Gifting Strategies – Your Unneeded Life Insurance Policy

One way you can endow a charitable organization is to make a gift of your unneeded life insurance policy. You should meet with your insurance advisor to determine if the policy you own still serves the original purpose for acquisition. If the need no longer exists – consider transferring ownership of the policy to the charity. A gift of the annual premium will keep the policy in force and provide you with a tax deduction for your contribution.

 

An alternative gifting strategy involves a determination of your policy’s actual market value. Your policy may have a market value in excess of its cash surrender value. This market value determination is based on a review of your medical records in what is known as a life settlement transaction. A life settlement pays you cash to transfer ownership to a financial institution. The cash received can then be gifted to charitable organization.

 

Since the cash you receive in a life settlement will be larger than the cash received through policy surrender, a life settlement may result in a larger tax deduction of your gift. Please consult your tax advisor for the tax treatment of a life settlement.