ARTICLE #1

Living Benefits through Life Insurance

Real Estate Professional Marjorie Williams purchased a life insurance policy for the living benefits it can provide in support of her personal philanthropic efforts.

The policy Marjorie purchased is considered what’s commonly referred to as a “Charitable Life” policy.  Such policies are standard life insurance contracts, but the insured purchases the contract for the benefit of a favorite charity.

In Marjorie’s case, she wanted to provide a meaningful lifetime gift to her local community college foundation.  “As a board member, I love the idea that by making my same annual contribution to the foundation, I can amplify my donation into a six figure contribution”, says Williams.  “It just made sense to me when I saw a presentation on the topic.” 

Foundation Executive Director Carl Meyer describes Charitable Life Insurance is one tool in his overall planned giving program.  He says it works for donors who want to make a meaningful gift to their favorite charity while they are still alive without having to deplete their personal assets.  “It starts with the individual”, says Meyer.   “Not everyone is comfortable with the strategy and it’s absolutely critical that you work with a credible life insurance agent.  However, when a donor decides to give, making them aware of the life insurance option opens up the conversation to discuss how planned giving fits into their overall estate plan,” says Meyer.

You may consider a variety of options in completing a charitable life insurance strategy.  In Marjorie’s case, she purchased her own policy, then assigned ownership to the foundation in order to maintain her annual tax deduction for the amount of her premium payment.  Other options include naming the charity as owner of the policy on the initial application, naming the charity as beneficiary of an existing policy or gifting an existing policy to the charity. 

Whichever option you choose, prospective donors should consult with their tax advisor to optimize their gift based on their personal tax situation.

 “It’s exciting,” says Marjorie, who is now working with the Foundation to determine how to maximize the benefit of her gift.  “I get a voice in determining how to leverage my gift for the benefit of an institution I love.  And I can appreciate the benefits of making that gift now and for the rest of my life.”

For more information about Charitable Life or Insurance Estate planning, contact Paul E. Donohue, MBA at The Downey Group:  pdonohue@downeygroup.com

This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, tax advisor or plan provider.