Ari Financial Group

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Ari Financial Group
20900 Northeast 190th Street
Aventura, FL 33180
(305) 466-0577
arifinancialgroup.com

THINKING OUTSIDE THE BOX
Raising funds is never easy, no matter how worthwhile the cause. Financial challenges, especially those currently facing community and academic foundations as well as religious organizations, motivate one to think outside the box in search of a solution. One solution charitable organizations have learned is that a life settlement can bring significant amounts of cash into their organization. Many organizations already possessing life insurance policies that were gifted them by donors could sell the policies in a life settlement transaction. Organizations also have a donor base of senior aged individuals who may no longer need or want their life policies. The donor can sell these policies in a life settlement and donate the funds to the charitable organization. The proceeds are unrestricted and can be used or invested in any way the organization chooses.

Life settlements explained
Simply put, a life insurance policy is property, like real estate, stocks or any other investment. Consequently, that life insurance policy can be legally sold in accordance with applicable laws. A life settlement is the sale of an existing life insurance policy by someone over 70 years old for a lump sum of cash that is more than the cash surrender value and less than the face value. Through a life settlement, a policy owner can generate cash today from an asset that is generally thought of as illiquid and only to have a benefit when the insured passes away. The transaction is typically a "win-win" situation where the seller receives cash that they want or need and the buyer acquires valuable "property" at a discount.

Life settlements are a powerful tool for 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 potential donor who owns a life insurance policy sells the policy for a lump sum of cash through a life settlement and immediately donates the funds to the philanthropic organization.

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

•Insuring an individual over age 70
•Their life insurance policy must have a face value greater than $250,000
•The policy must have been issued over two years ago
BENEFITS
Donor benefits:
1.Making a donation to his/her favorite philanthropic organization without depleting cash reserves or losing income-producing assets
2.Getting a tax deduction for the fair market value (selling price) of the life insurance policy instead of only the cash surrender value or the future donated premiums paid to keep the policy in force
3."Giving while living" — Being able to see their donated dollars put to use during their lifetime, rather than after their death if a life settlement were not utilized
4.Eliminating the requirement of continued premium payments on the policy
Fundraising organization benefits:
1.Receive a donation from a donor who may not have otherwise been in a position to contribute at all
2.Collect a lump sum of cash today instead of having to wait for the insured’s death to collect the proceeds
3.Not having the financial or administrative burden of paying a premium to keep the policy in force
4.Providing a valuable option to the donor that furthers their tax and estate planning objectives and invites the opportunity for future/additional gifts
5.Improved annual budget forecasting ability


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