Life Insurance as a gift
Life insurance is a simple idea that takes many shapes. Its basic purpose, of course, is to provide cash to meet the needs of survivors at the insured person’s death, and all policies provide this benefit. However, life insurance policies may also build up cash value that can be utilized for a variety of purposes. A particular policy may be intended primarily for protection through its death benefit, or it may be designed more for investment purposes through increasing cash value.
Some general types of policies
Term life maximizes the death benefit payable if the insured dies within a specified time, but it accumulates no cash value. Because it offers the most affordable protection, it is often the choice of parents primarily concerned about security for their family in case of an untimely death.
Whole life combines a death benefit with predictable cash value growth. Normally the premium and death benefit are fixed, and the cash value grows according to a predetermined schedule.
Universal or variable life
These policies place greater emphasis on growth. The premium and/or the death benefit may change, and the growth in the cash value will depend on investment performance. Large initial premium deposits may render future premium payments unnecessary.
New ways of looking at Life Insurance
As time goes by, our priorities change. We find ourselves wanting to share our good fortune with those around us, to show our support of the causes and institutions we believe in, to leave the world a little better than we found it.
When goals such as these take shape, the life insurance policy that served us well in years gone by can serve us in an entirely new way when we make a charitable gift. In other cases, a new policy can be the key to achieving philanthropic goals. Here are some possibilities:
Give the death proceeds. Mary no longer needs the $25,000 death benefit from the policy she took out years ago when her family was young. So she decides to make her parish the beneficiary of the policy. At death, her estate will receive a donation receipt for the amount of the death benefit, resulting in significant tax savings on her final return.
Give the policy itself. Peter, age 76, had almost forgotten his paid up $50,000 policy until he began thinking about establishing an endowment with the diocese in memory of his wife. Because he makes the diocese the beneficiary and also the owner of the policy, his gift is irrevocable, and he receives a donation receipt for the cash value of the policy creditable up to 75% of income (excess credit may be carried forward up to five years).
Give a new policy. Susan, in her mid-40s, would like to make a significant gift to the Kootenay Forward Fund. She has no existing policy or assets to contribute but she does have some discretionary income, so she purchases a new $40,000 policy naming the fund as both owner and beneficiary, and pays for it monthly.
Each year a donation receipt for the total annual premium paid would be issued to Susan making a significant tax saving.
These are but some of the ways in which life insurance can help you achieve your personal and philanthropic goals. If you would like to explore a life insurance gift or any other form of gift to your parish or diocese please contact me.
Archdeacon David Irving
Tel: 250 762-3306
Email: archdcnkootenay@telus.net
