The Secret to Effective Donations of Life Insurance Policies for Philanthropic Giving
"Hi everybody, Tyler Horning here, Principal at TDC Life. Today I wanted to talk to you about life insurance and not-for-profit organizations."
"Hi everybody, Tyler Horning here, Principal at TDC Life. Today I wanted to talk to you about life insurance and not-for-profit organizations.
Did you know that life insurance policies can be a great asset to donate to not-for-profit organizations? You probably didn't because many not-for-profits are not asking for these types of gifts.
Many not-for-profit organizations don't have the infrastructure, expertise, or knowledge to really implement these types of gifts. Here at TDC Life, we're helping philanthropic organizations all over the country to get the knowledge and advice they need to be able to accept these gifts.
The great benefit of gifts of life insurance is it's a blue sky opportunity. That blue sky opportunity really falls into two categories.
1. We can use life insurance to create Super Donors.
Folks that are making gifts to philanthropic organizations already can use those gifts as a premium to leverage up a much larger death benefit that will ultimately be what the charity gets.
Let me give you an example. A recent situation that we helped a client with is they needed to make a $5M gift -a headline gift as part of a campaign- to a philanthropic organization close to their heart. Instead of making that $5M gift in cash, they ended up donating a premium that bought a $5M life insurance policy. The premium ended up being $250,000, but the charitable organization at the end of the day was going to get $5M. A great way to take a good giver, turn them into a Super Donor, and do something great for a non-for-profit close to your heart.
2. We can turn policies into cash.
So folks that have life insurance policies that they don't need any more, who are over the age of 65, or have had a major change in health since they took the policy out, can donate a life insurance policy to a philanthropic organization.
That organization then turns around and sells the policy for cash on something called the "secondary market" for life insurance.
Let me give you an example. An 82 year old client of ours had a $5M life insurance policy. They donated it to their alma mater. The alma mater took that policy and sold it for $2M in cash. Something that the client didn't need anymore and didn't want anymore was able to be turned into something good for an educational institution they care about.
These are two strategies which we've been using with clients for a number of years and would be great strategies to do year-end giving for your clients this year. I'm going to have some time to talk about these strategies if you'd like to join me for an upcoming Town Hall webinar. Details in the email that you received this video in.
Thanks for the time, have a great year-end, and let's do some good for the not-for-profits we care about."
-Tyler Horning, Principal