Texas Senator Tommy Williams (R-The Woodlands)

Senate Bill 567, increasing coverage limits for annuities under the Texas Guaranty Association Act, won unanimous support in the Senate (31-0) March 24^th and was passed April 14^th in the House (142 aye/7 absent).  NAIFA-TX member Senator Tommy Williams (R-The Woodlands) sponsored the measure which follows the NAIC 2009 Model Life and Health Guaranty Association Act recommendation that annuity protections, currently at $100,000 per life, be increased to $250,000 per life. Click here to view S.B. 567 in its entirety. 

The bill was received by the Governor on April 20^th and awaits his signature. Its effective date is Sept. 1, 2011. Perry's Legislative Assistant Cassie Brown informed NAIFA-Texas CEO Des Taylor that she has no questions on the bill at this time.

NAIFA member responses across Texas underscore the significance of this bill's passage:

• "This is huge" -- Kirk Haworth, Amarillo, NAIFA-Texas Trustee
• "Des, how you answer my question may be worth $800,000 for me in annuity sales:  Will the guaranty protections for annuities be increased to $250,000 this year?" -- J.C. Bryan, Dallas
• "Clients are contacting me to increase their annuities as soon as the Guaranty Bill is passed.  When is that going to happen?"  -- Steve Colson, College Station
• "Passage of S.B. 567 is proof positive of the value of state advocacy in Austin and the need for a strong state IFAPAC to support state lawmakers" -- Cylinda Clark, NAIFA-Texas President
• "Congratulations to our ace lobby team in Austin for a gigantic 'win' for agents and our clients" -- Jason Talley, Floresville, NAIFA-Texas Trustee

A frontal attack on the tax-deferred growth of life insurance and annuity cash values is coming!

So, too, are attacks on tax-free employer-provided benefits. 

The current federal tax rules that allow for tax-deferred growth of life insurance, annuity cash values and employer-provided group health, life insurance, pensions and other benefit plans are classified as "tax expenditures."  Washington Democrats think that tax expenditures are loopholes; Washington Republicans think of tax expenditures as a form of federal spending. 

As the U.S. Congress becomes more committed to reducing and ultimately eliminating the deficit, elimination of loopholes and reduction of spending will be a big part of those efforts.  There is grave risk that everybody will forget what all of this means and will be duped into thinking that it all sounds like a good idea when Congress calls for repeal of tax expenditures.

Tax expenditure values are very large and ripe for taxation.   The Joint Committee on Taxation's 2010-2014 tax expenditure values of products and programs that affect our industry are listed below.

75 million American families are depending on us to protect their assets. 

From an article by Diane Boyle NAIFA Vice-President Federal Government Relations in March/April Advisor Today

Diane Boyle

U.S. House Budget Committee Chair Paul Ryan

U.S. House Budget Committee Chair Paul Ryan has introduced his proposed Fiscal Year 2012 Budget Resolution which would cut approximately $6 trillion in government spending over the next 10 years. Ryan's broad proposal for tax reform is to lower the top tax rate to 25% for both individuals and businesses and broaden the tax base by eliminating some tax exemptions that include exclusion of life insurance inside build-up, exclusion of retirement savings, and exclusion of employer-provided health insurance, cafeteria plans, and group life, disability, and long-term care insurance, as well as deductions and credits.

The FY 2012 Budget Resolution also calls for the full repeal of Patient Protection and Affordable Care Act (PPACA). Ryan proposes to reform Medicare beginning in 2022 by creating a tightly regulated exchange for a variety of guaranteed-issue options for seniors to purchase coverage subsidized by premium-support payments.

NAIFA President Terry Headley

NAIFA President Terry Headley ensures that the voices of NAIFA members are heard by providing testimony on crucial issues whenever they arise.  Two recent examples of note were his comments on a definition of retirement plan fiduciary proposed by the Employee Benefits Security Administration (ESBA), and his testimony regarding medical loss ratio (MLR) calculations before a National Association of Insurance Commissioners (NAIC) task force.

Definition of Retirement Plan Fiduciary:

Headley testified that a new definition of retirement plan fiduciary proposed by the ESBA could limit consumer access to investment education and advice.

The EBSA, an arm of the U.S. Labor Department, has been trying to update rules to determine which plan advisors are fiduciaries.  Critics say the current plan is too narrow, but critics of the proposed update say that it could include individuals and entities that do not seem to be fiduciaries.

LIMRA recently reported that commissions are the dominant form of compensation for advice given to mid-market investors, and that is the core client base for NAIFA members according to NAIFA President Terry Headley.  Headley went on to say, "The proposed new definition would impose rules that would make it difficult for NAIFA members to serve those clients, thus reducing consumer access to affordable advice."  With individually directed defined contribution plans now dominant in the marketplace, "there is a strong and ever growing need for workers to have access to quality, affordable investment education and investment advice."

MLR Calculations:

Headley provided testimony for the Professional Health Insurance Advisors Task Force of the NAIC at their annual meeting in Austin, where they were deciding on what actions to take in regards to the exclusion of agent and broker commissions from MLR calculations.

Headley testified that unintended consequences of the healthcare law are having "disastrous effects" on customer service provided by licensed insurance agents.  To meet the MLR requirement, companies have slashed agent compensation up to 50%.

Ultimately task force members chose to postpone action, asking the NAIC staff to provide more data on the MLR issue.

Online registration is now live!  Register for the NAIFA-TX Career Conference & Annual Meeting prior to June 23rd and receive discounted registration fees.

The conference, chaired by President-Elect Stephen Ehlers, will be held at the Hilton Houston NASA Clear Lake Hotel on July 21-24, 2011.  "UP to the Mission; DOWN to Business" is this year's theme which is what NAIFA is all about:  "Keeping agents in business." 

We have a great line-up of MDRT main platform and key note speakers! Their schedule was recently announced and is as follows:

The Texas House Ways and Means Committee is considering four identical bills that may continue to exempt agents and other businesses with less than $1 million in gross receipts from paying the margins tax which is the state's primary business tax.  However, the exemption will cost the state $150 million over the next two years, and some are saying that Texas can't afford it.  Business owners have to pay the tax whether or not they are profitable.

Without new legislation, more agents may pay the margins tax because the temporary exemption in previous legislation will automatically drop on September 1^st to include businesses with $600,000 or more in annual gross receipts.

Rep. Harvey Hilderbran (R-Kerrville) who chairs the Ways & Means Committee is looking for revenue to offset the $150 million exemption.  Once Hilderbran finds a revenue bill that works, his tax exemption bill will be contingent upon passing the revenue bill.  Small business owners would then be working to pass two bills.

U.S. Senators Kay Bailey Hutchison (Top) and John Cornyn (Bottom) will be in Texas until April 29.

Members of the U.S. Congress - U.S. Senators and U.S. Representatives - are currently on recess for two weeks from April 18-29. This is a good time to call their district offices in Texas for a short appointment to provide input on national issues of importance to agents and financial advisors.

First Step:  Go to http://capwiz.com/naifa/home to find the address and phone number of the district offices of U.S. Senators and your U.S. Representative.  When asked for your home zip code, use the zip code + 4 digit extension to better guarantee the correct information.

Second Step:  Find 2-3 other NAIFA-Texas members - preferably those who live in same district - to attend the meeting with you.  Call and ask for a 30-minute meeting to provide input on issues of importance to you and NAIFA.  (See Third Step.)  Agree to meet with a staff person if the Senator or Representative is already over booked.

Third Step:  Do your homework.  Read over Meeting Tips before the meeting.  NAIFA's website provides resources, guides and talking points for insurance agents and financial advisors who want their voices heard. 

Fourth Step:  Attend the meeting and have a good time!  Senators and Representatives want to meet with constituents.  Take your business cards, be polite and never discuss campaign contributions during the meeting.  Contributions must be addressed only with campaign offices.  Don't overstay the time allotted unless the Senator/Representative asks you to stay.

Fifth Step:  Write a thank you note/letter!

A U.S. Government Accountability Office (GAO) report has suggested that paying agents and brokers a fee per health plan enrollee could help reduce the need for a Patient Protection and Affordable Care Act individual health insurance ownership mandate. 

Alternate ways to hire and compensate agents could bring expertise to facilitate coverage through the exchanges or to work with small employers that do not offer insurance to assist employees to select and enroll in appropriate plans.

Also, agents could reduce the risk of antiselection by encouraging many people -- insured and uninsured -- to sign up for health coverage, including the new subsidized plans that are supposed to be sold through a system of exchanges.

In the second installment of our series highlighting current students of the Leadership in Life Institute (LILI), we feature Brandon Green of NAIFA-Houston.  LILI students commit to six monthly sessions of intense leadership training and personal development in an effort to excel personally and professionally.

Brandon Green, LUTCF, CLTC

Q. What interested you in the LILI Program?

A. Several people in my local association spoke so highly of the program that I went online to the NAIFA website to do some research.  I ordered a free DVD that went through an overview of the LILI program, and I was hooked!

Q. What are your expectations of the program?

A. Similar to what they were going into the experience: exit the program with a laser-like focus on my personal mission and business plan, with concrete steps and attitudes to take it to a new level.  Additionally, I fully expect to hone my leadership skills and use them to make a difference in my career, family life, and local association.

  
Q. How are you currently involved in your local?

A. I am the chair of Professional Development and Continuing Education.

Q. What is the greatest asset that you bring to the LILI program?

A. Making decisions in the present with an eye toward the future.  

Marvin Feldman

Marvin Feldman, CLU, CHFC, RFC, President / CEO of Life and Health Insurance Foundation for Education (LIFE) has been named recipient of the 70th annual John Newton Russell Memorial Award by the National Association of Insurance and Financial Advisors. The award is the highest honor accorded by the insurance industry to a living individual who has rendered outstanding services to the institution of life insurance.

Feldman entered the life insurance business in 1967 and during that time has held management and leadership positions for many years, has spoken as an expert on life insurance in 34 countries and has published numerous articles in professional journals. He is a former president of the prestigious Million Dollar Round Table and a 37-year member of the group. Insurance Newscast listed Feldman in 2009 and 2010 to its 100 most powerful people in the insurance industry in North America.

"Receiving this award is like winning an Oscar in the insurance industry, except we give out only one each year," said Jeffrey J. Taggart CLU, ChFC, LUTCH, chair of the award committee.

NAIFA-Texas members who attend the NAIFA Career Conference and Annual Meeting in September will have the opportunity to hear Feldman speak at the John Newton Russell Memorial Award Brunch. Gen. Colin Powell will also speak at the brunch, which is being held September 13, 2011 at 10:45 am.

NAIFA members from across the country will travel to Washington DC for the national conference September 10-14.  In addition to Powell, speakers include MSNBC's Joe Scarborough and FDNY Firefighter Richard Picciotto. Early registration ends July 6.  For more information about the Washington DC conference or to register for the event, visit naifa.org/conference.