Introducing life insurance to your clients in a non-threatening manner may sometimes be a challenge. The reality is that some clients are reluctant to discuss life insurance and, consequently, their own mortality.

However, there are options for introducing the benefits of permanent life insurance in a non-threatening manner. For example, alumni are commonly solicited by their alma mater to request donations. What is the best option for providing the maximum benefit for their gifting dollar? In some cases, it may be a single pay whole life insurance.

According to a June 2007 report of Giving USA Foundation, charitable gifts to educational institutions in 2006 totaled $40.98 billion, a 9.8% increase from 2005. How much is typically gifted? While there is an occasional “mega gift,” a more modest gift is the norm.

In 2006, the average alumni cash gift was $1,195. However, the average gift of appreciated stock was $47,806. By gifting appreciated stock, the donor may be able to deduct the gift, subject to the 30% limit of adjusted gross income, at the stock’s fair market value, thereby making a leveraged gift and reducing current income taxes.

Is there additional leverage opportunities for that highly appreciated stock? Yes. Once the gift transaction is complete and the university assumes full ownership, the appreciated stock can be sold and converted into cash. As a tax-exempt, 501(c)3 organization, the university would not pay income tax on the gain. Once the funds are converted to cash, a single premium whole life insurance policy may be purchased on the life of the donor to create additional leverage on the gift.

Instead of being recognized for a gift of just the highly appreciated stock, the donor can be recognized for a gift of the much larger death benefit. Of course this would require the donor’s consent and the services of a life insurance professional to assist university personnel.

Why would the university consider single pay whole life insurance? Let’s consider the following benefits:

? Life insurance is an effective tool for long-term endowment fund building.

? The policy’s guaranteed death benefit provides significant leverage on a cash gift.

? The guaranteed death benefit can be designed with any lump sum amount, (subject to minimum issue limits).

? High ratio–generally 90% or better–of first year guaranteed cash value to premium.

? The university can access guaranteed cash value, if necessary, while the insured is alive.

? The guaranteed cash value can serve as a fixed asset with in the university’s total endowment portfolio.

? (Guarantees are dependent upon the claims-paying ability of the insurer.)

Obviously, not all donors will be candidates for life insurance and the university’s investment committee will want immediate access to cash in most cases. However, if using a single pay whole life insurance product is positioned as an asset class within the portfolio–perhaps 5% of the annual gifting amount–there could be significant sales opportunities.

Are there other product options besides single pay whole life? Absolutely. Guaranteed no-lapse universal life can also be designed to guarantee a death benefit on a single-pay basis. And in many cases, the policy would create a larger initial guaranteed death benefit than whole life.

However, the guaranteed cash value within a no-lapse UL product generally decreases as the insured approaches policy maturity. In order to provide liquidity in the event cash value needs to be accessed, having guaranteed cash value–which increases each year–is crucial to this concept.

What are the next steps?

Who are the prospects? Certainly you may receive preferential treatment at your own alma mater. Other prospects include small colleges without large endowment offices, and private secondary schools, including parochial schools. Contact the endowment office or alumni relations at the educational institution to discuss how to leverage educational gifts.

As a possible marketing opportunity, these offices may be willing to allow a co-sponsored mailing to their alumni featuring the benefits of gifting life insurance. Endowment office personnel may be aware of using life insurance as a charitable gift, but may not be aware of all of the features and benefits single pay whole life insurance can provide.

Dan Randall, CLU, ChFC is senior product sales associate at National Life Group Montpelier, Vermont. You can e-mail him at .