Return to home pageOpen Door Mission - Donate NowOpen Door Mission - VolunteerOpen Door Mission - Other Ways To HelpOpen Door Mission - Contact UsOpen Door Mission - Email This Page
Feed 20 Hungry Men, Women & Children for $38.40 today
Rescue Blog
Who We Are
Programs
Community Promotions
News
Contact Us
Open Door Mission - Volunteer
Open Door Mission - Listen To Candace on KCRO Thursdays at 4:00 PM on Inside the Open Door
Open Door Mission - Listen Online
Open Door Mission - Listen To Candace on KCRO Thursdays at 4:00 PM on Inside the Open Door
Open Door Mission - Privacy Policy
Combined Federal Campaighn
CFC 73234

 
Gifts of Life Insurance

There are several ways you can use life insurance as the basis for a charitable gift.

Making the Charity a Beneficiary of your Life Insurance Policy
You may wish to make the charity the beneficiary (or a contingent beneficiary) of a life insurance policy as a way to make a sizeable future gift. You retain lifetime ownership of the policy, keeping the right to cash it in, borrow against it, and change the beneficiary. A gift of this nature is treated much like a bequest made through your will. Because you retain the ownership of your asset (the policy), you will not receive an income tax charitable deduction for this future gift or for your premium payments during your lifetime. The policy's proceeds will be included in your gross estate, and your estate can take an estate tax charitable deduction.

Making a Gift of Your Policy
You may wish to transfer ownership of a policy to the charity, or purchase a new policy with the charity as owner and beneficiary. If you make a charity the owner and beneficiary of a policy, you are entitled to certain tax advantages.

the WalkersExample:
Since their children had grown up and begun lives on their own, the Walkers decided to review their finances. They realized that some of the insurance they carried while the children were dependent on them was now not really needed. They decided to donate a fully paid-up policy to charity. Their financial advisor told them that as the policy is paid-up, they are entitled to a charitable deduction equal to the lessor of the premiums they paid over the life of the policy or the cost of a comparable replacement policy if purchased today.

The Walker children were very supportive of the idea. In fact, one of their children purchased a small whole life policy and designated the charity as the owner and irrevocable beneficiary. As a result, the annual premiums that are paid are a charitable deduction.

Shopping at the Kings KlosetWealth Replacement Using Life Insurance
A donor may make a current gift to charity and receive a charitable tax deduction. At the same time, the donor may purchase life insurance to replace the donated amount or perhaps, the amount after estate tax that the beneficiaries would have received. Depending on the circumstances, the charitable tax savings and any life income resulting from the gift may defray the cost of the wealth replacement insurance premiums.

John AbbottExample:
John Abbott, age 60, wants to make a gift that will ultimately be used to purchase equipment for a charity he has supported for years, but he is also concerned for his children and their futures. He creates a 6 percent Charitable Remainder Unitrust for $100,000, which yields a tax savings to him of $13,307. He then purchases a $100,000 whole life insurance policy that will maintain his children's inheritance. His annual premium payments are $4,500, which he pays for the first three years from his tax savings and subsequently with the increased income from his trust.

Creating a Life Insurance Trust
You may want to set up an Irrevocable Life Insurance Trust (ILIT). An ILIT removes the life insurance from your estate to help reduce estate tax while providing other benefits. For example, upon one's death, the proceeds of the life insurance policy may remain in the trust to provide income for the surviving spouse, but stays outside of the spouse's estate for estate tax purposes. Or, the trust could be used to distribute proceeds to children of a previous marriage. Although ILITs can be expensive and more complicated than owning life insurance directly, they may be an attractive option in certain situations.

As with all matters concerning estate planning, please consult your estate and tax specialists. Click here to return to Wills and Bequests.

Please note, individual financial circumstances will vary. The information on this site does not constitute legal or tax advice. Donor stories and photographs are for purposes of illustration only. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. Use of this site signifies your agreement with the terms of use. The content in this Planned Giving section has been developed for Open Door Mission by Future Focus. Please report any problems to section webmaster.
Revised: April 9, 2008 .

 
Open Door Mission
2828 North 23rd Street East
Omaha, NE 68110

Back to Home Page


©2007 Open Door Mission

phone: (402) 422-1111
fax: (402) 422-0737
odm@opendoormission.org
www.opendoormission.org
Open Door Mission is a Gospel Rescue Mission founded in 1954. Each day, Open Door Mission ministries provides 320 men, women, and children with safe shelter beds, serves nearly 1,500 hot nutritious meals, and provides preventive measures to more than 250 families living in poverty. to meet the basic physical needs of the hungry and homeless, the Open Door Mission’s day facility services provide free transportation from the downtown area to Open Door Mission and Lydia House. Open Door Mission offers life-changing programs for those recovering from life-altering addictions and abuse to break the cycle of homelessness and poverty.