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When was the Last Time You Sold Life Insurance as a Charitable Gift?

November 4, 2017

Chances are, very few of your clients and prospects are millionaires. That’s why you should always consider the sales opportunity of a gift of life insurance. For the millions of  “average” citizens (non-millionaires), gifts of life insurance offer some unique advantages.

Now, why life insurance? Well, there is a “frustration” level in many people who would love to make a sizable donation to an organization (church, charity); however, they lack the capital to make that donation. But, if they purchase a life insurance policy, the “substantial” donation has been made with small dollars — essentially cents on the dollar.

People buy life insurance for many reasons, but it’s primarily for LOVE — love for the family. The purchase is made to ensure the family’s financial well being when one of the breadwinners passes away. Well, that same logic, LOVE for an organization, applies when someone purchases a life insurance policy and names that organization the beneficiary of the proceeds.

We won’t discuss the potential tax deductions and other financial planning pluses by using life insurance as a funding vehicle — those issues can be discussed with a CPA/financial planner. Instead, let’s just focus on why life insurance is really an ideal funding vehicle. Some of the advantages of using life insurance for charitable giving:

  • Life insurance assures the size of the gift in advance. The organization will receive a guaranteed sum, promptly, and in cash, at the death of the insured/donor!

 

  • A significant charitable contribution can be made on the “installment plan” through life insurance premium payments.

 

  • A life insurance gift is self-executing, simple to arrange, and assures that the donor’s wishes will be carried out.

 

  • A life insurance gift is more certain than stocks and bonds. The life insurance policy won’t be subject to the potential downsides and volatility of the market. The face amount of the policy is essentially — ”what you see, is what you get.”

 

  • A life insurance gift is more certain than wills. Life insurance proceeds payable to the organization (the beneficiary) are not subject to probate; they avoid (1) the delays and costs of estate settlement; (2) creditor’s claims; (3) will contests by disgruntled heirs; and (4) public scrutiny through probate court records

 

  • If the organization owns the policy, it may surrender the policy for its guaranteed cash value, or borrow on the cash value at an attractive interest rate, during the insured’s lifetime. (again, a “must check” with a CPA/financial planner)

 

And

 

  • It is possible with a life insurance gift to get a current annual income tax deduction for premium gifts. (again, a “must check” with a CPA/financial planner)

 

So, on your next sales visit where the client says “I don’t need any more insurance”, ask that person about his/her favorite organization (church or charity). Ask the person if he/she would like to contribute “big” dollars with affordable dollars by using life insurance as a funding vehicle. Help that person dream that upon his/her passing, a sizable check can be issued to the organization of his/her choice. Yes, that life insurance policy will help ensure that the member’s favorite organization will receive a generous financial contribution when he or she is longer here.

So, when the client says “no” to life insurance, pivot to life insurance as a charitable gift — incredible sales potential.

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