Using Life Settlement To Achieve Charitable Giving Goals

A life insurance settlement is the sale of an existing life insurance policy for a value that is less than the expected death benefit of the life insurance policy but more than the current cash value. A life insurance policy is property, like real estate or stocks and can legally be sold even if the investment is made within a charity or non-profit organization.

Receive Immediate Liquidity & Avoid Spending Down Assets

Some non-profits and charities have reportedly let donated policies lapse due to premium maintenance or procedural changes by the directors of the organization. Before letting these policies lapse the charity should evaluate whether these donated policies qualify for life settlements.

The charitable organization can sell these policies on the secondary market and generate substantial revenue as opposed to letting the policy lapse and receiving substantially less or nothing at all.

Learn More About Life Insurance Settlements

How A Life Settlement Can Be Used In Your Charitable Gifting Program

There are a number of options and estate planning strategies that can be combined with life settlements to increase charitable giving.

However, there are two primary approaches: the donor who owns the policy can either sell the policy and give the life settlement proceeds to the charity, or donate the policy to a charity and have the charity sell the policy for cash.

Each of these strategies increases donations to the charity and eliminates on-going expensive premiums.

A win –win situation!

Monetize Existing Donations

Unlock the money trapped in your already donated life insurance policies by having us appraise your life insurance policies. Any policies that qualify can be monetized to help you:

  • Realize cash from your policies today.
  • Eliminate insurance premium payments.

How Life Settlements Benefit the Organization

  • Revive a donation from a donor who may otherwise not have been able to contribute.
  • Collect a lump sum of cash today for capital projects, instead of waiting for the insured’s death to collect the proceeds.
  • Not having the financial burden of premium payments to keep the policy in force. This allows the non-profits or charities to accept additional donations.
  • Providing a valuable option to the donor that furthers their tax and estate planning objective and invites the opportunity for future/additional gifts.
  • Accommodates an owner who wishes to see the policy’s hidden value tapped while he/she is still living.
  • Develops a stronger relationship with donors through more creative planned giving programs.
  • Improve annual budget forecasting ability.

How Life Settlements Benefit the Donor

  • Making a donation to his/her favorite philanthropic organization without depleting cash reserves or losing income-producing assets.
  • Getting a tax deduction for the fair market value (selling price) of the life insurance policy instead of only cash value.
  • Being able to see their donation put to use during their lifetime, rather than after their death.
  • Eliminating premium payments on the policy.
  • Removing a taxable asset from their estate if the policy was individually held.

Success Stories


Story In Brief

  • $1,000,000 & $500,000 policies
  • Cash surrender values of $8,000 & $0
  • Annual premiums of $60,000 & $51,000
  • Final settlement amount of $275,000


The Background

A University needed some creative solutions for donated policies that would also help increase capital for their operating budget.

The Problem or Challenge

Decreasing Donations, High Premiums On Donated Policies
Recently our network helped a University evaluate their donated insurance policy pool. Two polices were of most concern: one was a $1,000,000 policy insuring an 79 year old male with a $60,000 annual premium and cash surrender value of only $8,000; the other was a $500,000 policy on a 81 year old female, $51,000 annual premium, and no cash surrender value.

The Solution

Both insurance policies were sold: one for $175,000 and the other for $100,000. These transactions netted the university $275,000 instead of just $8,000 in surrender value! The University also eliminated the annual premiums of $111,000.


Life Insurance Settlements For Non-Profits

Story In Brief

  • $5,000,000 & $2,000,000 policies
  • Cash surrender values of $88,000 & $23,400
  • Annual premiums of $175,000 & $80,000
  • Final settlement amount of $1,100,000


The Background

A non-profit had a portfolio of donated life insurance policies. The first policy in their portfolio was a $5,000,000 life policy insuring an 84 year-old female. The annual premiums were $175,000 with a cash surrender value of $88,000. The second was a $2,000,000 life insurance policy insuring a 75 year-old male. The annual premiums were $80,000 with a cash surrender value of $23,400.

The Problem or Challenge

Need To Raise Capital For Projects & Reduce Annual Expenses
The non-profit donations were down and the organization was looking to raise capital for their budget and projects they wanted to fund.

The Solution

The $5,000,000 life insurance policy was sold for $800,000. The $2,000,000 life insurance policy sold for $300,000 creating nearly $1.0 million more than the life insurance company would have paid based on the cash surrender value and saving $255,000 in annual premiums.

Multi-Hospital System

Story In Brief

  • $500,000, $200,000 & $100,000 policies
  • Cash values $40,000, $13,400 & $0
  • Annual premiums $17,000, $6,000 & $3,500
  • Final settlement amount of $210,000


The Background

A multi-hospital system had a portfolio of donated life insurance policies. The Hospitals were seeking funds to contribute to their new Heart Center. An expert on life insurance settlements suggested that they review their current policies to see if additional funds might be raised by selling selected policies on the secondary market.

The Problem or Challenge

Need To Raise Capital For Projects

The Hospital Foundation at the advice of the Life Settlement Expert selected 3 policies to value with an annual premiums of $26,500 and the cash surrender value was $53,400. The Hospital Foundation was considering cashing in several policies for the cash surrender value to create some current cash and decrease the annual premium payments.

The Solution

The 3 policies with a face value of $800,000 were sold for $210,000 or approximately $156,000 more than the insurance company would have paid based upon the cash surrender value. Additionally, the Hospital foundation realized annual premium savings of $26,500. The Foundation is now more actively pursuing life insurance policy donations realizing that they can sell selected policies at a much higher value than the cash surrender value and better manage their annual budget.

Take The Next Step Today

To find out if you qualify for a life settlement,
please complete our brief 5 minute questionnaire.