Plain, Vanilla Insurance - I Like It!

I think gifts of plain, vanilla - no scheme - permanent life insurance can actually make a terrific planned gift campaign! (And no, I don't sell insurance.) I always try to include an insurance campaign as a piece of a comprehensive planned giving program.

It works great when introducing younger constituents to the importance of planned giving to your organization. And, since insurance is such a leveraged product, it allows these young donors to make a more significant gift than they originally thought possible. The younger the person, the more affordable the premium payments, and they are deductible if your organization owns the policy. Ultimately, the payout to your nonprofit is always a major gift. Meanwhile, you've started a long-term connection with the donor that will surely grow over their lifetime.

I'll bet a few of your supporters have policies purchased years ago to protect a child's education. Did you know they can donate those policies to your organization once the child is out of school? Of course, this would apply to any insurance policy that no longer serves its intended purpose. This is easily accomplished by transferring ownership of the policy to your organization, usually with a simple "Transfer of Ownership" form provided by the insurance company. Remember, even though your contributor didn't lay out any cash, they're entitled to a charitable deduction of either the premiums paid or a bit less than the policy's cash value, whichever is the smaller amount. Once your organization owns the policy, it can either hang onto it and become the beneficiary, or cash it in.

How about supporters making your charity a beneficiary (or partial beneficiary) of an existing policy? Again, it's just paperwork. There's no immediate charitable deduction, but there may be some tax benefits when the policy pays out, depending on the ownership.

I think more organizations should seek out this type of planned gift.

BREAKTHROUGH TIPS

Getting the Most Out of Insurance Campaigns

While I recommend all participants in your insurance campaign be recognized as members of your legacy society (you've got one, right?), I think there should be a special "club" for the younger donors who make your organization the owner of a policy. People ranging from 30 to 50 years old (and younger) can usually buy $100,000.00 of permanent life insurance for premiums between $100.00 and $200.00 a month, and they only need to complete a confidential health questionnaire for the insurance company. If you can appoint a "campaign chairperson," and have them talk about their gift and how easy it was to make it, you'll definitely be more successful with this type of campaign.

• Don't accept term life insurance as a planned gift. My understanding is, term life insurance is good for only one year. There may be some products that go for longer, but they don't have any cash value and they are worthless.  
• Try to avoid a conflict of interest situation. Don't use an insurance agent or broker who sits on your board.

• Lastly, with all the trouble in the financial community, remind your insurance donors to check the quality of the insurance company they are using.