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'Tis The Season For Charitable Giving Via Life Insurance

Life insurance is a viable legacy-giving solution for clients who want to provide funds to a worthy cause. But more than half of consumers don’t see life insurance as a vehicle for charitable giving.

In a recent study by Lincoln Financial Group, 15% of consumers see life insurance as one of the best vehicles for charitable giving while 33% view it as one possible, but not the best, vehicle. Fifty-two percent don’t see life insurance as a means for charitable giving at all.

With more than 10 million nonprofit organizations in the world, according to the 2018 Global NGO Technology Report, there’s no shortage of causes to support.

Charitable giving is always in season. Whether it’s school kids selling wrapping paper, clubs selling grapefruit, your alma mater’s annual fundraising campaign or even a Kickstarter campaign to fund a startup’s project, there are thousands of ways to give in the moment. But what about leaving a large legacy gift that impacts a charity, and the world, in a bigger way? That’s where you come in.

Charitable Giving In The U.S.

According to The Giving Institute, giving by individuals declined in 2018. At $427.71 billion, individual giving comprised less than 70% of overall giving for the first time in at least 50 years. Giving to foundations decreased the most, after experiencing strong double-digit growth in the prior year. Giving to international affairs showed the largest growth of any sector at 9.6%. Giving by bequest amounted to $39.71 billion.

How Does Life Insurance Fit In?

Options for charitable giving may include life insurance, annuities and retirement account assets.

There are many advantages to leaving a charitable gift through life insurance. It is simple to set up and often does not require the services of an estate attorney. The size of the gift is set and is not affected by market fluctuations or economic factors.

Using a life insurance policy to benefit a charity allows the giver’s wishes to be carried out by directing a large gift to a specific charity or charities while preserving assets for the giver’s family members.

Life insurance also is a way to multiply the dollars that will eventually go to the giver’s choice of charity. The proceeds from the life insurance policy are larger than the amount of money that the giver spent to fund the premiums, enabling the giver to provide a bigger gift than they might have been able to make directly from their own funds. Simply put, small premiums fund large gifts.

If the charity is the owner of the policy, the premiums may be tax deductible. As with most tax issues, the guidelines may be complicated, so consulting with an accountant is advised.

There are several options for using life insurance as a charitable giving vehicle. Your client can name the charity as the beneficiary of an existing life insurance policy. Or your client can contribute an obsolete or paid-up policy that the charity can cash in now. If your client purchases a new policy and gifts the premiums to the charity, your client may be able to claim a charitable deduction for income tax purposes. In addition, your client may choose to take dividends received from an existing policy and direct them to the charity.

How To Choose A Charity

Causes to consider include art, animals, fighting diseases, faith-based, children, education, environmental, parks, health, international relief, mental health, police and fire, veterans, social causes or youth development. A donor may choose to fund scholarships, nonprofit grants or even start a foundation to follow their vision.

Along with a list of best and worst charities by giving category, Consumer Reports offers these tips: Verify tax-exempt status, give directly instead of through a professional fundraiser, request privacy, and be on guard for charities with names that sound credible, but with reputations that are not.  
For more in-depth research, use Charity Navigator as a resource. You can set up an account and join 752,000 registered users. While you’re on the site, you can evaluate charities on a variety of criteria, see what causes are trending and even make a gift online. Charity Navigator is America's premier independent charity evaluator. They help charitable givers make intelligent giving decisions by providing in-depth, objective ratings and analysis of the financial health, accountability and transparency of America's largest charities. Use Charity Navigator's simple searchable database to find a charity you can trust and support.

Partnering With Charities

Adding a legacy gift specialization to your practice can start by asking your client this question: If you could leave a legacy gift, who would it go to and how would it work? The answer will reveal your client’s passion and vision.

To position yourself as a legacy giving partner advisor, consider partnering with charities in these ways:

  • Conducting charitable giving workshops in partnership with the charity’s donor relations team.
  • Requesting a link on the charity’s website under “donor options.”
  • Reaching out to significant donors with ways to fund the charity’s future dream projects.


Start by researching organizations you’d like to partner with to see what they offer now. For example, the National Parks Foundation has this giving information on their site: “A charitable lead annuity trust is a perfect instrument to make a generous gift to National Parks Foundation while reducing or eliminating estate and gift taxes. National Park Foundation will receive a fixed contribution each year.” This site even offers a Charitable Lead Unitrust Calculator to show how contributions may vary with investment performance.

The Legacy-Giving Team

Consider creating a legacy-giving team to grow your influence, and support. This team has five players.

  1. Donor: The person who purchases the policy.
  2. Charity: The organization that will benefit.
  3. Accountant: Choose a firm with experience in advising about charitable giving deductions.
  4. Attorney: The client’s estate attorney who can advise on any legal complications.
  5. Financial advisor: The expert who manages the client’s investment portfolio.

Introduce Clients To Legacy Giving

The first step to introducing a client to legacy giving is to determine which charity they want to support. Get to know the organization and research their financials. Form a relationship with the charity’s donor relations team. Then work with the client to set a goal amount that they want to give.
Finally, set an example with your own charity-directed policy.

#GivingTuesday

Dec. 3 is Giving Tuesday, a global day of giving. Celebrated the Tuesday following Thanksgiving, Giving Tuesday follows Black Friday and Cyber Monday as it kicks off the year-end charitable gift-giving season. Last year, 3.6 million gifts raised more than $400 million – all in one day!
One of the best ways to get involved is in your own community. Go to givingtuesday.org to find charities and events in your community. Look for one or more charities you would like to support. And if you don’t see a #GivingTuesday event for your charity, start one!

Barbara Rozgonyi is the founder of CoryWest Media, and is an educator, author and speaker who develops customized sales training for individuals and companies. Barbara may be contacted at [email protected] [email protected].


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