How Would Repealing The Estate Tax Affect Life Insurance Sales?
The Trump Administration has stated repealing the estate tax is one of its highest priorities. In April 2017, LIMRA asked 24 U.S. insurers how they thought this would affect life insurance sales.
Current federal estate tax law only applies to estates exceeding $5.49 million per person. Since Americans can leave an unlimited amount of assets to their spouses, the threshold for married couples is $10.98 million. According to the Joint Committee on Taxation, roughly 0.2% of Americans, or one out of every 500 people who die are impacted by the estate tax. This includes family-owned businesses and farms.
Survivorship life insurance is intended to pay federal estate taxes and other estate-settlement costs owed after both spouses pass away. It represents approximately four percent of the life insurance market and 10 percent of premium for companies who offer it annually. Note: the carriers in the survey represent 64 percent of the survivorship life insurance market.
All carriers surveyed felt repealing the estate tax would have some sort of negative impact on survivorship life insurance sales. Four in 10 carriers believe it would have a significant negative impact on their survivorship life insurance sales and 54 percent think it would have a minor negative impact on their single life sales.
While six in 10 surveyed (58 percent) do not expect U.S. estate tax law to change this year, if it is repealed three-quarters believe it would have a significant negative impact on industry survivorship life insurance sales in the following year.