Insuring the Future

I was recently part of a discussion about gifts of life insurance to the church and whether or not I like them. (I know, you’re amazed at how exciting my life is, aren’t you?)

Given the question “Is life insurance a good gift to give the church?” My answer is a definitive maybe.

It depends on the policy and the history.

Many young families take out whole-life policies so that in the even of the demise of one of the parents the mortgage can still be paid and the kids can go to college. Fortunately most of these policies go unused and empty nesters with paid-off homes still have these policies even though they no longer need them. Afterall, the average funeral in this country is somewhere in the $5,000 range.

These are great policies to give. The church member can either make the church the beneficiary at the end of life or he can gift the actual policy and the church can cash it in if the need is more immediate.

Few of us, when we count up all of our shekels, include the value of life insurance. So it is a great way to make what could be a sizable gift without really feeling the pinch.

On the other side of the debate is the practice of taking out a new insurance policy to benefit the church. I vote no on this approach.

When you take out a new policy the insurance agent makes a commission and the insurance company’s underwriters make sure the numbers are in their favor. I don’t begrudge them. This is how they make a living and they deserve to be compensated.

But it is an inefficient way of getting money to the church.

Most balanced funds in United Methodist Foundations pay somewhere in the 5-10% range each year. If a donor would skip the insurance policy and make the same premium payment(s) to her local UM Foundation with instructions that it is to grow without distribution until her death, in most cases the church would end up with more money.

There are, of course, the outliers. A woman in her 30s could make one very modest premium payment on a $1 million policy, get hit by a bus the next day and the church would win that bet. But that seems like a long shot on which to insure our future.

So my bottom line is I’m neutral on life insurance. It depends on the situation.