Everyone has their own unique way of contributing to their community.
Policemen, doctors, firemen, pastors.
And plenty of other folks help out in ways that aren’t so immediately apparent. One of those people who I’ll always remember is a retired accountant named Theo…

Theo helped to manage the finances at a small Methodist church in North Carolina. It’s beautiful country, with a wonderful congregation. The church was an integral part of their community, as it has been for nearly a century now.

But Theo and his congregation were wrestling with the same kinds of problems so many other churches face. The aging church and its adjoining facilities were forever in need of more renovations. They needed to build a new fellowship hall to accommodate their growing numbers, and a new parsonage to house the pastor and his family.

Worse still, Theo’s church had struggled in recent years to find the right pastor. Their newest was promising, but the congregation was still uncertain.

Given this unique set of challenges, Theo made a novel suggestion. “Why don’t we fund a whole life insurance policy for the new pastor?”

Since the church was a nonprofit, all the money being used to pay the premiums was essentially tax-free … the policy would grow tax-free … and the resulting death benefit would of course, be tax-exempt.

The church was able to borrow against the paid-up cash value of the policy for a lower interest rate, saving thousands on financing a much-needed renovations after one particularly rough winter.

And since they were only borrowing against the cash value of their insurance, the policy continued to accumulate dividends as they gradually paid off the loan. What’s more, since the church was essentially borrowing its own money, there was no strict repayment schedule like there would’ve been for a typical bank loan.

In addition to the obvious financial benefits, the policy also gave Theo and his congregation invaluable peace of mind…

Because the policy helped ensure that the church would have the money it needed to continue operations even during trying financial times. It also boosted donor confidence, and ensured the members of the congregation that they’d have financial security if and when there was ever a sudden loss in leadership.

Additionally, like so many pastors, theirs was deeply invested in the spiritual welfare of others — and not quite as focused on his own financial security. His new life insurance policy gave him freedom to carry on with his noble work, knowing that both he and the church are making a long-term investment in the stability of their community. It ensured that the pastor’s growing family would be taken care of if anything ever went wrong.

It was a transformative investment for the congregation … and one that many churches end up wishing they’d made sooner.

Whole life insurance can be an outstanding vehicle to help churches and other nonprofit organizations manage their finances. These types of organizations typically aren’t pursuing high-return investments so much as long-term financial stability, for which whole life insurance is unrivaled.

Life insurance provides a valuable financial asset that can help protect your church from the vicious ups and downs of these various markets. Most of the top companies in the space have been in business for over a century, and will remain in business much longer thanks to strict regulations on their assets.

You see, whole life insurance provides a volatility buffer unlike anything else in the financial world. Stocks can rise and fall … banks can (and do) suddenly go out of business … even the accessibility of financing isn’t something we can take for granted.

With the right policy contract and the right arrangements, your church’s financial security can be set for decades to come. There’s no need for constant management. All you have to do is keep the premiums paid and let compounding work its magic.

A life insurance policy doesn’t have to be owned, insured or funded by the church in order to benefit the congregation, either. Life insurance can be an extremely valuable charitable gift that’s often overlooked during the estate planning process.

Sometimes, an individual will have financially outgrown the need for a specific life insurance policy’s protection. Maybe they were more successful than expected, maybe their beneficiaries are independently wealthy — in either case it doesn’t hurt to be over-insured.

By filing a “change of ownership and beneficiary” form, they can gift to the policy to a church or one of its institutions. Gifted policies will typically be paid-up or mostly paid-up, with a few years of premiums left to pay. The remaining premiums, if any, will still need to be paid. (Future premiums donated to a church are treated as cash gifts).

The recipient isn’t the only one to benefit from this type of donation, either. Gifting a life insurance policy to a church or other nonprofit will provide the donor with an immediate income tax deduction available to 50% of adjusted gross income.

So if you’ve got a specific, taxable income event coming in the future—like the liquidation of a major asset—then gifting your policy can help offset the taxes you might have to pay.

Incorporating your life insurance plan into your charitable giving plan can open up a new dimension of flexibility and potential tax benefits you might not otherwise have access to. And it can be a transformative gift for the institutions and organizations that have meant so much in your life.

Key Takeaways

• Whole life insurance can serve as a powerful financial tool for nonprofit organizations like churches, providing long-term financial stability and tax advantages.
• Policies grow tax-free, offer tax-exempt death benefits, and enable borrowing against cash value for lower-cost financing, securing funds for renovations and operations.
• Life insurance enhances continuity by ensuring funds for leadership transitions and donor confidence, protecting against unforeseen financial challenges.
• Gifting life insurance policies to nonprofits can offer substantial tax deductions for donors, offsetting taxable income events effectively.
• Life insurance acts as a volatility buffer in financial planning, avoiding the risks associated with stock market fluctuations and bank failures.
• Incorporating life insurance into charitable giving expands flexibility, aligns with long-term legacy goals, and supports community stability.

Ready to see how this could apply to your wealth plan? Click the big yellow Clarity Call button and let’s map it out together.