IMPACT GIVING: Life Insurance
Using an existing life insurance policy or obtaining a new policy on the life of a donor will provide a substantial cash gift to the Church at death. For an existing policy, you simply gift the policy to the Church. The Church becomes owner, payor, and beneficiary of the policy. For a new policy, you apply to the company of your choice for a life insurance policy naming the Church as owner, payor, and beneficiary. You make a tax deductible donation to the Church equal to the premium, and the church pays the premium. During your lifetime the Church controls the cash values. Upon death the Church receives the death benefit directly from the insurance company, not subject to the probate or estate taxes.
* Based upon rates and dividends of a highly rated life insurance company at the time of publication. Dividends are projections only and not guaranteed. Assumes nonsmoker in excellent health.
Please contact your financial advisor to determine how comparable figures would apply based on your particular case.
- Donor can make a substantial gift (death benefit) for a relatively small outlay (premium).
- There is no delay in the payment of the proceeds. The policy is separated from the estate and is not subject to “shrinkage” by taxes, fees, and probate costs.
- Premiums may be deductible to the donor.
- Administration is easy.
- Gift can be made with no publicity, if desired.
- A 50-year-old- female wants to donate 10% of her $500,000 estate to the Church. She obtains a $50,000 policy with the Church as owner, payor, and beneficiary donating the $855 annual premium to the Church as a tax deductible contribution. After 13 years, dividends pay the premium for her.*
- Total cost (premium for 13 years) = $11,115
- Tax savings (@28%) = 3,112
- Net cost = $8,002
- Gift to Church at death = $50,000
- A 50-year-old female has already designated 10% of her $500,000 estate to the Church. This $50,000 is in a certificate of deposit earning 6% interest. If the CD was used to pay premiums on a life insurance policy for 12 years, it would purchase a $340,000 death benefit immediately.*
- Total cost (Premium for 12 years) = $67,680
- Tax savings (@28%) = $11,950
- Net cost = $48,330
- Gift to Church at death = $340,000
- Gift to Church in 25 years, if left in CD at 6% = $214,593