Major and Planned Giving
Gifts of Life Insurance
Two types of life insurance are typically donated to
Denison: paid-up whole and universal life insurance policies, and newly issued whole and universal life insurance policies.
Your options include:
- making Denison the beneficiary of an existing policy and earn an estate tax charitable deduction;
- making Denison the owner and beneficiary of an existing policy, thus removing it from your taxable estate and earning an immediate income tax deduction approximately equal to the cash value of the policy (future premiums are tax deductible);
- taking out a new policy with Denison as the owner and beneficiary (all premium payments are tax deductible); and
- using in conjunction with a life-income gift to "replace" for your heirs an asset that you have given to Denison
Example: A number of years ago Harry Oliver
purchased a $50,000 whole-life policy to ensure funds for his
children's education. The annual premium for the policy is $1,000. His
children have graduated and are now financially independent. The
policy, which he still owns, has a fair-market value (usually very
close to the policy's cash value) of $22,000, and the net premiums paid
equal $23,000.
Harry assigns the policy to Denison. In his
28-percent tax bracket he realizes an immediate tax savings of $6,160.
In future years, Harry increases his annual gifts by $1,000 a year to
Denison that, in turn, pays the insurance premium. Harry realizes an
annual tax deduction of $1,000, based on his annual gifts for that
purpose.