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Q & A – Life Insurance

Q & A – Life Insurance

Jarod Powell’s credentials speak for themselves. He is the past president and current member of the Quad City National Association of Insurance and Financial Advisors (NAIFA). He was awarded NAIFA’s 4 under 40 for the state of Iowa. He is part of the Quad Cities Estate Planning Council and was named NAIFA’s Quad Cities Agent of the Year in 2012. But when it comes to his service on the St. Ambrose Planned Giving Advisory Council, it is important to add one more distinction; 1998 SAU graduate.

As COO of Powell Financial Group, Jarod has a great deal to contribute to the council and the St. Ambrose Advancement Office. Thankfully, he is willing to share his expertise and knowledge of the insurance world with others, as well.

Q. How can individuals use life insurance policies to make a charitable gift?

A. If a donor has a current policy, they can donate it outright to a charity by transferring the gift to that organization. If there is a cash value, there may be possible tax deductions for the cash value. The other way to use an insurance policy to make a charitable gift is to work through the gift planning area of the organization. Together, you can set up a new policy that names the organization as the beneficiary and owner. The donor may possibly receive tax deductions for the premiums. It’s important for donors considering these types of plans to consult with a qualified insurance provider to determine what tax deductions are possible.

Q. What benefits does this type of arrangement have over other methods of giving?
A. Life insurance creates dollars for pennies and is a way from someone to leverage their assets to create a larger gift than was possible before.

Q. Life insurance is generally thought of as a way to care for dependents. Can you provides some guidelines on when a person might evaluate if they can use an existing policy for a gift?
A. A common trigger is when kids graduate from college, but it is important to evaluate your insurance policies and insurance needs every two to three years. There might still be a need for insurance, but it might be different.

Q. What steps do I need to take to use my insurance policy as a gift and is the process difficult?
A. If you currently have a policy you would like to gift to an organization, the process is very easy. You change the ownership of the policy by signing one sheet of paper. This can be done with the assistance of a qualified advisor and your gift planning team.

Q. Should I take out an insurance policy for the sole purpose of leaving a gift?
A. This arrangement is very common in terms of deferred giving. The ability to give a little bit over time can result in a larger legacy. However, the decision depends on the situation. If there is underwriting, it would be important to consider if the person is healthy enough to get a new policy. Currently, many people can get life insurance and age is not a defining factor.

Q. Is there a specific type of life insurance you should use to leave a gift?
A. It is important to get permanent life insurance so you are assured the gift will get to the charity.

Q. Based on your expertise, what’s one thing everyone should know about charitable gift planning?
A. It is an easy thing to do, and it gives the donor a good feeling about giving back to an entity they care about. In addition, make sure you work with a good advisory team (accountant, attorney, life insurance professional, etc.) who can work together to assist with your plans.

Q. Any final points of wisdom to share?

A. Make sure your life insurance is owned properly and has contingent owners.
A. Check your beneficiaries and make sure there are contingent beneficiaries.

A. Make sure your life insurance is doing what you want it to do. There are many types.

A. There are many different paths that can be taken to achieve many different results when doing charitable planning. There are more advanced methods than covered in this interview. Partner with a financial advisor who has insurance background or a life insurance professional to get more information about the topics above or to discuss what option might be best for your situation.

Thank you to Jarod for his time and expertise. If you are interested in receiving educational materials to help you begin planning your estate or refining the plan you already have in place, please contact Sally Crino at 563-333-6080 or CrinoSallyE@sau.edu.

You can also browse our planned giving website to find articles related to specific topics.

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