Last week I took time out from the daily activities in the field to attend the 55th annual meeting of the American Association of Life Underwriters (AALU) in Washington D.C. The meeting reinforced the fact that we hold the keys in determining what legacy we will leave for the next generation of life insurance professionals.

Let's face it; most prospects and their advisors are unfamiliar with the products we sell, how they work, when and how benefits are paid and the tax-treatment of life insurance and annuities.  Many are actually misinformed, or have allowed misperceptions and assumptions about the products govern their mindset. Why should we believe that our representatives and their staffers in Washington D.C. are any better versed about our industry and products? The reality is that their understanding and knowledge of the industry is not too different than most prospects; they are in need of education.

Nearly 80% of Americans disapprove of the job our Congress is doing. It appears that the anti-incumbent mood is likely to continue through the next election and that many new faces may be headed to Washington D.C. in January.  Additionally, the likelihood that any real legislation affecting tax reform gets enacted during this election year is almost zero. The representatives seated in the 113th United States Congress will undoubtedly be debating and implementing some level of tax reform.  In an environment when the United States Government debt is at an all-time high, and Congress is running annual budget deficits, be assured that  the they will be seeking revenue from all sources, including the tax-treatment of "inside build-up" in life insurance and annuities.  The fiscal mess our country is in is unprecedented, and it is not unreasonable to believe that tax reform potentially enacted by the 113th Congress could be unprecedented as well.  The impact on our industry and individual businesses could be profound.

We all have a part to play in shaping the conversation around tax reform.  Our part goes beyond educating clients and their advisors, to actively participating in the education of our representatives.  Leadership has to come from within our industry on this incredibly important front. There is no better voice than ours to articulate the positive impacts that the current tax treatment of life insurance affords consumers, our society and the US economy.

As you contemplate our industry's role in our society and economy, consider these facts:

• The life insurance industry is one of the largest sources of investment capital in the nation with $4.5 trillion invested in the U.S. economy.
• At year-end 2009, life Insurance companies purchased more than 23% of Build America Bonds, issued by state and municipal governments as part of the American Recovery and Reinvestment Act, and increased overall bond holdings by 34%.
• In 2009 and 2010 life insurers' investments helped finance the construction of 131 new schools and 6,600 new classrooms in one major metropolitan area alone.
• Life insurers are the largest single source of bond financing for American business, holding 16% of all U.S. corporate bonds.
• The life insurance industry generates approximately 2.5 million jobs in the U.S.
• Life insurance provides financial security to 75 million American families.
• The life insurance industry pays $1.5 billion per day to American families and business, compared to $1.9 billion per day by Social Security.
• Life insurance policies provide $18 trillion of death benefit protection.
• Life insurance products provide for 20% of Americans' long-term savings.

Clearly, our industry is an essential component in the fabric of the growth of our economy, making long-term investments to match our long-term promises.  In a time when seemingly every institutional investor is chasing returns, the life insurance industry is serving as bedrock for long-term economic and job growth in the U.S. Investments made by life insurers result in repaired and new infrastructure, new schools and classrooms, and countless other local projects throughout the United States.

Our products are savings vehicles for millions of Americans and provide financial stability for families when they need it most. Now, imagine your business under a tax regime that taxes your clients annually on the gain of cash value inside a life insurance policy. How much less insurance would be sold? What would the impact on an insurer's ability to invest in our economy be? The indirect effects of such tax policy could yield catastrophic results for consumers, the industry and our economy. Is that the legacy we are prepared to leave to the next generation? We have a lot to be proud of as life insurance professionals.  Our efforts make a significant positive difference in the lives of our clients and their families each and every day in addition to the indirect impact on the foundation of the American economy. We should not take the tax treatment of life insurance for granted, particularly in these unprecedented times.

We have the obligation and opportunity to participate in educating our elected members of Congress on the merits of our products and industry and the far reaching consequences that an historic change of posture towards life insurance and annuities would yield.   It should not be assumed that these facts about our industry are widely known or that the story will be told by someone else.   Whether AALU, NAIFA, NAILBA, ACLI, or any other advocacy group, there is a conduit available to participate in, get up to speed on the current debates, and to get involved. These organizations are comprised of us; the responsibility is collectively ours.

Let's take action with the same energy and passion with which we educate our clients and advisors and bring that education to our candidates for and members of the 113th Congress.  When the dust finally settles and tax reform is ultimately debated, voted on and implemented, our legacy relative to the tax treatment of life insurance will have been determined.

Justin W. Smith