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Charitable Institutions and Charity Considerations

Charitable Institutions
The advantages of life settlements to charitable organizations are many and varied. A few of the advantages are:

  • Charities can sell donated life insurance policies to generate cash for projects and be relieved of future premium payment obligations
  • Charities can produce cash from life insurance policies that might soon lapse due to poor performance or because the charity can not afford to pay the premiums
  • Through the use of a COLI (Charitable Owned Life Insurance), charities may provide additional tax benefits to their donor base, while realizing the future benefit of the life insurance policy(s)
  • Qualifying charities may utilize their tax exempt status to establish long term income through Milestone’s Leveraged Endowment Program

*Charities which currently own donated policies, or are listed as the beneficiary of a life insurance policy, may contact Milestone for a free, non-binding appraisal of these policies. 

Many charities own donated life insurance, or are the beneficiary of life insurance which the charity pays the premiums on, and/or manages the policy based on premium invoices received from the life insurance company.  Milestone can show you how to reduce or eliminate these payments and optimize these policies in order to maximize the benefit to your organization.

Individuals and Trusts 
Some of the advantages of life settlements to charitable-minded individuals and trusts are:

  • Individuals and trusts can use life settlements to accomplish their charitable giving plan, and receive a larger tax deduction than the cash surrender value
  • A Life Settlement can produce more cash for charitable purposes
  • Donors seeking to give a gift of life insurance can contact Milestone for an evaluation of the policy which may provide the greatest tax deduction to the donor and the greatest income to the intended recipient of the donation

Benefits to the Donor
Some benefits of life settlements to charitable donors are:

  • Donors can receive a larger charitable deduction over and above the cash surrender value, for gifting a life insurance policy to a charity
  • Donors can receive a tax deduction for the amount of the Life Settlement sale proceeds, not simply the (lesser) cash surrender value
  • Donors can convert a generally worthless asset, such as a policy that will soon lapse or be surrendered, into an asset of significant value
  • A Life Settlement can provide funds for charitable giving
  • A Life Settlement can relieve the individual or organization from further premium obligations
  • A Life Settlement can provide individuals with philanthropic options

Benefits to the Charity
Some benefits of life settlements to the charity are:

  • A Life Settlement can generate cash to bolster endowment funds
  • A Life Settlement can create cash for capital projects or important programs
  • A Life Settlement can provide additional funds to supplement income from underperforming endowment investments
  • A Life Settlement can encourage donations from those who would not otherwise give
  • A Life Settlement can provide new planned-gift strategy to donors

Sometimes gifts of life insurance are worse than no gift at all due to the fact that, over time, these policies cost far more in premiums than will ever be received in death benefits.  Milestone can analyze those policies which are currently in the name of the organization, or that are being considered as gifts to the charity. 

Our in-depth understanding of insurance products can help you maximize the return on these gifts.  After Milestone conducts an evaluation of the policy(s), organizations often realize increased benefits through selecting appropriate products and management practices.

*Appraisals are provided to qualifying charities and foundations as a tax deductible gift from Milestone. 

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