Serve > Board of Management > Stewardship > Life Insurance
Planned Giving Using Life Insurance
Life insurance policies are a very efficient method of facilitating a planned gift to the church. Structured properly, an insurance policy can trigger a substantial gift for a modest outlay, and could offer significant tax benefits during your lifetime, or after your death.
Charitable Tax Benefit Now
Suppose you own a small policy your parents took out on your life when you were a child or when you started working. You've been paying premiums faithfully for years, but you decide that it no longer fits into your estate plan, or is no longer needed. You could surrender the policy for its cash value. Any gain would be taxed as income in the year it is surrendered. An alternative would be to transfer ownership of the policy to the parish. You would receive a charitable receipt for the cash value, and a receipt for any subsequent premium you pay. The church would own the policy and become the beneficiary. The advantage to you is the immediate tax benefit and avoiding probate fees or possible challenges by creditors. The advantage to the parish is the certainty of the (eventual) gift, allowing effective long-range planning.
Another alternative is to apply for a new policy, then transfer ownership to the church. Each premium you pay entitles you to a charitable receipt, and the church has the certainty of knowing it will receive the gift. You will have made a significant planned gift for a very modest outlay (the annual premium).
Charitable Tax Benefit at Death
Recent tax changes allow you to name the church as beneficiary of a life insurance policy without transferring ownership. The advantage to you is the flexibility to change your beneficiary to fit your circumstances. There is no charitable receipt during your lifetime, but the death benefit creates a charitable credit to offset the taxable portion of your estate. In a similar vein, your will may be the place where you need or want to make your charitable bequest to the parish. In this case, naming the estate as beneficiary of the insurance policy creates the capital required to fund the bequest, and results in a charitable tax credit to your estate. Again, there is no tax advantage to you during your lifetime.
A properly planned gift of life insurance can be an effective way of creating a legacy of faith. Remember that any decision about a planned gift should be made in consultation with your professional advisors, your family, and the parish.
If this is of interest to you, please contact the incumbent, Andrew Asbil, or Peter Bennett of the stewardship committee.
Please click on the following links for additional Stewardship information:
Stewardship Main Page
Bequests (and other Planned Gifts)
Charitable Annuities
Gift of Stock