Life Insurance policy donations and Major Gifts 2015

Thinking Outside the Box for Major Gifts!

An unfamiliar yet fruitful avenue for making major gift charitable donations is through the sale of a donor’s unwanted, unneeded, or unfordable life insurance policy in a process known as a life settlement. Policies over two years old with face values over $100,000.00 owned by individuals, businesses (key person or buy/sell) or trusts may be eligible where the insured is over 65 years old, has a change in health status, and no longer has a use for the policy.

A universal, term with conversion, or whole life can be appraised on a secondary market at no cost where proceeds are often 4-5 times the cash surrender value. The cash payment from a Life Settlement during the insured’s lifetime can make it possible for donors from all economic levels to make a substantial tax deductible gift without taking money directly out of their pocket.

Life Insurance policy donations and bequests have traditionally fallen under the umbrella of Planned Giving for future use or endowments. However, there are times when a life insurance policy should be considered as an immediate resource for significant amounts of needed cash—while the donor is still alive. In this scenario, the sale of an unwanted, unneeded, or unaffordable life insurance policy in a life settlement is a welcomed strategy for obtaining major gifts in present time.