Introduction: Life is a journey filled with unexpected twists and turns. For Mr. A, a successful financial planner, life had taken him on a path he never anticipated. He had purchased a life insurance policy two decades ago, intending to safeguard his loved ones in case of an untimely event. Little did he know that his noble intentions would lead him to a moment of profound generosity and gratitude, shaping the future in a way he never imagined.
The Policy Predicament: As time passed, the insurance landscape changed drastically. The prolonged low-interest rate environment led to a sharp decline in crediting rates across all life insurance carriers. Unfortunately, Mr. A received an unwelcome surprise: a pending lapse notice from the life insurance company. To maintain his policy’s coverage, he was now required to pay three times the original premium at age 70. A daunting prospect, especially for someone who had recently retired and sought to conserve income.
The Common Path: When faced with such a situation, many individuals opt to let the policy lapse. It is the most common decision, and understandably so, as the burden of increased premiums can seem overwhelming. According to statistics, a staggering 88% of life insurance policies sold in the United States end up lapsing without ever paying a death benefit.
Insuring A Better World Fund:
Mr. A didn’t settle for the common path; he chose the extraordinary one. He discovered the Insuring A Better World Fund, a 501(c)(3) charity that offered a remarkable alternative. By donating his policy to the fund, Mr. A could stop the $16,000 a year premium payments without forsaking the $1 million life insurance policy death benefit.
The Perfect Blend: Mr. A opted for the perfect blend. By donating his policy to “Insuring A Better World Fund”, he secured several benefits:
- No Cost: The donation to the charity comes at no cost to Mr. A or the chosen charity.
- Charitable Tax Deduction: Mr. A received a charitable tax deduction for the policy’s valuation, which amounted to approximately $150,000.
- Legacy Gift: His alma mater received prorated distributions from the Fund, turning the lapsing life insurance policy into a legacy-sized gift.
- Continued Annual Giving: With the $16,000 savings on life insurance premiums, Mr. A now makes annual donations of $5,000 to his alma mater, generating additional charitable income tax deductions.
Conclusion: Mr. A’s decision to donate his life insurance policy proved to be the perfect blend of generosity and foresight. Not only did he fulfill his pledge to his alma mater while alive, but he also ensured that a charitable cause dear to him would benefit from his legacy. The lesson learned from Mr. A’s story is that with thoughtful planning, a blend of options can lead to a win-win situation for all parties involved. Consider exploring creative ways to make a positive impact while safeguarding your financial future—a perfect blend of gift and gratitude.