Life Insurance: Ways to Give

By: Richard Carnes

People purchase life insurance for the following reasons:

· Income Replacement - which is especially important for younger couples with children who want to provide income for survivors in the event of premature death.

· Mortgage protection - to pay any mortgage balance due at death.

· Final Expenses - following a death when other sources of cash may not be available.

· Liquidity - particularly important in the case of a large estate with assets like a private business when money is needed for taxes and other expenses.

You Can Give Unneeded Life Insurance

With the passage of time, these needs for life insurance may no longer exist. The children have grown and left home, the mortgage has been paid, significant investments have accumulated, and either a business has been sold or a transition plan developed. In these cases, the insurance policy can make an excellent charitable gift.

If you are one of those with an insurance policy no longer needed for its original purpose, consider transferring ownership of it to a Baptist ministry or to the Foundation to create an endowment fund that will support the Baptist ministries of your choice. If the policy is paid up, you would receive a charitable deduction for the lesser of the replacement value and your cost basis (a value that can be provided by the insurance company). If you are still paying premiums, you would receive a charitable deduction for approximately the cash value of the policy and you would also receive deductions for premiums you subsequently pay.

You Can Name a Charitable Beneficiary

If you prefer to retain ownership in case your circumstances should change and you or your family might need the cash value or proceeds from the policy, you could name the charity as beneficiary but not policy owner. Although you would not receive a current income-tax deduction, your estate would be entitled to an estate-tax deduction for any proceeds paid to the charity.

A life insurance policy can be a great way to ensure a future gift to Baptist ministries. To learn more, you may contact the Foundation’s trust counsel, Laurie Valentine, or me at our toll-free number (866) 489-3533.

Richard Carnes is the president of the Kentucky Baptist Foundation, PO Box 436389, Louisville, KY 40253; toll-free (866) 489-3533; KYBaptistFoundation.org

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.