“One Big Beautiful Bill” or One Big Missed Opportunity? What Advisors Need to Know About the New Tax Law’s Impact on Life & Annuities

Here’s the good news: The life insurance and annuities industry just got a legislative lifeline in the form of the One Big Beautiful Bill Act, signed into law on July 4, 2025. It’s being touted as a major win by the American Council of Life Insurers (ACLI), and on the surface, it is: tax deferral is intact, regulatory clarity is improved, and the threat of burdensome new taxes has been temporarily shelved.

But before we all break into a fireworks-worthy celebration, let’s ask the deeper question: Does this bill actually help clients—or just the carriers and distributors?

What’s in the Bill?

At its core, the One Big Beautiful Bill Act protects key provisions that make life insurance and annuities such powerful tools for retirement and legacy planning:

• Preserves tax deferral on non-qualified annuities and life insurance cash value accumulation

• Avoids new excise taxes that were previously floated for “large balance” annuity contracts

• Provides clarity around Roth conversions and RMD flexibility that could boost annuity integration in retirement plans

• Freezes the corporate tax rate at 21%, helping life insurers manage their general account spread margins with more predictability

ACLI’s CEO David Chavern framed it as a “foundational bill for American financial security.” He’s not wrong. But he’s also not talking about the full picture.

Strategic Win… But For Whom?

From an industry standpoint, the legislation reinforces the viability of life and annuity strategies at a time when clients are desperately seeking guaranteed income, tax-efficient growth, and legacy leverage. But for financial professionals who want to lead with ethics and transparency, this bill is a double-edged sword.

Why? Because it protects product advantages without addressing persistent gaps in:

• Suitability and best-interest oversight

• Disclosure and fee transparency

• Client education about product complexity

In short: it amplifies product attractiveness but does little to ensure they’re being sold—and understood—appropriately.

What Advisors Must Watch Now

1. Don’t Let Tax Deferral Be the Sales Crutch

Just because the tax deferral feature survived another legislative round doesn’t mean it’s bulletproof long term. Frame annuities and cash value life products as solutions to planning needs—not tax shelters. Lead with income planning, risk transfer, and longevity hedging.

2. Prepare for a Rush of New Product Variants

Carriers now have green lights to lean into product innovation. Expect an expansion in multi-year guaranteed annuities (MYGAs), indexed annuities, and PPLI (private placement life insurance) offerings. Advisors must double down on due diligence and internal training to vet what’s worth recommending.

3. Talk About What the Bill Didn’t Do

There was no progress on tax credits or incentives for long-term care annuity hybrids. Nothing on enhanced disclosure. Nothing on fiduciary alignment. This leaves room for ethical advisors to fill the void by becoming educators, not just distributors.

4. Get Proactive with Client Conversations

Clients are going to hear about this bill—likely in oversimplified terms. “Annuities are even better now!” may be the message in the media. Counter it with clarity: Yes, the tax treatment is protected, but let’s make sure this fits your income, liquidity, and estate goals first.

Data Points Worth Quoting

• $434 billion in total annuity sales in 2024 (LIMRA estimate)

• 47% of Americans aged 55+ still believe annuities lose money if you die early (Pew Research, 2024)

• More than half of annuity owners say they were unclear about fees or surrender charges at the time of purchase (NAIC Study, 2023)

The education gap is real. And this bill, for all its strengths, doesn’t close it.

Final Thought: A Time to Lead, Not Coast

The One Big Beautiful Bill Act gives our industry breathing room. But it’s up to advisors to make sure that room isn’t filled with noise, hype, or lazy sales practices.

This is the moment to raise the bar. We can’t rely on legislative wins to justify product pushes. We must re-earn client trust—daily—by pairing technical expertise with ethical guidance.

Let’s use this policy win not to relax, but to recommit.