A Revolutionary Fundraising Opportunity -- Life Settlements

Amid fundraisers' growing concerns about the current charitable giving climate, dampened by the erratic stock market and shaky economy, a new fundraising opportunity has emerged – Life Settlements.

What is a Life Settlement? A Life Settlement is the sale of an existing life insurance policy for a lump sum of cash that is more than the cash surrender value. A life insurance policy is property, like a car, house, stocks and bonds that can be legally sold in accordance with applicable laws. Through a Life Settlement, a policy owner can realize value today from an asset that is generally thought to only have a benefit when the insured passes away.

How can Life Settlements be used in Fundraising? There are many variations and complex estate and tax planning strategies that can be employed when utilizing Life Settlements in a planned giving program. However, in its simplest terms, a Donor who owns a life insurance policy gives the policy to the philanthropic organization that in turn immediately sells the policy for a lump sum of cash through a Life Settlement.

In order for a policy to be eligible for a life settlement, it must meet the following criteria:

Insuring an individual over age sixty-five (65) or with a serious illness
With a face value of at least $100,000
Issued over two (2) years ago

Donor Benefits:

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 the cash surrender value;

Being able to see their donation put to use during their lifetime rather than after their death if the organization did not utilize a Life Settlement;

Eliminating the requirement of continued premium payments on the policy;

Removing a taxable asset from their estate if the policy was individually held. Organization Benefits:

Receive a donation from a Donor who may not have otherwise been in a position to contribute at all;

Collect a lump sum of cash today instead of having to wait for the insured's death to collect the proceeds;

Not having the financial burden of paying premium payments to keep the policy in force;

Providing a valuable option to the Donor that furthers their tax and estate planning objectives and invites the opportunity for future/additional gifts.

Improved annual budget forecasting ability How Does a Life Settlement Work?

Once the Donor is considering gifting a life insurance policy to the organization, the life insurance policy should be appraised. Typically, a Life Settlement Broker can determine its eligibility for a life settlement and will undertake it to obtain the highest offer for the policy.

The value of a life insurance policy is determined by a number of factors, including, but not limited to, the age and medical condition of the insured, type of insurance policy, rating of the issuing insurance company and amount of premium payments to keep the life insurance policy in force. Most types of insurance policies can qualify, including universal, whole life, and converted term. When a mutually agreed upon price is determined for the life insurance policy, the organization that now owns the policy is paid a lump sum in cash, the ownership and beneficiary rights are transferred to the purchaser. All future premium payments are the responsibility of the purchaser and upon the death of the insured, the death benefit is payable to the purchaser. The cash proceeds from the Life Settlement may be used by the organization in any way – there are no restrictions regarding the use of the funds. The money may be invested or spent on current projects. Because some Life Settlement Brokers offer fundraising support, it makes sense for organizations to partner with them for their expertise.

Life Settlement Regulations

As of June, 2003, eighteen (18) states have enacted statutes addressing the sale of life insurance policies insuring non-terminally or chronically ill individuals and an additional seventeen (17) states have laws that only regulate the sale of life insurance policies insuring terminally or chronically ill individuals. Fifteen (15) states do not regulate the transaction at all.

Donated Life Insurance Policies

In addition, most philanthropic organizations currently own life insurance policies that have been donated in the past. If there is a need for funds sooner rather than later or if the premium payments are becoming burdensome, the organization can utilize Life Settlement transactions to sell those policies for lump sums of cash and put the money to work right away.

Life Settlements are powerful arrows in the quivers of professional fundraisers –

Generating money for their organizations by encouraging current gifting of life insurance policies

Turning already donated life insurance policies into cash

About The Author

The author, Jolene D. Fullerton, practicing attorney for eighteen (18) years and former Director and Vice President of the Viatical and Life Settlement Association of America, the industry's trade association, is General Counsel for a leading Life Settlement Broker company, First Secured Life, LLC located at 1926 Victoria Avenue, Fort Myers, FL 33901; Telephone: 877-968-7785, Website: www.firstsecuredlife.com/nonprofit.html

jolene.fullerton@firstsecuredlife.com

Comment on "A Revolutionary Fundraising Opportunity -- Life Settlements"

Harborstone Credit Union Partners With Security Reverse Mortgage To Provide Reverse Mortgages To Its Members
Harborstone Credit Union provides a much needed service to its senior members in these difficult times.

Reverse Mortgage Wholesaler - Hassle Free Experience
Increased popularity of a certain type of mortgage expands the competition for clients. In the reverse mortgage industry there is a new type of mortgage format for you to consider - the reverse mortgage wholesale. A reverse mortgage wholesale may be the perfect way for you to get the reverse mortgage that you want at the rate that you want without the lender fees that many lenders are pressuring their clients into assuming.

Reverse Mortgage Information Site Implements New Home Valuation System
MyReverseMortgagePro, a Web site that provides information about reverse mortgages, is implementing a new system of home valuation reports for seniors.

Bargaining For The Best Reverse Mortgage Rates
Reverse mortgage rates are not different form traditional mortgage rates, and when you are applying for a reverse mortgage you should make every effort to find the lowest reverse mortgage rates you possibly can. While comparison shopping takes time, you can help your own cause by taking advantage of the reverse mortgage calculators available on one of the many reversed mortgage Internet websites.

The Reverse Mortgage Association: Answers For Seniors
The National Reverse Mortgage Lenders Association was established in 1997 to provide a variety for services for both those wishing to take advantage of reverse mortgages on their homes and lenders wishing to finance reverse mortgages.

Financing Expert Debunks Myths About Reverse Mortgages
Despite their growing popularity, many homeowners harbor outdated attitudes about Reverse Mortgages.

How A Reverse Mortgage Works
Ever wonder how a reverse mortgage works? For folks that have lived in their home for a long time, they may very well be sitting on a gold mine. Home prices have increased greatly over the last thirty years, and nationally have nearly doubled in value over the last ten years. This has left a great many homeowners with valuable equity in their homes and many different options to access that equity, home equity loans and mortgage refinances being the most common. For older Americans, there is another, less common option that is growing in popularity as home prices have increased and baby boomers have moved closer to retirement age: the reverse mortgage. But do you know what it is, and do you know how a reverse mortgage works?

How To Get The Best Reverse Mortgage Rates
As with your first home mortgage and all major purchases, you need to shop around when considering a reverse mortgage to ensure that you are getting the best rate available. Talk to your family and friends, use mortgage calculators online and preview rates on various websites to be well on your way to finding some great mortgage rates for your reverse mortgage.

Total Mortgage Expands Reverse Mortgage Program To Assist Growing Senior Population
Total Mortgage Services, a leading mortgage lender and broker, announced today it is expanding its reverse mortgage lending operation. This Reverse Mortgage Program, along with some of its lowest mortgage rates, will help more senior homeowners.

How To Find A Trusted Reverse Mortgage Broker
The better the reverse mortgage broker you choose the better the deal on your reverse mortgage. The sad reality of reverse mortgages if that certain people who have been conned by a shady reverse mortgage broker find that their first reverse mortgage paycheck is not as much as what they anticipated. A corrupt reverse mortgage broker takes more than their fair share of the proceeds in a deal that they were not fully upfront about to the consumer.