Life Insurance as IRA's

  • (p19) - Senator Wayne ALLARD (R-CO). The other thing, when they came in and marketed, I assume they approached the soldiers pretty much as this was a savings mechanism, a financial investment.
    • Was this in relation to IRA accounts or was it Keogh plans, or how were they structuring the sales to start with?
    • I personally have been approached by these people with an IRA account, for example, who say this is strictly a savings account, but when you get into it, you find out you bought life insurance or some part of that is life insurance, and it is very expensive.
    • This sounds to me like the same mechanism that we have here. 
  • (p20) - Senator ALLARD (R-CO) Same types of stuff we run into in the private sector.
    • We ran into them in the 1970’s particularly, if I recall, although they just had them as IRA accounts at that time, and they are deceptive.
    • The salesman persisted that this was not life insurance, but it was there in black and white if you read the fine print. I can understand how they can get misled on that kind of stuff, and I think that it is a shame. 

2005  1117 – GOV (Senate) – A Review Of The GAO Report On The Sale Of Financial Products To Military Personnel - [PDF-89p]  ---  [BonkNote]

  • 1984 11 - DOT - Tax Reform for Fairness, Simplicity, and Economic Growth - The Treasury Department Report to the President, Volume 1 - 275p
    • (p134) - In order to make the taxation of income flowing through financial institutions more neutral, the Treasury Department proposes that the exclusion of the inside buildup in life insurance be repealed and that annuity interest income be subject to current taxation.
    • Taxpayers will be allowed to treat the savings portion of life insurance premiums as deposits in an individual retirement account (IRA), subject to the overall IRA limitations.
    • Income earned on these savings will be tax exempt until withdrawn from the IRA.
    • Individuals would buy life insurance and annuity policies for the primary purpose of protecting against premature death or longevity, rather than as a tax shelter.