The downside to the charity is the need to minimize the administration required to keep up on gifts that may require many annual premium payments before they are fully funded. One solution is to encourage gifts where the premium is paid up in one lump sum or over just a few years.

One charitable donation of life insurance we have looked at is the Charity Life Direct Insurance Program because of its limited premium payment time period and because the donor can purchase it on-line. This could be a very useful tool for charities connecting with supporters through social networking sites.

Description of the Program

Donors who are interested in making a gift of life insurance can visit www.charitylifedirect.com and "click" on the Apply Now button that takes them to a page that allows them to calculate the premium that they would pay for a prospective life insurance policy. Donors can experiment with different policy sizes and payment terms. When a donor has chosen the policy size and terms that are right for them, they can complete the application on-line.

Snap Shot

The insurance policies have 3 or 5 year annual premium payment periods but the whole premium can be paid in one lump sum to the charity. The donor/insured must be between the ages of 18 and 75 and the death benefit can range from $15,000 to $50,000. No medical is required. The charity owns the contract. AIG of Canada is the insurer.

Features and Benefits of the Charity Life Program

The most important benefit of this program is its relative simplicity which will result in considerably less administrative activity and record keeping by the charity than more traditional policies require. This is due to the policies being paid up in a relatively short period of time and do not require tracking and administrative activity for years into the future. Charitable donations can even be made through the payment of the entire premium in one lump sum to the charity. The charity receives the premium from the donor, issues a tax receipt and then pays the insurer.

1. Feature: Short payment period - Donors choose either 3 or a 5 annual payments (or one lump sum to the charity). The contract is fully paid-up once the payments have been made.
   Benefit: Donors are much more likely to complete the full payment of the premium obligation. Charities can be confident that changes in the donor’s long term financial and personal situation will not affect the status of the gift.
     
2. Feature: No medical exams - Donors do not need to have a  medical exam but must sign a general statement of good health.
   Benefit: Applying for a policy is simple and private.
     
3. Feature: Reduced paid-up feature - Should a donor not complete some or all of the premium payments, the death benefit will be honoured but at a reduced rate.
   Benefit: The charity will not be called upon to meet the premium obligation.
     
4. Feature: The charity is the owner and beneficiary of the policy.
   Benefit: The future gift to the charity is irrevocable and the donor receives charitable tax receipts for the premiums as they are paid.

Do Your Homework

Before your charity becomes involved with this insurance product or any other fundraising product be sure to run it by your own professional advisors and your board for approval. This article is not meant to be an endorsement of the Charity Life Direct Program but simply a review of the features and benefits of the program as we understand them.