To: NAIFA Members

From: David E. Smithkey, CLU, RFC, NAIFA President

Dear Fellow NAIFA Members:

Background: I’m not going to mince words with you. Our ability to provide our clients with financial security at death and retirement is in great jeopardy.

As you no doubt know, the President’s Advisory Panel on Federal Tax Reform has now sent Treasury Secretary Snow its options for revising the federal tax code. NAIFA has been working feverishly ever since, along with AALU and ACLI, to craft a unified life insurance industry response expressing opposition to tax "reform" proposals that would impose a tax on the inside buildup of life insurance and annuities.

Specific details of these proposals are set forth in the November 2, 2005 issue of NAIFA Frontline, available online at www.naifa.org/advocacy/frontline/archives/20051101_nfl_1.html. Also, a statement issued by NAIFA and its coalition partners can be accessed as well at www.naifa.org/newsevents/releases/20051101_tax.cfm.

NAIFA Position: NAIFA opposes tax policy that discourages our clients and prospects from using the flexibility of permanent life insurance and annuities to manage their long range personal, family and business security goals. The Panel's recommendations "discourage" their use in two ways: a direct tax on inside buildup and granting other savings vehicles inside buildup tax treatment. For 92 years federal tax policy encouraged people to take care of themselves and their families through the use of life insurance and annuities. That policy is now in jeopardy.

The Process/Political Environment: With the Panel’s report in hand, Treasury Secretary John Snow now has the task of crafting a specific tax reform proposal for President Bush to submit to Congress. So, the first crucial challenge is to convince Secretary Snow not to recommend the savings accounts to President Bush--a tough hurdle--but doable--with enough political pressure.

It is important to note that Secretary Snow said recently… "Whatever we are going to come up with will be built around ‘an ongoing' sense of where all the [political] pressures points are." NAIFA members need to be one of those pressure points. You can bet the homebuilders, realtors, mortgage brokers, state and local governments, the charitable community and many others will be doing the same.)

What You Can Do: Because of the extreme political nature of this battle, each NAIFA member is being asked to take several steps at this time to preserve the unique value of life insurance and annuities:

1. Contact your members of the U.S. House of Representatives and Senate to tell him or her that this proposal will destroy the ability of Americans to provide their families and businesses with adequate financial security at death and retirement. To help you do that, use NAIFA’s Online Legislative Action Center at http://capwiz.com/naifa to make an initial contact with your Representative and two Senators via email. Use the sample message in the Action Center or (better yet) compose your own.
   
   A letter to Secretary Snow, now circulating in Congress, has some good "talking points" if you wish to compose your own message. (The letter is availalbe online at www.naifa.org/newsevents/documents/cole_pomeroy_snow_20051114.pdf).

• In your communication, make sure you urge your Representative and Senators to oppose "savings" accounts that limit the ability of Americans to protect their families through life insurance and annuities.
  
  
• Also--and IMPORTANTLY--ask your member of the House of Representatives to sign the Congressional letter to Secretary Snow (availalbe online at www.naifa.org/newsevents/documents/cole_pomeroy_snow_20051114.pdf) being circulated by Reps. Tom Cole (R-OK) and Earl Pomeroy (D-ND). The letter extols the value of life insurance and annuities as two products that can protect dependents at death and guarantee lifetime income, and asks Secretary Snow to work with Congress to achieve "financial and retirement security for American Families and our nation."
  

At the moment there is no comparable letter in the Senate, but urge your Senators to write to Secretary Snow with the "no saving account" message.

2. Circulate this email (available online at www.naifa.org/actionalert/20051114_taxreform.html) to your agent friends and colleagues who are not NAIFA members and ask them to email their Representative and Senators. We will not limit access to NAIFA’s Legislative Action Center to just NAIFA members. (Of course, joining NAIFA would also help a lot. We could use their dues dollars right now for the fight. Going to war is expensive.)

3. Ask your family members and employees to email. It’s their industry on the line, too.

Later this week I will be asking the members of NAIFA's Political Involvement Committee to seek an appointment with their House and Senate members over the Thanksgiving recess. Right now, recess is scheduled in the House for the week of November 21 through December 2, 2005. The Senate’s recess is approximately the same. If you are in a position to see your Representative and two Senators, I urge you to do so.

Personal action by every member of NAIFA’s local associations is necessary to win this battle. If you have any questions, please contact the NAIFA Government Affairs Staff at 1-703-770-8188.

All the best,

David

National Association of Insurance and Financial Advisors, 2901 Telestar Court, Falls Church, VA 22042
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