Life insurance is a valuable asset for making a charitable gift. It can be made without diminishing other investments or assets earmarked for family members.
A gift of life insurance could be right for you if:
- Your life insurance policy is paid up or has substantial cash value.
- You have no loan outstanding against the policy.
- Your family is well-provided for by other means.
- You would like to make a gift to Moravian Theological Seminary.
How it works
Option 1: You give your policy to Moravian Theological Seminary.
As the policy owner, Moravian Theological Seminary will either cash in your policy and use the proceeds, or maintain the policy until it ends and then receive its face amount. Your benefits will include:
- An immediate income tax charitable deduction for the value of your policy.
- No change in your cash flow.
- The satisfaction of making a generous gift to Moravian Theological Seminary.
Option 2: You designate Moravian Theological Seminary as a beneficiary of your policy.
When your policy ends, Moravian Theological Seminary will receive some or all of your policy's death benefit, as you have designated. Your benefits will include:
- The death benefit of your policy will not be included in your estate, which may save estate tax if your estate exceeds the applicable exemption amount.
- No change in your cash flow.
- The satisfaction of making a generous gift to Moravian Theological Seminary
This option offers the additional benefit that you can change your mind about your gift at any time should circumstances in your life change.
A few states will not allow you to give life insurance to a charity
For your gift of life insurance to be valid, your state of residence must consider a charity to have an "insurable interest" in your policy. Most states do, but verify that this is true in your state before you make your gift.
Dawn Grant bought a $250,000 life insurance policy on her own life shortly after the birth of the first of her four children. Her policy has been paid-up for years and her children, who are now in their 40s and 50s, no longer need the financial protection the policy provides. The cash value of her policy is now over $90,000, and she's paid $75,000 in premiums.
Dawn has enjoyed a relationship of many years with Moravian Theological Seminary, and would like to honor their relationship with a significant gift. However, she has been reluctant to use her liquid assets to make the gift. When Dawn learns that her policy can be put to a new and productive use, she is delighted. She arranges with her insurance agent to donate her policy.
- Dawn will earn an immediate income tax charitable deduction of approximately $90,000, providing tax savings if she itemizes.
- Her $250,000 death benefit will not be included in her estate.
- She has the satisfaction of making a generous gift to Moravian Theological Seminary without reducing her income level.
- As the policy owner, Moravian Theological Seminary can either cash in the policy and have over $90,000 to work with immediately, or hold the policy and receive $250,000 as a legacy gift from Dawn.