Philanthropic use of Life Insurance: Winning The Triple Crown

Mage just won the Kentucky Derby on May 6th. This is a huge win for the horse, the trainer and the owners. However, this is just the first leg of the Triple Crown. Saturday is the Preakness followed by the last leg, the Belmont Stakes, on June 10th .  Although Mage is entered in the Preakness, it remains to be seen who will win and whether or not Mage will even enter the Belmont Stakes. Winning the Triple Crown is very rare and has happened only thirteen times in over 100 years of horse racing.

Often times in negotiations and legal settlements the parties try to achieve win-win solutions. This allows both parties to feel good and claim victory. Although this can be achieved more often than not, one side feels like the winner and one side experiences disappointment.

Philanthropic use of life insurance is the triple crown of philanthropic planned giving. Now donors can win by helping their favorite charity win big with a legacy sized gift of life insurance. The Financial Advisor and Planned Giving Advisor win too with the charitable gift of life insurance.

The primary purpose of life insurance is to provide a safety net for those who depend on you financially. The death benefit that is paid to your beneficiaries can help them cover daily expenses, future costs, such as college tuition or mortgages and provide liquidity at death for business needs, taxes or income replacement. What if your children are grown, your business is sold, your estate planning is complete, and you have more life insurance than you need?  This results in unneeded life insurance that can now be transformed into a legacy-size donation to a favorite charity.

“Life insurance often provides a death benefit several times larger than the premium paid, which is why it is a great way to boost your charitable giving.” says Robert Stuchiner, Co-founder of Insuring A Better World Fund, and a life insurance professional with 45 years of experience.

There is over $20 TRILLION of life insurance in force in the United States and roughly 88% of these policies will lapse without paying a death benefit. Over 250,000 seniors lapse their life insurance policy each year. More than $150 billion of senior-owned life insurance is wasted annually when the owners stop paying premiums. Despite its enormous size and opportunity, life insurance is the most under utilized asset class for charitable giving.

According to a study by Dr. Russell James, Professor at Texas Tech University, charities that accept noncash donations achieved far more robust growth than other charities. Specifically, Dr. James studied the data of one million nonprofit tax returns from 2010-2015. Over a five-year period, the total growth in fundraising contributions was 11% for organizations that only received cash gifts compared to 50% growth for those that received noncash gifts in addition to cash gifts, and 66% growth for charities that received securities as part of their noncash gifts. Note this study was conducted during a time period of continued asset growth in bonds, stocks, real estate, and more. Today is a different world with declining markets, inflation and donor’s concerns about outliving their assets. Noncash gifts are more important than ever.

Insuring a Better World Fund, a 501(c)(3) nonprofit, helps donors transform this wasted life insurance to better the world. Donors choose. Insuring A Better World Fund pays. Charities receive. Donors can make legacy-sized gifts to their favorite charity with a simple, no-cost solution.

The Triple Win

The Charity Wins: Receive a Legacy-Sized gift with additional benefits.

Save time, money and resources! Insuring A Better World Fund can do it all for charities. The donation process is easy to explain and simple to execute with donors. Insuring A Better World Fund pays all costs, administers the policies and expertly manages the life insurance gift to maximize its value for charity. There is no need for a charity to augment their staff. Insuring A Better World Fund draws from its extensive network of financial professionals, the charities own donor pool and other referral sources to identify and secure donations.

Maximize value! Insuring A Better World Fund’s management team utilizes their decades of experience to underwrite and evaluate policies to determine which policies are appropriate for donation. Donors who make legacy gifts are much more likely to continue to make annual gifts too. The added opportunity to receive a blended gift from the donor’s life insurance premium savings is a compelling proposition for the donor. Donations of life insurance strengthen relationships with financial professionals to secure more gifts and donors. Charities may elect to have Insuring A Better World Fund review their existing life insurance policy portfolio to rescue lapsing policies and maximize the value of the portfolio.

Something new to engage donors! Does marketing a no-cost ask sound easy? It is. This is a no-cost ask of donors with legacy-sized potential. There is no change to human behavior because these life insurance policies would otherwise lapse. Insuring A Better World Fund equips charities with the right tools to easily get donors started on the process.

The Donor Wins:

Eliminate life insurance premiums! Cash flow improves immediately. Once a policy is donated to Insuring A Better World Fund, donors are not responsible for premium payments or any other cost of the policy. Donors may also be entitled to a sizable charitable tax deduction at the time of the gift for the full value of the policy. *

Giving while living! There is no better way to celebrate outliving the need for life insurance than to benefit a favorite charity. Insurance works on the law of large numbers. A single charity cannot aggregate enough life insurance policies to achieve actuarial credibility. Insuring A Better World Fund aggregates policies from all charities into distinct large portfolios of policies. Funds are distributed from this large portfolio of policies on a pro rata basis, allowing for distributions to charities while the donor is alive. The charity the donor chooses is able to recognize the gift upon donation.

Leaving a Legacy! Everyone leaves a legacy, the values the donor wants remembered and carried on after their passing. This is an opportunity to make a lasting impact by supporting a charity working on a cause that fulfills that legacy. The best part is neither the donor nor the donor’s chosen charity pays a dime.

The Financial Advisor and Planned Giving Professional Wins:

Value to the client! Offering a charitable alternative to lapsing a policy is a new and no-cost conversation to have with clients and transforms an unsatisfied client into a delighted donor. The client may also be entitled to a charitable tax deduction based on their policy’s full fair-market value. *

Income! Policies that are donated earn continued renewal commissions. Financial advisors are able to earn first year term conversion commissions. Working alongside donors and boards of the charities that benefit from the good work of securing these donations is a great source of new business.

Job Satisfaction: Research proves that doing well while doing good increases job satisfaction and one’s sense of self-worth. Financial professionals that work with Insuring A Better World Fund will have a lasting impact on charities and therefore the world. Financial professionals feel good about this philanthropic work.

In addition, the financial professional gains valuable prestige and influence in the industry that helps build their business. Think of the leaders of the life insurance industry. Look at the leadership at Finseca. Think of the leaders of any industry. All are admired and celebrated for their philanthropic acts. Be involved. This is the life insurance charity for life insurance professionals. Let’s do the industry proud!

The planned giving professional meets the donor where they are. With over 250,000 seniors lapsing their policy every year, the opportunity for the planned giving professional to satisfy their donors’ intent increases exponentially. Now it’s easy to have this no cost ask lead to more conversations, visits and donations. It’s easy to build good will with the donor base by allowing them to turn waste into a legacy sized gift recognized by the charity.

Here is a link to a list of some of the many charities who have benefitted from a gift of life insurance to Insuring A Better World Fund:

We’re at the post. Riders up. We can all win the triple crown together. It is only with your participation that we will all be successful in ensuring a better world for us all.

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