Life Insurance for Charitable Planning Purposes


If you’re like most charitable Americans, you probably give cash or other assets (eg., stocks, bonds, etc.) that can easily be sold to charity. There are several reasons why this is done:

  1. it’s an easy way to give – you just have to write a check or transfer a security that can easily be sold
  2. Charities want and need cash to pay for projects and expenses
  3. You may be unaware that there are other ways to give to charity

You probably also have favorite charities that you regularly give to. Wouldn’t it be nice if your contributions could make an even greater impact?

Donors who regularly support a charitable organization may be interested in leveraging their gifts into permanent life insurance on their lives but owned by the charity and where the charity is the beneficiary. In this way, donors may transform their gifts into much larger gifts. Modest gifts are important for a charity, particularly when such gifts are received in volume from many donors, but each individual gift often doesn’t have sufficient impact. However, a regular gift of cash that is used to purchase permanent life insurance can eventually have a major impact on your choice charity.

Example: Joseph is a healthy 50-year-old male who annually gives $70,000 (deductible) to his favorite charity. Certainly, his charity appreciates the gift and will use the money to support its programs. Let’s assume, however, that his deductible annual gift of $70,000 is sufficient to purchase a $2,500,000 permanent life insurance policy.

What’s more impactful — $70,000 each year or a one-time (albeit deferred) “gift” of $2,500,000 or more depending on the growth of the policy? Below is a closer look at the numbers as it pertains to this strategy.

Life Insurance for Charitable Planning Purposes

NET CASH VALUE = Cash Value Utilization
NET DEATH BENEFIT = Death Benefit Utilization

THIS ILLUSTRATION IS BASED ON THE 2013 DIVIDEND SCALE AND ASSUMES THAT THE CURRENTLY ILLUSTRATED NON-GUARANTEED ELEMENTS, INCLUDING DIVIDENDS, WILL CONTINUE UNCHANGED FOR ALL YEARS SHOWS. THIS IS NOT LIKELY TO OCCUR AND THE ACTUAL RESULTS MAY BE MORE OR LESS FAVORABLE THAN THOSE SHOWN.   IF YOU WOULD LIKE TO SEE THE FULL ILLUSTRATION FOR THE REFERENCED ILLUSTRATION ABOVE, PLEASE EMAIL INFO@WEALTHANDLEGACYGROUP.COM. THE FOLLOWING ASSUMPTIONS WERE UTILIZED: GUARDIAN L95 POLICY, MALE, AGE 50, PREFERRED PLUS NON TOBACCO RATING.

The foregoing information regarding estate, charitable and/or business planning techniques is not intended to be tax, legal or investment advice and is provided for general educational purposes only. Neither Wealth and Legacy Group, nor its subsidiaries, agents or employees provide tax or legal advice. You should consult with your tax and legal advisor regarding