Using life insurance to make a legacy gift to your church, the Cooperative Program or other charitable organization allows you to make a larger gift than you may have ever dreamed possible. That’s because the premiums you pay are generally significantly less than the life insurance death benefit that will pay out at your death.
There are two ways to make a legacy gift with life insurance. You can name the church or other charity the primary or contingent beneficiary of the policy or you can transfer ownership and all rights in the policy to the charity.
Naming one or more charities as the primary or contingent beneficiary of a life insurance policy is simple. Doing that provides no current tax benefits to you, but does set up a plan to fund a potentially significant gift to the named charitable beneficiaries of the policy at your death for which your estate would get an estate tax deduction.
Transferring ownership of a life insurance policy to a charity is a charitable contribution for income tax deduction purposes. If the policy is paid-up, the charity holds it until you die and collects the death benefit. If premiums are still due on the policy, cash gifts you make in future years to the charity to provide the funds for premium payments are additional charitable gifts. If you get to the point you can no longer provide funds for future premiums, or don’t want to do that from the outset, the charity can cash in the policy or adjust the death benefit to take it to “paid up” status.
Leverage your legacy giving through a life insurance gift.
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.