LEVERAGING ANNUITIES WITH LIFE INSURANCELEVERAGING ANNUITIES WITH LIFE INSURANCE

This concept takes a nonqualified commercial annuity and leverages it through two new life insurance contracts. The first life insurance contract is for the benefit of the client’s heirs. The second is a charitable life insurance contract owned by the Lutheran Community Foundation to benefit the donor’s favorite charities.

After the insured’s lifetime, death proceeds from the second contract go to the donor’s customized charitable fund at the LCF, benefiting specific charities selected by the donor or areas of charitable work they are interested in.

How It Works – The Basics

  1. Client annuitizes a current annuity over a fixed period.
  2. The tax-free portion of each payment is used to purchase life insurance to benefit the client’s heirs.
  3. The taxable portion of each payment is used to make gifts (premium payments) to a charitable life contract owned by the LCF (which may offset tax liability).

Target Audience

  • Client(s) age 60 or over.
  • Desire to reduce future tax burden.
  • Has health insurance, long term care, and survivor needs met.
  • Has assets they will never need for income.
  • Desire to preserve assets for heirs.
  • Owns annuities that will generate annual taxable income that exceeds the donor's standard deduction.
  • Has charitable intent.

Tax and Financial Benefits for You and Your Clients

  • The client may avoid tax liability on annuity payments.
  • The client leverages assets for the benefit of heirs.
  • The client fulfills charitable goals.
  • Results in a minimum of two new life insurance sales.

Step-by-Step: How to Begin Using This Concept with Your Clients

  1. Contact Advanced Consulting Team to get list of members that may benefit from this approach.
  2. Complete a Comprehensive Financial Analysis to determine interest and suitability.
  3. Complete Fund Workbook: How to Establish your Charitable Fund. (You will need to read Guide to Charitable Life Insurance.)

Resources to Support Your Work


Benefits to you, the Professional Advisor

LCF will support you with a full range of charitable products and services, and you'll be compensated for your efforts by Thrivent or American Funds. (details)