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Guidelines |
Routine Requirements |
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Annual contribution x 10 equals charitable amount of life coverage. (Does not include charitable remainder trusts.) |
Always needed: Gross annual earned income on the application. Cover letter and copy of contribution record for past two years. Third party financials from a CPA will be required for applications of $2 million or greater. Examples are a current income statement and balance sheet. |
The use of life insurance in charitable giving is most often simply an attempt to provide an uninterrupted continuation of an existing pattern of giving. The pattern of giving will typically be defined monetarily, but donations of time and services will be evaluated also.
Favorable Factors
The proposed insured has an established pattern of giving; a long-standing volunteer relationship; or has personally benefited from the organization’s services.
Personal life coverage is already in force for income replacement and/or estate needs, and the intended charitable amount is in line with the proposed insured’s income and net worth.
The proposed insured pays the premium and is the owner (unless state regulations require otherwise).
Unfavorable Factors
There is no pattern of giving or long-standing relationship.
Personal in-force coverage is minimal.
The charitable organization is paying all premiums, initiating applications selectively, and/or is insisting on ownership (even though not required by state regulation).
The amount allowed is an approximation of an amount equal to or less than the anticipated remaining lifetime contributions. The multiple is 10 times the average annual contribution unless more specific justification is available, i.e., charitable remainder trusts.