Founded on December 8, 2008, LifePoint Charitable Endowment Inc. is a 501(c)(3) tax-exempt organization that is guided by a Christian world view. LifePoint received its IRS Tax Determination letter on May 27, 2009. LifePoint is classified as a public charity and donations are tax-deductible under section 170 of the IRS code. LifePoint is uniquely structured to accept and manage tax-deductible donations of life insurance policies for the benefit of donor-designated charities. LifePoint enables charities to participate in an endowment fund which offers long-term financial stability for the charity.
Most charities do not accept the outright gift of life insurance policies because:
- They view each potential donation as a stand-alone transaction that requires an ongoing premium commitment.
- They are fearful that the ongoing premiums could become a financial drain on current or future operations.
- They are not prepared to deal with the administrative burden of policy management.
- Individual death benefits are unpredictable... they never know how long a donor will live or when the death benefits will be received.
The LifePoint Charitable Endowment accepts donations of life insurance policies from individual donors and pools these policies into a single fund of manageable assets for the benefit of donor-designated charities. By pooling life insurance policies from donors of multiple charities, LifePoint achieves the scale necessary to make the fund's cash flows statistically predictable.
The target audience for LifePoint Charitable Endowment is charitably minded individuals and active donors over age 65 with in-force life insurance policies of $25,000 or more. The owner of the policy is able to realize similar tax benefits he or she would otherwise enjoy from direct cash gifts.
The LifePoint Charitable Endowment provides charity beneficiaries several immediate benefits:
- LifePoint pays all ongoing premiums and administrative costs associated with managing donated policies.
- LifePoint enables charities to confidently promote the donation of life insurance policies.
- LifePoint creates a totally new revenue source for charities and provides a new giving opportunity for current donors.
Our mission is to be a financial catalyst for charities to meet the physical, medical, and spiritual needs of people around the world. Our vision is to distribute over $1 billion to charity by 2025.
In 2008, forty-two non-profit organizations were surveyed to identify the critical issues confronting non-profits and their donors. The challenges non-profits are facing are significant:
- Charities are experiencing a downswing in giving due to the economy.
- The majority of non-profit fund raising efforts are to generate current revenue to offset current expenses.
- Charities are seeking ways to move donations from being perceived by their donors as discretionary giving to a more stable, value-oriented commitment.
- Universally, charities are exploring new ways of generating revenue and looking “outside the box” for new funding strategies.
- Charities are concerned about the time commitment required to pursue new strategies. Their dilemma is that they have limited resources and must focus their time on those activities that generate revenue in the short term.
The unique nature of the LifePoint Charitable Endowment and its focus on building long-term financial stability for charities provides a compelling solution for many charitable organizations.
The market for the LifePoint Charitable Endowment is driven by a combination of factors, all of which creates a tremendous opportunity for charities to benefit from their donors' unneeded or unwanted life insurance policies. LifePoint's target market, consisting of individuals above the age of 65, is projected to grow 3X faster than the total US population over the next 25 years. The senior population is projected to grow from 37 million today to 86 million by 2050. Additionally, a 2009 study by the Insurance Studies Institute found that 85% of all life insurance policies lapse before a death claim. However, the study also revealed that 80% of individuals age 62+ still owned some life insurance. This suggests that a significant number of seniors, that own life insurance today, will terminate their coverage over the next decade.
This finding is supported by the 2008 U.S. Individual Life Persistency Update, a joint study by the Society of Actuaries and Life Insurance Research Association (LIMRA). The report notes "a spike in rates of lapse at age 65 and beyond (on a policy basis) where we would expect to see the impact of retirements." The annual policy lapse rates at age 65 and beyond, by policy type, were as follows:
| Whole Life | 5% | Universal Life | 6% |
| Variable Life | 8% | Term | 14% |
Using Bernstein Research data, it is estimated that as much as $300 Billion in death benefits simply vanishes each year through policy lapses by seniors. Imagine the impact on charity if only a small percentage of those donors, that are expected to lapse their policy, will choose to donate their policy each year to support charity.
There are many reasons why charitably inclined seniors would consider donating their unneeded life insurance to the LifePoint Charitable Endowment to benefit charity:
- The donor may be considering lapsing a policy and prefer to do something to support the charity.
- Donating a life insurance policy may represent the best opportunity to make a large charitable gift.
- The donor may want or need to stop paying premiums.
- The donor may have outlived the purpose of the life insurance.
- The donor may have changing estate planning needs.
- The donor is passionate about the charity�s work and desires to leave a legacy.
- The donor may want or need a sizable income tax deduction.
