CEDAR RAPIDS, Iowa—Healthcare, university and community foundations with gifted universal life insurance policies
need to be aware of a relatively unknown trend that could affect the benefits they receive from these policies. If the donated policies were purchased in the 1980s or 1990s, plummeting interest rates and stock values in the past few years could mean the policies will die before the beneficiaries do—rendering the policy valueless.
The Kirkwood Foundation
, like many foundations, receives life insurance policies as donations. The Foundation is cognizant of their responsibility to evaluate each policy on an annual basis with the goal to identify any policy that may be in danger of losing value. Annual statements are reviewed and in-force illustrations are requested, as they offer a complete analysis of a policy’s long-term performance. As a result, Kirkwood identified potential problems in several policies. Kirkwood sought professional insight from Polsar Financial
, which completed a comprehensive audit of the Foundation’s portfolio of policies and confirmed the Foundation’s concerns.
“Many universal life policies—I believe as many as 50 percent—will lapse long before their owners die,” says Loren Coppock, founder of Polsar Financial and principal at TrueNorth Companies. “When that happens, the cash value is zero, the insurance company keeps all the premiums that have been paid and there is no death benefit. It’s perfectly legal, and insurers really have little incentive to make policyholders aware of the situation.”
The Kirkwood Foundation describes the Polsar Audit Process as extremely beneficial, as the results validated their assumptions and served to reinforce the steps they were taking to address the issue.
“We were able to confidently discuss their analysis and offer solutions to two separate donors,” says Susan Ovel, director of planned and endowed giving for the Kirkwood Foundation. “Polsar served as an important partner in communicating the information about this complex problem to policy donors. Their professional expertise was a strong complement to our firm commitment to transparency, stewardship and fulfillment of donor intent.”
Polsar provided the Kirkwood Foundation with an all-in-one dashboard that represents a succinct assessment that will be simple and effective to review on an annual basis. Much like an annual physical, it is a way to monitor the financial health of each policy.
Healthcare, university and community foundations, and other nonprofit organizations that have donations in the form of universal life insurance policies are strongly encouraged to have their policies reviewed by an auditor specializing in universal life insurance policies. Polsar conducts low-cost policy audit reviews, and the benefits can be hundreds of thousands of dollars returned to the bottom line.
About the Kirkwood Foundation
The Kirkwood Community College Foundation, Cedar Rapids, Iowa, supports the education and development needs of Kirkwood Community College’s students by providing resources not available through public funds. To learn more about the Kirkwood Foundation, visit www.Kirkwood.edu/Foundation.
About Polsar Financial
Polsar Financial specializes in evaluation of universal life insurance policies and has a proven process to review, rescue and manage them. To learn more about Polsar Financial, visit www.PolsarFinancial.com.