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Creating Flexible Charitable Legacies

Creating Flexible Charitable Legacies

As people age, their level of altruism has a tendency to increase and often we see an intense desire by clients to leave some sort of charitable gift behind. Whether it is to further the funding of causes they feel passionate about or to help make a general difference in the world, clients often express a desire to make a change in the world toward the end of their life and rely on advisors to assist in the planning. Sadly, many retirees are having a harder time making their money last long enough through retirement to feel that they can adequately provide additional financial support to the causes they believe in. Often the solution can be found inside of traditional life insurance products.

Leaving a legacy

As long as a client’s overall health is in good condition, a basic term policy can provide the coverage required to best meet the needs of a client who is seeking to leave a legacy for either charitable giving or create taxfree income for the people they leave behind. The basics of term provides a better value from the coverage per dollar aspect than other options early on.  However, it isn’t always the most ideal solution for those seeking to use insurance as a way to build wealth in order to leave a charitable legacy to the causes that are most important in their life.

Also considering the fact that wealth management advisors are beginning to express concerns that longevity is increasing to the point that clients are running out of money, a standard, affordable term policy at age 60 may not ever pay out and will completely negate efforts for leaving a charitable legacy. Instead, the premiums would just be perceived as “wasted” money, leaving them less for gifting and possibly in a worse situation than when they started.

Convertible term may be the best solution

Overall flexibility can be an important factor in developing a long-term plan for gifting and legacy needs, especially when looking decades into the future. A convertible term life policy will give the client and the advisor tools to begin planning for legacy gifting by starting to piece a solution together over time and using the convertible feature to transfer coverage to a permanent policy, locking in premiums that will last the rest of their life. This method also allows for the option of exercising the conversion and then selling the policy off to receive a life settlement in the event the client wants to gift to a cause before he or she passes.

Instead of using a traditional term life policy as a possible legacy vehicle and watching it expire, converting the policy will help make a temporary solution become a permanent fixture. With clients who are seeking to provide funds to people and causes important to them, convertible term life insurance can be the tool needed to stair-step their plans for leaving a legacy.

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