Life Insurance

Most donors don't naturally think of life insurance as an asset they may be able to give to your organization.

As such, asking prospective donors if they've considered gifting life insurance policies is an opportunity to open up a whole new level of conversation. Don't shy away from it--bringing up the subject of life insurance doesn't require you to be an expert on the topic.

In fact, the best suggestion you can make during that initial conversation is to encourage them to engage their insurance agent in the discussion, and ask that agent to help you explore the options.

But from the donor's perspective, why would a life insurance policy make sense to give?

Put simply, people buy life insurance to provide for certain circumstances, and as those circumstances change, sometimes they no longer need it.

Frequently, the greatest need for life insurance coverage comes early on, as careers and families are growing. But as time passes, other assets accumulate, and the need for the coverage becomes less critical.

Not infrequently, as the policy holder passes into retirement, the insurance becomes totally overlooked as an asset.

The policy may be paid up--in fact, its cash value may well be continuing to rise--yet it just sits there, unused and almost forgotten. 

Broadly speaking, life insurance policies can be broken into two types: Term (or temporary) and Permanent. Term policies aren't relevant for our purposes. A homeowner might purchase a term life insurance policy to make sure that the mortgage gets paid off in the event of his or her untimely death, which means that the value of the policy decreases as time goes on and the outstanding mortgage shrinks.

Permanent policies, however, can make very good gifts to your organization.