Charities And Life Insurers Wary Of Death Tax Repeal
December 8, 2000
Some life insurers are concerned that the movement to eliminate or reduce death-tax duties will eventually succeed. A large majority in Congress approved the Death Tax Elimination Act last summer, but President Bill Clinton vetoed it. Presidential candidate George W. Bush supports repeal of the tax.
The 60 or so life insurance companies that sell so-called "survivorship insurance" fear their ox will be gored if a President Bush signs an estate tax repeal:
- Abolition of the death tax would make obsolete insurance companies' highly lucrative policies designed to pay the tax -- which are sold not just to the super-rich, but to those with estates reaching the $675,000 tax threshold.
- There are currently 180,000 survivorship insurance policies in force, bringing the companies $3 billion in annual premiums.
- Experts estimate repeal of the tax would result in an 8 percent drop in sales of these so-called "variable life" policies -- those where the amount of the final payment is uncertain.
Some charities are also concerned about estate tax repeal. Since charitable giving is deductible from estates, 8.2 percent of the roughly $190 billion donated to those organizations in1999 came from estates.
Source: "Survivorship," Economist, November 25, 2000.
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