Make a Gift of Life Insurance
Life insurance is an asset you may not think of donating to a charity like Big Brothers Big Sisters of Central Mass/Metrowest until you discover its power, practicality and simplicity. When you own a life insurance policy with accumulated cash value, you are essentially sitting on a pile of money.
How it works
When the original purpose for your life insurance protection no longer applies, such as to educate your children who are now grown or to provide financial security for a spouse now deceased, your life insurance can be redirected to help support a worthwhile cause. One option is simply to name Big Brothers Big Sisters of Central Mass/ Metrowest as the beneficiary (naming us as beneficiary while you retain ownership of the policy, however, does not qualify you for an income tax deduction). Or, you can name us as the beneficiary and also assign us ownership of the policy as a current charitable gift. Doing so provides you tax benefits as outlined below:
- Give the life insurance policy to BBBSCM/MW
- Receive an income tax deduction
- The policy is kept or cashed in by BBBSCM/MW
When you assign us ownership of a life insurance policy and also name us as the beneficiary the following happens:
- You receive an income tax charitable deduction, available under most circumstances.
- You realize tax savings from use of the deduction, and these savings can be invested for future income.
- You reduce your future estate tax liability.
What about donating a new policy?
What if you don’t own an existing policy but realize the power and benefits of giving life insurance? If so, you can (in most states) purchase a new insurance policy and name a qualified charity like ours as a beneficiary and owner of the policy. Rather than paying premiums to the insurance company, you make tax-deductible cash gifts to cover the annual premiums. Even greater leverage is possible when two donors, usually spouses, purchase a two-life second-to-die policy. With two lifetimes before the payment of death benefits, a future gift to us will cost you even less.
And what about the kids?
You want to make a significant gift to Big Brothers Big Sisters of Central Mass/ Metrowest but not at the expense of your children's inheritance. Is it possible to do both?
Yes it is and here is how it could work:
Depending on your age, health and marginal income tax rate, the money you save in taxes, thanks to the charitable deduction you will receive for your donation, can be used to purchase life insurance with death benefits equal to the value of your gift.
How to make a Life Insurance gift
Contact your insurance company to arrange for assignment of ownership of the policy at its current value to BBBSCM/MW. Then, one of three scenarios typically unfold:
- We might surrender the policy to arrange for cash once we receive ownership, providing us much-needed funds and relieving you of the obligation to make ongoing premium payments.
- We may keep the policy in force so that the original face value ultimately will become your gift. In this case, you pledge to make cash gifts at least annually, which we will use to pay the premiums. The gifts are tax-deductible.
- Another alternative is that we might decide to accept a smaller amount of paid-up insurance and still keep the policy in force for your lifetime, and you would be relieved of the obligation to make further premium payments.
Please contact Harold Pinkham, Director of Advancement, at 508-752-7868 ext: 12 if we can answer any questions you have about this way to support our mission.