Incoming SEC Chair Paul Atkins’ 54 Life Insurance Policies: A Look Under the Hood
Paul Atkins, President Donald Trump’s nominee to lead the Securities and Exchange Commission, is a man of diverse financial interests. His holdings include investments in Chinese tech, crypto companies, and venture capital firms. Most notably, however, Atkins has amassed a considerable collection of life insurance policies: a staggering 54 in total, held jointly with his wife and family.
This information comes from a recent ethics disclosure, a standard requirement for agency heads, members of Congress, and other high-ranking officials. With Atkins likely to be confirmed as SEC chair this week, his financial dealings are under close scrutiny.
To put the sheer number of policies into perspective, consider that the American Council of Life Insurers reported just under 260 million active life insurance policies in the U.S. in 2023. That’s less than one policy, on average, for every American adult. Moreover, the 54 policies represent nearly 10% of Atkins’s net worth, estimated by Bloomberg to be at least $327 million.
This significant investment in life insurance has raised eyebrows among financial experts.
“It would make no sense for an individual to have 20, 30, 40, let alone 50, universal life policies on their own life,” said James Carson, a professor at the University of Georgia who researches the insurance market, in an interview with Fortune.
So, what’s the purpose behind this extensive portfolio? Fortune sought comment from Atkins through the consultancy firm Patomak Global Partners, where he serves as CEO, but did not receive a response.
Death and Taxes: Potential Tax Strategies
One possible explanation, according to Timothy Harris, an economics professor at Illinois State University, is tax planning. He told Fortune that Atkins’s life insurance policies might be designed to reduce his tax burden.
There are two primary types of life insurance: term and whole life. Term policies provide coverage for a set period, typically 20 or 30 years. Whole life policies, on the other hand, provide lifelong coverage. All 54 of Atkins’s policies fall into the whole life category, or a variation known as “universal.”
Whole life insurance combines a savings component with a death benefit. Policyholders deposit money into their account, earning tax-deferred interest. Upon death, the beneficiaries receive the accumulated savings, the interest earned, and a lump-sum payout. As Harris explained, “It’s less so about insuring against premature death, and it’s more of an investment vehicle.”
However, whole life insurance isn’t necessarily the best investment for everyone. Harris notes that for those who haven’t maxed out contributions to retirement accounts like 401(k)s and Roth IRAs, whole life insurance may not be the optimal choice. However, for high-income earners who have fully utilized their retirement options, “you can turn to these whole or universal life insurance policies to try and circumvent some of the taxes,” he added.
Complex Finances or a Speculative Investment?
Patricia Born, a professor at Florida State University’s College of Business who studies risk management and insurance, told Fortune that Atkins’s insurance holdings are unusual. However, she suggests there might be explanations beyond tax advantages.
Born points out that Atkins’s financial situation is complex. He manages multiple trusts, serves on the boards of numerous companies, and is the CEO of Patomak Global Partners. Companies may offer employees or board members life insurance policies as a perk. “And it would make sense to have policies written specifically to pay to each of those trusts,” she noted.
However, Carson, the University of Georgia professor, believes there’s another potential reason for the large number of policies: Atkins may be purchasing life insurance policies from others in a secondary market.
This practice is not uncommon. Sometimes, an individual may decide they no longer need a policy or find the premiums too expensive. They can then sell the policy back to the issuing company for a surrender value. Policyholders can sometimes get a better deal by selling to a third party. In these instances, the buyer continues to pay the premiums and receives the death benefit when the original policyholder passes away.
Those who purchase another’s life insurance are essentially betting on that person’s lifespan. The strategy relies on the assumption that the policyholder will pass away relatively soon, making the investment worthwhile. Carson is convinced this is the strategy behind Atkins’s extensive portfolio.
“This guy clearly likes to have a big pool of varied investments,” Carson said. “And I think these are investments.”
He cites the variety of insurance issuers listed in Atkins’s disclosure, as well as the differing values of the policies, as supporting evidence. Some policies are worth over $1 million, while others are valued between $1,000 and $15,000.
Atkins is currently undergoing a confirmation hearing before the Senate. According to an ethics agreement, he plans or has already divested a significant portion of his holdings. However, his life insurance policies are not included in this divestiture.
This story was originally featured on Fortune.com
