Welcome. Charitable Endowment With Life Insurance

Transcription

1 Welcome Charitable Endowment With Life Insurance Prudential, Prudential Financial, the Rock logo, and the Rock Prudential logo are registered service marks of The Prudential Insurance Company of America, Newark, NJ, and its affiliates. IFS-A Ed. 04/09 Exp. 12/10

2 Disclosures The material presented in this seminar is designed to provide general information in regard to the subject matter covered. It should be used with the understanding that we are note rendering legal, accounting or tax advice. Such services should be provided by your own advisors. Accordingly, any information in this seminar cannot be used by any taxpayer for purposes of avoiding penalties under the Internal Revenue Code.

3 PruLife Universal Protector is issued by Pruco Life Insurance Company in all states except New York, where it is issued by Pruco Life Insurance Company of New Jersey. Both are located in Newark, NJ. Policy number ULNT Other insurance products are issued by The Prudential Insurance Company of America and its affiliates. Each of the foregoing companies is solely responsible for its own financial condition and contractual obligations. Like most insurance policies, our policies contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional will provide you with costs and complete details. Each Pruco Life company may have the right to contest the policy for misrepresentation or to apply a suicide clause. Not Insured by FDIC or Any Federal Government Agency. May Lose Value. Not a Deposit of or Guaranteed by the Bank or Any Bank Affiliate.

4 Seminar Overview Charitable Giving Touching Others Charitable Endowment How it Works Benefits to the Organization and Donor Income Tax Benefits Campaign Goals Summary of Potential Donor Costs Charitable Endowment Questions and Answers

5 Charitable Giving Touching the future in a very personal way

6 Charitable Giving Your gifts of cash during your lifetime may be used in a cost effective manner to purchase life Insurance.

7 Life Endowment Program How it Works Qualified donors make income tax deductible contributions to the institution that are used to purchase life insurance policies on the donor based on age, commitment and level of Life Endowment established. For example, Using PruLife Universal Protector, a Male, non-smoker plus, age 50, can establish a $250,000 ultimate endowment with 5 payments of $10,863* (or a single payment of $48,781*). Assuming 20 donors at $250,000 an ultimate endowment of $5,000,000 would be established. Estimated life insurance premiums are based on a rounded up non-smoker plus underwriting class. Your endowment may be higher or lower for your donation, as it will be based on your specific underwriting qualifications. Note: Montana uses unisex rates, which are equivalent to the male rates.

8 Life Endowment Program How it Works (Continued) Your charitable organization is the owner, premium payer (through cash gifts) and beneficiary of each policy. Each Life Endowment Plan is personally medically underwritten to maximize each donors level of commitment and/or endowment. This program allows each Donor the option of creating an endowment gift with a single payment or five annual charitable gifts. If one family member cannot qualify, another family member may be eligible for the program.

9 Why Gifts of Life Insurance Benefits for the Organization The value of life insurance can be fully guaranteed*. The organization will collect the face amount of the policy as long as the premiums are paid as expected. Life insurance proceeds are paid promptly. Problems concerning one s will, probate and estate administration are avoided because payment is made directly to the charity. Death proceeds are not subject to federal income taxes or other estate administrative costs. * The timing of premium payments is vitally important in maintaining the death benefit guarantee.

10 Why Gifts of Life Insurance Benefits for the Organization Through life insurance, an organization s donors have the ability to make a major gift to an endowment fund. The potential build-up of cash value provides an organization with the ability to access cash for immediate cash needs. However, loans or withdrawals may reduce the cash value and death benefit available, have possible tax consequences and may affect guarantees.* * The emphasis within this Endowment Plan is on the guaranteed death benefit, usage of the policy cash values, though they may be available, should generally be avoided to maintain the guaranteed death benefit.

11 Why Gifts of Life Insurance Benefits for the Donor An opportunity to help ensure the future of an organization by making a substantial endowment through tax deductible contributions that may exceed the amount donated through normal giving. The tax deductible contributions in effect may be relatively moderate in comparison to the death benefit to the organization. This strategy does not take into account the time value of money and may not be appropriate in all cases.

12 Why Gifts of Life Insurance Benefits for the Donor Enable Donors to make moderate future contributions to the organization without excessively taking away current or future assets from family or beneficiaries. Avoid costs, delays, or other complications of estate settlement, since the gift is self-completing upon the donor s death.

13 Charitable Giving Lifetime Gifts Current income tax deduction Assets generally removed from your estate

14 Tax Deductions on Charitable Giving (Deductible Amount of Adjusted Gross Income) Cash or Ordinary Income Property Long-Term Capital Gain Property Public Charity 50% 30% Private Foundation 30% 20% The Charitable Endowment Program generally provides cost effective gifts to charity through the use of life insurance. Assuming the Charity or Private Foundation is the sole owner and beneficiary of the contract, premiums are income tax deductible, and can be taken as a percentage of the donor s Adjusted Gross Income.

15 Example of Deductible Contributions John Jones has an Adjusted Gross Income of $90,000. He contributes $50,000 to charity and can deduct the following in the first year: Cash Capital Gain Property Public Charity $45,000 * (50%) $27,000 * (30%) Private Foundation $27,000 * (30%) $18,000 * (20%) * Excess deduction can be carried over up to 5 additional years.

16 Endowment Campaign Goals Number of Individuals Needed for a Successful Campaign (20) $ 100,000* (8) $ 250,000* (2) $ 500,000* = $ 5 Million Campaign Assuming all non smoker plus, age 50, total estimated commitment 5 Years x Males $231,426 or Females** $193,442 (10) $ 100,000* (4) $ 250,000* (1) $ 500,000* = $ 2.5 Million Campaign Assuming all non smoker plus, age 50, total estimated commitment 5 Years x Males $115,713 or Females** $96,721 Additional premiums payments may be necessary to keep the policy in force. Based on your specific underwriting qualifications, your endowment may be higher or lower for your donation. **Note: Montana uses unisex rates, which are equivalent to the male rates.

17 PruLife Universal Protector Non Smoker Plus Summary at Various Ages and Death Benefits (Sample of 5 Annual Contributions) Ages $100,000 $250,000 $500,000 Female* 50 $4,331 $8,990 $17,451 Female* 60 $6,383 $13,704 $26,913 Female* 70 $10,168 $22,222 $44,008 Male 50 $5,105 $10,863 $21,211 Male 60 $7,425 $16,321 $32,165 Male 70 $11,501 $25,641 $50,867 Estimated life insurance premiums are based on a non smoker plus underwriting class. Your endowment may be higher or lower for your donation, as it will be based on your specific underwriting qualifications. *Note: Montana uses unisex rates, which are equivalent to the male rates.

18 PruLife Universal Protector Non Smoker Plus Summary at Various Ages and Death Benefits (Sample of Lump Sum Contributions) Ages $100,000 $250,000 $500,000 Female* 50 $19,433 $40,398 $78,420 Female* 60 $28,490 $61,205 $120,197 Female* 70 $44,764 $98,537 $195,140 Male 50 $22,889 $48,781 $92,250 Male 60 $33,043 $72,810 $143,490 Male 70 $50,475 $113,378 $224,925 Estimated life insurance premiums are based on a non smoker plus underwriting class. Your endowment may be higher or lower for your donation, as it will be based on your specific underwriting qualifications. *Note: Montana uses unisex rates, which are equivalent to the male rates.

19 PruLife Universal Protector - Smokers Summary at Various Ages and Death Benefits (Sample of 5 Annual Contributions) Ages $100,000 $250,000 $500,000 Female* 50 $6,473 $13,856 $27,218 Female* 60 $8,990 $19,991 $39,530 Female* 70 $13,345 $28,623 $56,854 Male 50 $7,234 $16,069 $31,659 Male 60 $10,346 $23,751 $47,073 Male 70 $15,662 $34,074 $67,784 Estimated life insurance premiums are based on a smoker underwriting class. Your endowment may be higher or lower for your donation, as it will be based on your specific underwriting qualifications. *Note: Montana uses unisex rates, which are equivalent to the male rates.

20 PruLife Universal Protector - Smokers Summary at Various Ages and Death Benefits (Sample of Lump Sum Contributions) Ages $100,000 $250,000 $500,000 Female* 50 $28,874 $61,992 $121,776 Female* 60 $39,663 $88,535 $175,068 Female* 70 $57,408 $125,594 $249,465 Male 50 $32,231 $71,736 $141,334 Male 60 $45,333 $104,367 $206,848 Male 70 $66,014 $146,928 $292,287 Estimated life insurance premiums are based on a smoker underwriting class. Your endowment may be higher or lower for your donation, as it will be based on your specific underwriting qualifications. *Note: Montana uses unisex rates, which are equivalent to the male rates.

21 Endowment Program Questions 1. Must a charity wait until my demise to benefit financially from the charity of choice? Generally, it is recommended for the policy s increased death benefit. 2. Must I use a Pruco Life representative, if I want to give a gift of life insurance, or can I use my own agent? Your own agent may also be able to provide this type of guaranteed policy. 3. Is a medical exam required? Yes 4. What percentage of my gift is tax deductible? All deductible, but how and when a donor s deduction can be taken will vary with their tax situation.

22 Endowment Questions 5. Is the value of life insurance guaranteed at death? Yes, if premiums are paid as expected and there are no substantial loans or withdrawals. 6. Are life insurance gifts subject to probate costs? No. 7. What happens if I cannot fulfill my 5-year premium payment commitment toward the life endowment program? There is no legal obligation, though tax deductions are only based on gifts paid. 8. What happens to my policy and premiums paid to date if my designated charity ceases to exist in 3, 5, or 10 years? The donor has no rights to the policy. The policy and its values remain with the charity s other assets.

23 Thank You 2009 The Prudential Insurance Company of America 751 Broad Street, Newark, NJ All Rights Reserved. IFS-A Ed. 04/09 Exp. 12/10