Force discussed the President’s Advisory Panel on Tax Reform. For a review of its recommendations, see the October and November reports at aaluwr.org. Here is the key concern for life insurance from the November 1, 2005 report:

“The Advisory Panel’s report envisions that all life insurance and annuity contracts, if they are to attain any degree of tax benefit, would have to be purchased through the SaveForRetirement and possibly the SaveForFamilies accounts -- in effect, limiting the tax benefits of each of those accounts to the $10,000 after-tax annual purchase cost. Beyond that level, there would be no tax-free inside build-up for life insurance.”

At the NAIC meeting, Barbara Lautszenheiser of the American Academy of Actuaries and Bill Anderson of NAIFA expressed concerns of the life insurance business. The State of the Union address next year should give an idea of what will be proposed for 2007 or beyond. Changes are inevitable, but there is cause for concern. A Republican president would be proposing the limit. Would Democrats also favor the limit as not favoring the wealthy?

We also need to see how Congress resolves the estate tax issue. The related issues deal with what should be taxed on retirement accumulation and then what should be taxed for the wealth that is passed on at death. My comment at the meeting was that we need to have the tax laws favor the use of lifetime income, long-term care, and other health benefits during retirement. Rather than discourage building values in life insurance relative to other retirement options, we should have better ways of protecting retirees who are at risk of outliving their resources or of depleting them due to health care costs.

Is our tax code irreducibly complex? Can we have an intelligent design that would better address the needs of society?

Saving Cincinnati from September 11th
By Chris W. Kite, MBA, Vice President-Strategic Relations
December 21, 2005

Do you know how Cincinnati was saved from a September 11th catastrophe? Did you know Cincinnati was about to be attacked? How do we protect our communities in the future?

The year was 1862, not 2001. Confederates invaded Kentucky hoping to attack Cincinnati. This Queen City of the West controlled the Ohio River Valley. It was one of the five or six largest cities in the United States and a crucial transportation hub. On September 10th, the Confederates advanced within a few miles of Battery Hooper, the communication hub for an eight-mile line of defense south of Cincinnati. They saw the Union defenses in these hills and then marched away in the night.

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