Case Study: Crowdsourcing vs. Life Insurance

Timothy Rodman • January 12, 2024

Many turn to crowdsourcing as a solution for family emergencies. But what are the implications of planning for your family’s needs using online crowdsourcing vs. life insurance?

OBJECTIVE

To compare a hypothetical outcome of raising $100,000 via a popular crowdsourcing app versus a 10-Year Term Life insurance policy from GBU Life (GBU).

INITIAL DATA GATHERING

Crowdsourcing App 10-Year Term Life
Goal $100,000 $100,000
Taxes Income tax(1) -
Fees 2.9% + $0.30 per donation(2) -
Cost - est. $43.83/month(3)

ADDITIONAL BENEFITS OF GBU LIFE INSURANCE

  • Wellness programs
  • Donation matching
  • Education programs
  • And so much more!

CROWDSOURCING HYPOTHETICAL

Marianne is ready to retire, but she is particularly worried about the first 10 years of this new lifestyle. What if something unforeseen happened and she passed away? Family could always use a popular crowdsourcing app in hopes of raising money4. According to Forbes, less than 12% of crowdsourcing campaigns reach their goal5. With this in mind, plus the variability of donors, let’s say the campaign was able to secure half of the goal ($50,000) through 100 separate donations of $500 each. With a 2.9% + $0.30 fee taken from each donation2, that would leave members of Marianne’s family with $48,520 before tax1.

LIFE INSURANCE HYPOTHETICAL

At 62, Marianne opened a 10-Year Term Life insurance policy with GBU. For roughly $43.83 a month3, Marianne has peace of mind knowing that her family will receive a $100,000 death benefit should she pass away unexpectedly in the first 10 years of her retirement. Marianne named her son, Jeff, as a beneficiary on the policy. This means any and all death benefits would be paid out to Jeff, as long as Marianne was current in her premium payments. Even with 10 years of premium payment, Marianne would have only paid $5,259.60 for a potential $100,000 guaranteed benefit. That’s $100,000 for the covered claim, non-taxed and available to collect as long as the policy is current and up to date with payment.

EXAMPLE RESULTS

Crowdsourcing App 10-Year Term Life
Goal $100,000 $100,000
Gain Donors Monthly Premium
Cost - est. $43.83/month(3)
Raised 50% 100%
Taxes 3.07%(6) -
Fees 2.9% + $0.30 per donation(2) -
Benefit $48,520 $100,000

CONCLUSION

In conclusion, in this hypothetical example, term life insurance coverage was the more feasible solution for covering the potential loss of a loved one.

For more information on additional benefits and financial planning, visit gbu.org for life insurance and annuity products.

  1. H&CO. (n.d.). GoFundMe Tax Implications. Hco.com. Retrieved November 8, 2023, from https://www.hco.com/insights/gofundme-tax-implications#:~:text=The%20IRS%20has%20specific%20rules,line%20of%20your%20Form%201040.
  2. GoFundMe (2023, June 16). No fee to create a fundraiser. Support.Gofundme.com. Retrieved November 8, 2023, from https://support.gofundme.com/hc/en-us/articles/203604424-Learn-about-fees#:~:text=No%20fee%20to%20create%20a%20fundraiser&text=However%2C%20to%20help%20us%20operate,charges)%20per%20donation%20is%20deducted.
  3. This is under the assumption that the recipient was in otherwise good health upon receiving a life insurance policy from GBU Life.
  4. Olya, G. (2019, August 19). The Cost of Dying in All 50 States. Finance.Yahoo.com. Retrieved November 8, 2023, from https://finance.yahoo.com/news/cost-dying-50-states-090000597.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_.
  5. Lee, B. Y. (2022, February 5). Most GoFundMe Campaigns for Medical Bills Fail, Less Than 12% Reach Goals. Forbes.com. Retrieved November 8, 2023, from https://www.forbes.com/sites/brucelee/2022/02/05/most-gofundme-campaigns-for-medical-bills-fail-less-than-12-reach-goals/?sh=31f5c5f63f69.
  6. smartasset. (n.d.). Pennsylvania Income Tax Calculator. Smartasset.com. Retrieved November 8, 2023, from https://smartasset.com/taxes/pennsylvania-tax-calculator.


GBU Life is the marketing name for GBU Financial Life (GBU), Pittsburgh, PA. GBU and its agents do not provide tax, legal or investment advice. Please consult with a legal or tax professional prior to the purchase of any contract. Products and features may not be available in all states. This is a summary of the contract provisions. Please refer to the contract for details of surrender charge schedule, benefits and exclusions. Contract Form Series: ICC20-ST, FL20-ST.2, GEN20-ST, ND20-ST.

January 21, 2025
Details and deadlines surrounding the GBU Foundation scholarship and grants for 2025.
January 3, 2025
Looking to try some new recipes this winter?
January 3, 2025
We've found some tips to keep up your sleeve this winter.
January 3, 2025
The Defined Benefit Annuity from GBU Life can help you to create a plan for a guaranteed income in retirement by making regular contributions based on your retirement income targets.
January 3, 2025
Graduating from college is an exciting milestone, but it’s also the perfect time to focus on your financial future. Building on the foundation you’ve already laid the groundwork for with smart money choices will set you up for long-term success. Here are a few key financial products to consider as you take the next step.
January 3, 2025
Kick-start your child’s journey to financial success with a whole life policy from GBU Life.
January 3, 2025
How well do you know the characters from the hit TV series The Office? Watch your reruns and get ready to test your skills in our winter trivia contest!
January 2, 2025
Did you know you can use your RMD to purchase financial products that can help to secure the future for you, your loved ones or a charitable organization that you care about?
December 6, 2024
Traveling can be one of life’s greatest joys. However, packing smart can make or break your experience. With so many gadgets and accessories out there, figuring out what’s truly useful can be overwhelming. To help you streamline your packing list, here’s a guide to the most useful travel items that will enhance your adventures. 1. The All-Purpose Carry-On Bag A durable, well-organized carry-on bag is essential. Look for one with: Compartments: separate sections for clothes, electronics and toiletries Durability: waterproof or water-resistant materials for unexpected weather Mobility: wheels and an adjustable handle for easy transport This is a must-have item because it saves you from waiting at baggage claims and prevents lost luggage during flights. 2. Travel-Friendly Toiletry Kit Opt for a compact, TSA-approved toiletry kit with refillable travel-size bottles. Bonus points if it comes with a hook for easy hanging in small hotel bathrooms. Tip: keep a separate mini toiletry bag in your carry-on with essentials like toothpaste, face wipes, and lip balm to freshen up during long journeys. 3. Portable Charger and Universal Adapter Staying connected is crucial for navigation, translating apps and emergency calls. A reliable power bank ensures your devices stay charged, especially during long flights or train rides. Pair it with a universal adapter to charge your gadgets no matter the country you’re visiting. 4. Packing Cubes Packing cubes help you stay organized by categorizing your clothes and accessories. They also maximize space in your luggage. 5. Travel Insurance and Document Organizer Keep all your travel documents—passport, visas, insurance and itinerary—in a waterproof organizer. This can be as simple as a resealable sandwich bag. 6. Reusable Water Bottle Remember to stay hydrated! Plus, a water bottle with a built-in filter ensures you have safe drinking water even in remote areas. 7. Noise-Canceling Headphones Whether you’re on a noisy plane or staying in a bustling city, noise-canceling headphones can be a lifesaver. Invest in lightweight, wireless options for added comfort. 8. Eye Mask For long-haul flights or train rides, a comfortable eye mask can help you get some rest. 9. Compact First Aid Kit Accidents and illnesses can happen anytime. A small first aid kit stocked with band-aids, pain relievers, antiseptic wipes and any personal medications is a must. Tip: add items like motion sickness tablets and electrolyte packs for extra preparedness. 10. Multi-Function Travel Jacket Look for jackets with built-in storage—many designs come with hidden pockets for passports, phones, and even water bottles! These jackets are perfect for streamlining your essentials. Tip: if you’re going somewhere with a cold climate, consider bringing a large scarf that can also double as a blanket or wrap. 11. Daypack or Sling Bag A small, secure bag for day trips is essential. Choose one with anti-theft features like lockable zippers or RFID-blocking technology to protect your valuables. 12. Versatile Footwear Depending on your itinerary, pack a pair of lightweight walking shoes, sandals and waterproof boots. Opt for neutral colors and comfortable designs to match various outfits. Packing the right items makes your journey smoother and more enjoyable. Start with these essentials, and tailor them to your destination and travel style. Remember, the key to efficient packing is quality over quantity. Remember to focus on versatile, durable and practical items that suit your needs!
Two people exchanging gifts
December 5, 2024
To help you shine at your next workplace white elephant party, here’s a list of affordable and useful gift ideas.
More Posts
Share by: