Consider Life Insurance in Your Gift Planning

Life insurance can often be an ideal subject for charitable giving – especially “surplus” policies that are no longer needed for family security.  Here are some options:

• Designating charity as beneficiary of a policy will produce an estate tax charitable deduction.  The designation is wholly revocable, and you’ll retain economic security from the policy during your life.  Charity can also be named as a contingent beneficiary, if your primary beneficiary dies before you.

• Assigning all ownership rights in an existing policy produces both an income tax charitable deduction and estate tax savings.  Future premium payments are fully deductible.

• Giving a newly purchased policy can amount to “philanthropy on the installment plan,” with all future premium payments becoming tax deductible.  New policies can be designed to be paid up after five or seven years.    

Advantages of life insurance gifts include:

• Privacy – the gift doesn’t go through probate.

• Larger gifts are possible, because annual premiums let donors give in installments.

• “Surplus” policies are often easy items to contribute.

• Gifts reach the organization quickly because they do not pass through probate.

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