New Life for Old Insurance Policies
Life insurance policies are contracts issued by a life insurance company to an individual. A donor can name the Foundation as the primary or contingent beneficiary, or the donor can transfer ownership of an existing policy. If the Foundation is named the beneficiary of the policy, the funds will not be included as a contribution until they are received. However, if the Foundation is both the owner and the beneficiary of the policy, the cash surrender value will be the declared contribution at the time the policy is transferred.
Donors can use paid-up life insurance policies to make gifts to the Foundation. At an earlier time in life, life insurance was a priority to protect family members, which may have outlasted its need. When a policy is donated, the Foundation becomes the owner and beneficiary, the donors take an income tax charitable deduction for the cash value of the policy at the time of the gift, and they can designate how the gift is to be used. If the policy still requires annual premiums, the donor makes tax-deductible contributions in that amount to the Foundation each year, keeping the policy active.