Life Insurance Quotes

Editor's note: President George W. Bush has signed into law a gradual repeal of the estate tax. The law will reduce the tax rate and increase the exemption level for the estate tax until it is abolished in 2010, but a "sunset" provision in the bill will bring the estate tax back to life in 2011 unless the repeal is confirmed by the Senate. There is currently no legislation pending in the Senate to extend or make permanent the repeal of the estate tax. Read How to deal with the death and resurrection of the estate tax for more information.

With the gradual repeal of the federal estate tax on the horizon, the Principal Financial Group is offering a new Estate Tax Repeal Benefit Rider that waives surrender fees and other costs if customers decide they no longer want theirlife insurance policies upon repeal of the estate tax.

Currently, when you die, your beneficiary pays an estate tax if your entire estate is valued at more than $675,000. Many wealthy Americans purchase life insurance to provide cash for beneficiaries to pay that estate tax so that they will not be stuck footing the tax bill on their own. Many insurers are concerned that when the estate tax is repealed, the need to buy life insurance to cover tax bills on large estates will be diminished.

The Principal's new rider would allow a policyholder to waive surrender charges and fees paid on the policy since the purchase date. For example, if you decide to surrender your universal life policy now that the estate tax law is repealed, The Principal will waive your surrender fee and reimburse you for premium expense charges — such as mortality and expense fees — and monthly administration charges.

Many people have delayed estate planning decisions until Congress made a decision regarding the future of the federal estate tax, says Mark West, director of Advanced Markets for The Principal. "In doing so, those individuals are taking a risk in that they might need the benefits of a life insurance policy."

However, to reap the benefits of the rider, you must follow the estate tax law closely. The policyholder must submit a written request to The Principal within 30 days of the repeal to receive the rider's benefits. Otherwise, surrender fees and other associated costs that maintain the policy will not be waived.

To receive the benefits outlined in the Principal's new rider, the federal estate tax law imposed under Subtitle B of the Internal Revenue Code of 1986 must be fully repealed by a federal tax law enacted on or before Dec. 31, 2001, and such full repeal of the estate tax must be effective on or before Dec. 31, 2015.