“The estate tax is a cash cow for the life insurance industry – and the industry’s lobbyists guard it zealously...[o]nly three industries – pharmaceuticals, electric utilities, and oil and gas – spent more over the same period.”
"Life insurance is the most basic tool for estate planning. Put simply, inheritance is subject to the
estate tax, while life insurance benefits are untaxed. This drives up the demand for life insurance,
thus driving up the price.
The disparate tax treatment distorts the market so much that a wealthy person could buy a policy
knowing he will pay more in premiums than the value of the benefit – and it would still make
sense financially.
For example, if someone bought a $20 million whole life policy at age 60, and
paid $25 million over the years in premiums, he would still be giving more to heirs (an untaxed
$20 million) than if he just bequeathed that $25 million to his children – because after the estate
tax, that could be worth less than $20 million."
--This discussion has been really informative. Thanks to all.
I don't think it does. The life insurance contribution to Berkshire Hathaway results is quite small. The bulk of the income is from reinsurance and P/C activities.
http://blogs.forbes.com/hanisarji/2010/12/01/life-insurance-...
“The estate tax is a cash cow for the life insurance industry – and the industry’s lobbyists guard it zealously...[o]nly three industries – pharmaceuticals, electric utilities, and oil and gas – spent more over the same period.”