Introduction
Life insurance policy owners are facing a major issue with over 90% of policies being cancelled, and 88% of all universal life insurance policies purchased never resulting in a claim, according to a study conducted at the Wharton School. However, a new solution is emerging that allows non-profits to accept life insurance donations (including term policies) with the donor paying no further premiums and receiving a substantial charitable deduction immediately. This is achieved by accepting life insurance as major gifts, rather than planned gifts.
The Opportunity
Every year, policyholders cancel life insurance policies that could provide over $30 billion in proceeds. Traditionally, the benefit of life insurance donations has been either the eventual death benefit or the cash surrender value. However, by treating life insurance as an asset, there is significant potential for major gifts. For example, a life insurance policy with $30,000 in cash surrender value could be treated as an asset and receive a fair market value offer of $120,000. This provides a clear advantage to both the donor, who maximizes their charitable contribution/deduction, and the non-profit, who receives a much larger donation. What’s even more surprising is that even term policies can qualify. For instance, a $10 million dollar term policy expiring the following year, where the policyholder would not pay the increasing premium, was able to provide $1,350,000 to charity and keep $1,000,000 for themselves.
This example illustrates that life insurance ownership can be partially donated, with the donor retaining a percentage ownership of the asset. This provides funds for the donor and a charitable contribution to the non-profit organization, resulting in a much better outcome compared to cancelling the policy.
The Doro Foundation
The non-profit start-up, Doro Foundation, has created a solution for non-profits who want to receive and manage these complex asset donations. For organizations that do not want to deploy resources to manage these transactions, the Doro Foundation will manage receiving, liquidating, and granting the proceeds. With its partnership with LS Hub (the most advanced solution for obtaining the highest fair market value of life insurance policies) the Doro Foundation ensures that every donation is maximized. This partnership also avoids the high commissions charged by traditional brokers and insurance agents, resulting in valuations that are 20-30% higher.
In addition to maximizing the value of life insurance donations, the Doro Foundation offers several other benefits to non-profits. For instance, the Foundation provides detailed reporting and tracking of all life insurance donations, ensuring that non-profits have a clear understanding of the value of their assets and the potential for future contributions. The Foundation also offers a range of promotional materials, such as flyers, brochures, and webinars, to help non-profits educate their supporters and stakeholders about the benefits of life insurance major gifts.
Finally, the Doro Foundation is committed to working with wealth managers and other key stakeholders to promote the life insurance major gift solution. By partnering with these organizations, the Foundation can help non-profits capture new retail accounts and expand their reach, increasing the potential for major gifts and charitable contributions.
Conclusion
In conclusion, the future of life insurance donations is being powered by the Doro Foundation, making accepting these often-significant donations fast, simple, and easy. With over $30 billion in funds available by treating life insurance donations as major gifts instead of planned gifts, non-profits have a unique opportunity to increase their charitable contributions and achieve their mission.