Most people own some form of life insurance. An important, but frequently overlooked, role of life insurance is the one it can play in planned charitable giving.
Primary Beneficiary
A donor can name the University of Dayton as the primary beneficiary of a life insurance policy. The donor retains ownership of the policy and has access to the policy's cash value. Although the face value of the policy will be includible in the donor's gross estate, no federal estate-tax liability will result because of the charitable deduction. Since the donor retains ownership of the policy, no income-tax charitable deduction is allowed for the value of the policy upon designation of the charity as the beneficiary or for subsequent premium payments.
Successor Beneficiary
A donor can also name a charity as a successor beneficiary to receive the proceeds in the event the primary beneficiary(ies) are no longer living. Once again, should the proceeds be paid to the charity, the donor's gross estate will be allowed an estate-tax charitable deduction.
Request our free booklet, "Gifts of Life Insurance."
