What happened when I called 6 charities in Ottawa about a term policy

I’ve been doing something a little unusual the last couple weeks.

I’ve been meeting with charities.

Not to donate money.

Not to volunteer.

To talk about life insurance.

Let me explain.

I’m working with a business owner who has a term policy he doesn’t want anymore.

He’s done with it. Doesn’t need it. Ready to let it lapse.

But here’s the thing.

He’s uninsurable now. Health issues. Not going to live a normal life expectancy.

And the conversion window on this policy? It closes later this year.

So we have a term policy on someone who is uninsurable, with a conversion option that’s about to expire.

If he lets it lapse, it’s gone. No value. Nothing.

But if we think creatively, there’s another path.

Donate the policy to a charity.

Here’s how it works.

The client donates the term policy to a registered charity.

The charity receives the policy and issues a tax receipt for the fair market value.

Then the charity converts the term to permanent insurance and pays the premiums going forward.

Eventually, the charity collects the death benefit.

For the client, he gets a tax receipt for something he was going to throw away.

For the charity, they get an asset that will pay out a significant benefit down the road.

The rate of return on a policy like this, given the health situation, is probably somewhere in the 10 to 15% range.

Not bad for a charity looking to diversify how they raise funds.

So I started making calls.

I reached out to the Ottawa Hospital Foundation.

CHEO.

The Ottawa Mission.

A few others.

Most of these people I knew already because I’m part of the Ottawa Estate Planning Council. We do a philanthropic presentation every year, and a lot of these fundraisers and gift planners attend. So I had relationships to lean on.

I called them up and said, “Hey, I have an opportunity I think you might be interested in. It’s not a traditional donation. But it could be valuable.”

And then I explained the concept.

The responses were fascinating.

Some charities said no right away.

“We appreciate it, but we’re really just looking for cash.”

Fair enough. Not every charity wants to hold an insurance policy. It requires some sophistication. It requires paying premiums. It requires patience.

But others?

They leaned in.

“We’ve done this before. Not often, but we know how it works. We’d have to take it to our board, but we’re interested.”

By the end of the week, I had three or four charities genuinely interested in exploring it further.

Not a guaranteed yes. But a real conversation.

Next week, I’m meeting with the client.

We’re going to walk him through everything.

Here’s what we found. Here are the charities that are interested. Here’s what the tax receipt could look like. Here’s the process.

And then he decides.

Maybe he keeps the policy after all. Maybe he donates it. Maybe he picks which charity he wants to support.

But he has options now.

Options he didn’t know existed two weeks ago.

Here’s the part that surprised me.

Going through this process, meeting with all these charities, something else happened.

They started seeing me differently.

Not as just another advisor.

As someone who might be a source of opportunities for them.

Because charities need to raise funds every year. That’s their job. And most of the time, they’re chasing the same donors, the same campaigns, the same asks.

But this?

This is different.

This is an advisor calling them and saying, “Hey, I might have something for you.”

That’s a different kind of relationship.

And now, when I come across another situation like this, I have a network of charities who already know me, already trust me, and already understand how this works.

That’s leverage.

Why does this matter for advisors?

Because most advisors would have let this policy lapse.

Client doesn’t want it? Fine. Let it go.

But there was value sitting there. Hidden value. And with a little creativity and a few phone calls, we unlocked it.

The client gets a tax benefit.

The charity gets a future asset.

And the advisor becomes someone who solves problems nobody else even sees.

This is what I mean when I talk about perspective.

It’s not about knowing more products.

It’s about seeing opportunities others miss.

It’s about asking, “What else could we do here?”

It’s about building relationships that compound over time.

The broader lesson.

This case reminded me of something I’ve been thinking about a lot lately.

The advisors who are going to dominate the next decade aren’t the ones who know the most about insurance.

They’re the ones who know how to connect dots.

Insurance to tax planning.

Tax planning to estate planning.

Estate planning to philanthropy.

Philanthropy back to relationships.

Relationships back to referrals.

It’s all connected.

And the advisors who see those connections, who build those bridges, who make those calls that nobody else thinks to make…

Those are the ones who become indispensable.

Not because they sell more.

But because they see more.

A quick note on the mechanics.

If you’ve never done a charitable donation of a life insurance policy, here’s the high level.

The policy gets transferred to the charity. They become the owner and beneficiary.

The donor receives a tax receipt for the fair market value of the policy at the time of donation.

If it’s a term policy with conversion privileges, especially on someone who is now uninsurable, that fair market value can be significant.

You’ll want someone who can do a proper valuation. There are actuaries and firms that specialize in this.

And the charity needs to be willing to hold the policy and pay premiums. Not all of them will. But some will, especially the larger foundations with more sophisticated gift planning teams.

It’s not an everyday transaction.

But when it fits, it really fits.

The takeaway.

Next time you have a client ready to lapse a policy, pause.

Ask a few questions.

Is there conversion value?

Is the client insurable or uninsurable?

Is there a charitable intent somewhere in the picture?

You might find an opportunity hiding in plain sight.

And you might build a relationship that pays dividends for years.

That’s the game now.

Seeing what others don’t.

Connecting what others can’t.

And being the advisor who makes the call nobody else thinks to make.

Talk soon,

Andrew