QCD to Life Insurance: A “Phenomenal” Concept
It’s worth paying attention when wealth advisor Charles Beatty uses terms such as “phenomenal” and “advantageous” to describe a new way to assist his clients.
The same is true with Nancy Hansen. The financial consultant calls the latest concept from InFaith Community Foundation “the neatest thing that’s come about in years.” Nancy specializes in helping clients follow through on their long-term charitable planning goals. What are these veteran advisors talking about? Qualified Charitable Distributions (QCDs) to life insurance.
Funding charitable plans with life insurance is not new, of course. But until QCDs became a permanent rather than temporary provision of the federal tax code in late 2015, it was challenging to use them for long-term planning. “Clients currently receive tax deductions for premium payments to gifts of life insurance,” Charles says, “but now that it doesn’t show up as taxable income, it’s all the more advantageous for my clients.” Nancy says, “I can help members leverage qualified money to do more good in the world for their causes and they pay no taxes. That’s a neat concept.”
Which Clients May Benefit
The QCD to life insurance concept is a suitable option for clients who:
- Are 70-1/2 but do not need RMD income for living expenses.
- Have charitable intent and/or are active in their church and community.
- Have secured other financial planning, such as long-term care insurance.
- Are comfortable gifting assets during their lifetime.
Nancy says, “With life insurance, money from qualified accounts can double or even triple its impact, depending on the age and health of the client.” Members designate their annual RMD directly to a non-advised fund at InFaith Community Foundation, which then pays premiums on the life contract owned by InFaith. Depending on client needs, virtually any permanent life product works with this concept.
Both Charles and Nancy have recommended whole life insurance to their members. “There are built-in guarantees with whole life and better back-out provisions if their health or other circumstances change,” Nancy says. Charles’s enthusiasm is contagious: “This is a phenomenal idea in the tax world that makes our job easier when we’re talking to members about charity.”
Get Started Today. To learn more about QCD to life insurance and to discuss the possibilities for specific clients, call InFaith gift planners at 800-365-4172.
Financial consultant Nancy Hansen will lead a Practice Excellence event at her office June 26-27 or Oct. 16-17.
Contact Betsy Zemlock at 920-628-3651 or Chelsie Hartline at 612-844-8251 with questions.