An often overlooked fact about life settlements is that they have the ability to be used for charitable purposes. Here's how.
Suppose an insurance company offers a charitable giving benefit rider. This is a unique feature, available with select universal and variable universal life insurance products, which provides an additional 1 percent death benefit above the base policy face amount payable to a customer's charity of choice. An insurance company would offer a feature like this to appeal to high net worth individuals shopping for a life insurance policy.
For example, let's say two different life insurance companies are offering similar policies at similar costs, but Policy B also includes this option to give to a charity at no extra cost to the policy owner. It would make sense for a high net worth individual involved with various charities to be drawn to purchase the policy that includes a charitable giving benefit rider.
