Giving to Albion FUMC
Additional Information #4
Gifts of Life Insurance
For many people, life insurance affords a practical means of making a significant gift to Albion FUMC.
- For the older donor, a gift of an existing (and no longer needed) insurance policy can be quite effective as part of the donor’s overall financial/estate plan.
- For the younger donor wishing to make a larger gift, brand new policies are often purchased specifically to give away immediately. The donor then pays modest annual premiums for a few years, but is credited with the face value of the policy for gift recognition purposes.
A gift (typically of both ownership and beneficiary status) of a “whole life” insurance policy will entitle the donor to an income tax deduction roughly equivalent to the cash value of the policy. If premiums are still required, the donor may elect to donate to the Church a cash gift equivalent to the annual premiums, and the Church will then pay the premiums. These cash gifts are deductible.
The Church, once made the owner, may opt to “cash in” the policy, or may wait until it “matures” and receive the full death benefit. Normally, the Church will honor the wishes of the donor in making this decision.
Wealth Replacement Option Using Life Insurance
One of the most important and sophisticated roles of life insurance in planned giving is its potential use in replacing the value of an asset that has been give to the Church.
How it works: You, as donor, use some or all of the tax savings created by the gift, to purchase a life insurance policy on your life. This policy is typically then held in a special form of life insurance trust payable on your death to your children or other designated heirs. Typically, the amount of life insurance purchased is equivalent to the amount of your gift less the estimated estate or other taxes your heirs would have incurred had you not made the to the Church. Such an arrangement can assure family interest will not be adversely affected. In essence, children inherit the same amount from you as they would have had you not made the gift.