SOURCE: Holleman Companies

November 30, 2009 10:18 ET

Giving Life Insurance to Charity? Holleman Gives Guidelines in National Underwriter

One of Safest, Best Ways Donors Can Support Charity, Head of the Holleman Companies Writes in Article

CHEVY CHASE, MD--(Marketwire - November 30, 2009) - Donating a life insurance policy to a charity such as an endowment or college is one of the most attractive and safest ways a donor can provide substantial support to a charity, Vernon W. Holleman, III writes in a recent issue of National Underwriter.

Life insurance is "an asset that, created with the stroke of a pen, creates dollars not there today for real leverage tomorrow," writes Holleman, president of The Holleman Companies, an insurance advisory firm in Chevy Chase, MD.

Uniquely, life insurance provides an organization with a substantial payout should the donor die prematurely. But even if the donor lives to be 100, the right cash-value policy will still provide a handsome internal rate of return. Holleman provides a mini case history showing how a policy on someone in good heath can produce better than a 7 percent IRR to age 100 without the ups and downs of the stock market.

"Life insurance can potentially afford the donor the ability to think about new opportunities for gifts, especially as today so many veteran donors are simply thinking of how to complete gifts already made and are thus making few new commitments," Holleman writes.

The insurance advisor must first make sure that the organization has an "insurable interest" in the donor -- a legitimate interest in owning a life insurance policy on the donor.

For instance, the donor's alma mater would apply for a $1 million life insurance policy that the school would own and be the beneficiary of. The donor would make annual gifts of the premium to the school and take tax deductions for doing so.

The same process would work with any organization eligible to receive tax-deductible contributions such as churches, arts organizations, museums, foundations and many other nonprofits. Check with a tax professional to determine deductibility, Holleman advises.

The full article, "Life Insurance as a Charitable Giving Tool Is More Attractive than Ever," can be read at

The Holleman Companies, Chevy Chase, MD, is a specialized insurance advisory firm focused exclusively on business continuity, executive benefits and insurance advisory, including charitable giving. More information is online at or by contacting the firm at or 301-656-8689.

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