by John Darer® CLU ChFC MSSC RSP CLTC
Is it a smart financial move to sell your structured settlement or annuity to make a charitable donation? Settlement purchaser CBC Settlement Funding apparently think so. CBC admonishes readers of its blog that "you can’t take it with you. That’s why many individuals may wish to make a cash gift to fund a college endowment or other charitable organization. For some, selling an annuity can be a way to fund charitable giving". Tell you what, John Darer® has a much better charitable giving strategy.
If you were to consider following CBC Settlement Funding's advice, it could mean that you no longer need the periodic payments that the structured settlement provides. If that is the case then I have an important questions for you. How is your health and do you smoke?
If you can qualify for life insurance , how about keeping the structure as is and using the income stream on the structure to fund premiums on a life insurance policy that is applied for and owned by your favorite charity? Charitable Life is a time tested concept used to fund endowments for hospitals and universities. Often such policies are paid with donations of premium by donors. With the structured settlement you've already got, there is a ready made source of premium for the life insurance. You simply must be insurable and have a long enough annuity payment stream.
Advantages of a Charitable Life Insurance Giving Strategy
If you are insurable, the leverage provided by the life insurance (i.e. the amount of life insurance you can buy per dollar of premium) likely far exceeds the discounted lump sum you would be able to donate to the charity by selling your cash flow to CBC Settlement Funding, or any other settlement purchaser for that matter. Please note that the size of your ultimate gift depends on the type of policy, your insurability and the structured settlement payment amount. Consider these points:
- You are using the full value of the structured settlement or annuity, not just the discounted present value.
- No discounts required if you only have lifetime benefits left. Life insurance premiums are only due until you die. A perfect fit!
- There is no court approval required.
- Your private information does not become public information, which it will if you sell your structured settlement (see immediately prior post section about "court records"). A life insurance transaction is private.
For more information on Charitable Life as a charitable giving strategy, information about other ways to use life insurance to enhance settlement planning, or for your own personal or business life insurance needs, please contact John Darer ChFC MSSC RSP CLTC at 203-561-6560 for a professional consultation. John is licensed for life insurance in over 30 states and recently qualified for inclusion in AM Best's Recommended Expert Service Providers for 2013.