When you first bought a life insurance policy, you probably hoped to ensure the financial stability of your family should something happen to you or your spouse. Have your circumstances changed since then?
Life insurance can be a tool with many purposes. For example, it can provide liquidity for paying taxes and other expenses at death. But, believe it or not, some of the most satisfying uses for life insurance policies are connected with charitable giving!
If you have a life insurance policy you no longer need, you might contribute it to a charitable cause in which you believe. Purchasing a new policy and naming the chapter as beneficiary is another possibility.
Giving an Existing Policy
When you make a gift of an insurance policy that you own, we must become the new owner and beneficiary. This will allow you to receive an income tax deduction for either the total of the premiums paid or the fair market value of the policy, whichever is less.
Actually, the phrase used by insurance companies for policies for which premiums are still due is "interpolated terminal reserve," which is slightly different than the cash value of the policy. The deduction is limited to 50% of your adjusted gross income, with the ability to use any excess deduction over the next five years.
Most term insurance policies do not have any cash value, and so donors receive no deduction for making a gift of a term life insurance policy.
Giving a New Policy
If you buy a new policy and then donate it to us, the premiums you would continue to pay are generally deductible on your income tax return. For example, you could give us enough money to pay the premium, and then we could pay the insurance company. (Remember, our organization must be the owner of the policy; the insurance company will send the premium notices to us, not the donor.) This is also true for term insurance policies.
A Satisfying Gift
If you are unable to let go of other assets, contributing life insurance is a perfect and easy solution. Your greatest reward is the personal satisfaction of helping the Society with a larger gift than you thought possible. But you also may increase your cash flow and secure important tax savings. For more information, please contact
For more information on donating life insurance, please contact Karen.Barton@nmss.org at 760-448-8412.
Back to Planned Giving Overview