The insurance is there to insure the repayment of your loan. It is not intended to be resold or owned by a third party. The charity owns the policy and pays the premium. You simply agree to participate in underwriting and sign the application naming the charity as beneficiary of the policy. Your IRA is a creditor of the policy and its death benefit to the extent of the outstanding balance of the loan at your death. The IRA cannot forgive the loan. Your IRA is repaid at your death and the IRA is paid to your named beneficiary. The named beneficiary of your IRA can be spouse, family or the charity. The life policy is a condition of the loan and protects your heirs. Your ability to obtain insurance is an asset. This precious asset can be used to help your charity now and to protect your heirs.

The policy on your life will be based on your age and health. The underwriting process involves a written application and requires access to your physician’s records, but does not necessarily require a physical examination. You may be able to participate even if you think you are “uninsurable.” Our approved insurers are highly rated companies. You should determine whether your current and/or future anticipated insurance needs are satisfied before proceeding.

The charity is obligated to pay annual interest. While not required, many charities will reserve a portion of the initial loan proceeds to satisfy interest payments. Many charities, as they do with other obligations, request the assistance of donors to satisfy their charitable needs. The interest payments made by the charity are directed to your IRA.

With the loan, you have not made a gift to charity. There is no charitable deduction for the loan. While neither required nor precluded under the plan, individuals can independently pledge to assist their charity with cash donations. These donations are subject to the limitations otherwise set forth under the tax laws and may or may not be deductible depending upon your situation.