Q: We are in our late 70s. Our pensions and Social Security give us enough to live on comfortably. We have no children or siblings. Our nearest relatives are cousins whom we have not seen or been in contact with for many years. As a result we would like to leave our estate equally to our college alma maters. A friend’s son is an insurance broker, and he suggested some type of combined annuity and life-insurance policy that will give us some added income and leave a substantial amount to the colleges. It sounds like a pretty good deal for us to get extra income (icing on our cake) and still leave a good deal to our designated heirs. What’s your opinion?
Annuities make sense for some people
A: In your case, such a deal makes sense. However, insurance companies have some pretty hefty charges for annuities and life insurance. That cuts into the return pretty heavily. Do your colleges have donor-annuity plans? If so, those charges will disappear. You will get a bigger return, and the college will get a larger donation. I know that Penn has such a plan that has been working well. There are also established charities that offer similar arrangements with substantial donors. If your donees don’t already have such plans, perhaps you can be the ones to get them moving in that direction.
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