How to Do Planned Giving When Planned Giving Isn’t All You Do
Planned Giving
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Transcript of Planned Giving
LifePoint Catholic Charitable Endowment Impacting the Mission and Ministries
of the Church…
We accept donations of
unwanted life Insurance from senior donors
(age 65+)
We “pool” the policies from
multiple Charities to
achieve actuarial scale
We manage the pool of policies
and pay the ongoing
premiums
We make annual grants from the death proceeds
to donor designated Charities
The CompanyLifePoint is 501(c)(3) Christian Charity founded Nov. 18, 2008. Our mission is to generate long-term sustainable revenue for other charitable organizations to help them to expand their reach and impact. To do this …
Pooling policies from multiple charities
allows the Endowment to achieve scale.
Scale allows the number of deaths within the pool to become actuarially
predictable.
In LifePoint’s pooling design, the charity
exchanges its interest in its specific policies
for a percentage interest in the future
grants from the entire pool.
RESULTS:
Earlier and more predictable grants to all named charities
The “Pooling” Concept is Important
1
3
2
4
Actuarial Science and Scale Create Predictable Results
BA, Mathematics, Physics and Business
Administration, Coe College
MA, Applied Statistics, University of Iowa
Vice President - CAST Management Consultants
23 Years Equity Principal - Milliman Consultants
Member of Life Products Committee of the Society of Actuaries
Fellow, American Academy of Actuaries
Affiliate, Institute of Actuaries
Douglas J. Bennett, FSA, MAAA
Mortality Table
2008 VBT RR 100 ANB
Age Mix 70-85
Premium Ratio
1.5%/face
Average Policy Size
$73,000
Years in-Force
20
Gender 65% /35%
Smoking Status 70%/30%
Independent Consulting Actuary
LifePoint’s Underlying Mortality Model
0
50
100
150
200
250
300
350
400
450
500
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Scale Creates Predictable # of Annual DeathsActuarially Probable # of Deaths Per Year
Based on LifePoint’s Portfolio Composition Assumptions
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
$100,000,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Scale Creates Predictable Death Benefits Probabilistic Death Benefit Model Projections
10 Years - $ 134,747,603
20 Years - $ 880,882,157
25 Years - $1,390,365,987
LifePoint Anticipates Reaching Scale by 2015
2012
114 Policies
$21,140,000
2014726 policies
$133,004,000
20151226 policies
$221,324,0002013336 Policies
$62,310,000
The Market Opportunity
Annual policy lapse rate by
seniors is 5% -14% depending
on product
80% age 62+ still own life
insurance
Senior market (12.8% of US
Population) is growing 3X faster
- Estimated to reach 20% by
2050.
An estimated $300 Billion in death benefit is voluntarily terminated
each year by seniors … and is growing!
Life Insurance Donations From Seniors An Overlooked Market Opportunity
2008 U.S. Life Individual Insurance Persistency Update, a Joint Study by the Society of Actuaries and LIMRA
2009 Study by the Insurance Studies Institute
US Census Bureau
37 million to 86 million seniors by
2050!
• Annual lapse rates for seniors range from 5% -14% depending on the product
• $300 Billion in death benefit is terminated eachyear!
Cancel the Policy
• Extremely limited secondary market for small policies
• Most insured’s and policies DO NOT QUALIFYSell the Policy as a Life Settlement
• Most charities DO NOT ACCEPT direct donations of life insurance without a donor commitment to pay the premiumsDonate Directly to
Charity of Choice
• Donor designates the charity to benefit
• Donor receives tax deduction
• LifePoint pays the premiumsDonate to LifePoint
Seniors with Small Policies Have Few Alternatives
Relationship to the CharityCommitted to the Mission
Supportive of the Charity
No Longer Need the PolicyHave outgrown the original purpose
Desire to repurpose policy for eternal impact
Considering Terminating the CoverageWant to stop paying premiums
Desire to Give a “large” GiftBest opportunity to make an “Endowment” sized gift
Income Tax DeductionTax deduction is equal to the cash value or Market Value (in Canada)
Seniors WILL Donate Policies to LifePoint
A gift of an unneeded life insurance policy can allow senior donors to maximize the impact of their lifetime giving.
Give Life Program
Lifetime Giving
Lifetime Giving
$25,000
$25,000 $75,000 (Average policy size)+
LifePoint Allows Senior Donors To MAXIMIZE Their Impact
Example: a 75 year old donor that has given $1,000 per year for 25 years:
LifePoint Overview – Phase I 2009Marketing Consultant - Non-Profit Fund Raising SurveyActuarial Consultant - Researched Mortality Model AssumptionsReceived 501(c)(3) Public Charity Status from IRS
2010 - 2013Raised a $1.08M donation Conducted a Proof of Concept PilotProved the Concept (People WILL donate policies to LifePoint)
• LifePoint currently owns $4.2M face amount across 23 policies benefitting 21 charities
Established predictable direct-marketing response ratesDeveloped relationships with 30+ charities and multiple universities Identified 2M+ current senior donorsIdentified a tremendous tax-incented opportunity in CanadaGained access to a 12,000 Canadian Financial Advisor Network via Canada GivesDeveloped a Charity Marketing ToolkitDeveloped an Expansion Strategy into the Catholic Market
Building An Endowment…Changing Lives…Impacting The Future…
Possibly the number one concern around the country is the sustentation of our Catholic schools-
Catholic Schools are the responsibility of the entire Catholic community…
Catholic Schools afford the best opportunity to realize the fourfold purpose of Christian education, namely,
1) to provide an atmosphere in which the Gospel message is proclaimed; 2) community in Christ is experienced; 3) service to the less fortunate is the norm; and, 4) thanksgiving and worship of God is cultivated and encouraged.
The vitality of the Church is inextricably tied to the health of the Catholic school system and its mission to form holy men and women who make God known, loved and served.
Catholic Schools exemplify how to prepare citizens for full engagement in democracy and commitment to the common good.
Schools – Number 1 Concern
Catholic Schools remain the largest private school system in America providing remarkable, transformative education while at times on a shoestring budget…
Catholic Schools flourished historically because of vision and passion of Bishops, Pastors and Religious…
How much more tuition can be charged? Costs and tuitions are rising while enrollment declines…closures on the increase…
Religious are almost gone. Pastors and Boards are overwhelmed. Mass attendance is down.
Faculty salaries still too low…
Catholic Schools matter now more than ever…
National treasures that must be preserved in spite of the challenges…
The Case for Catholic Education…
LifePoint Charitable Endowment
The Catholic Initiative is to benefit Catholic Education, Humanitarian and Religious endeavors of each Diocese
Health SciencesHumanitarian
Catholic Initiative
A Catholic Initiative
Catholic Statistics Total Age 65+US Catholic Population* 68,115,001 8,854,950Texas Catholic Population** 6,939,045 902,075Diocese of Dallas*** 955,298 124,188Diocese of Ft. Worth*** 450,000 58,500
* Official Catholic Directory, 2009** American Religious Identification Survey*** Diocese of Dallas and Ft. Worth