By Deacon Michael Shumway, CFRE
“Do you remember…”
How many conversations or reminiscences begin with that question? Today I’m asking, “Do you remember when college students and others went door to door selling inexpensive whole life insurance policies?” This was often a way to either work your way through school or work your way around the country.
These tended to be small policies that could be “paid up” in a very short period of time. Today many of those old policies are gathering dust in drawers all over the country.
Many of us have purchased Whole or Universal Life Insurance through the years. In some cases, we no longer need those policies, or we no longer keep up with the premiums and let them use up their cash value to stay in force.
If you have one of these policies, or even a Term Life policy that you are keeping in force, but no longer need, you can give these policies to your parish or to the Archdiocese and receive both a present and, perhaps, an ongoing tax benefit.
Here’s how it works. If you have a paid up Whole or Universal Life insurance policy, you can give that policy to charity and receive a tax deduction for the cash value of the policy. If it’s not completely paid up yet, you can get an immediate deduction for the current cash value and then you can make gifts to the Archdiocese or your parish equal to or greater than the premiums to keep the policy in force. Those gifts are also tax deductible. For a Term Life policy, you can gift the policy and then make gifts to cover the premiums and receive tax deductions for the amount of those gifts.
To make this happen, you work with your insurance agent to transfer ownership of the policy to your parish or the Archdiocese. Then you make your parish or the Archdiocese the beneficiary of the policy. Your agent can walk you through all of this very easily. All the paperwork is then given to the beneficiary and you start making those gifts of premiums (if necessary).
Should you later decide to stop making those premium gifts, the beneficiary may either keep the policy in force, let it lapse, or cash it in for its current cash value.
A gift of life insurance might be a good way to convert an asset you don’t need into something that may provide some tax benefits. Do you have a forgotten policy gathering dust somewhere? It could mean savings on your taxes next year!
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