Advantages of Giving Through Life Insurance
You can use life insurance in many ways for giving to the Church through your parish, the Archdiocese of Detroit Endowment Foundation, Sacred Heart Major Seminary or other archdiocesan institutions. Through life insurance, you can continue to support those Church ministries that have relied on your generous lifetime gifts after your death. Some advantages of giving through life insurance policies are:
- Your wishes will be carried out as specified in the policy
- The Church will receive the amount specified in the policy
- The proceeds will be paid promptly in cash and will not be diminished by probate costs
- Your gift will not be exposed to public view or contest
- The proceeds usually exceed the net amount of the premiums you paid on the policy; thus, your gift is multiplied
- You may be entitled to tax savings on your gift of the policy
How to donate through life insurance
There are several ways to donate life insurance to the Church.
If you no longer need your policy for your estate or family's protection, you can make a gift now by assigning your policy to the Church. An assignment of the policy transfers all your rights of ownership. These rights include changing the beneficiary, borrowing from the policy, or surrendering the policy for its cash value.
You are entitled to an income tax charitable contribution deduction for the replacement value of the policy, or the net amount of premiums you have paid, whichever is less. You also will be entitled to an income tax deduction for any premiums you pay on the policy after you assign it to the Church. Moreover, you will have removed the death benefit proceeds from your estate that may otherwise be subject to estate tax.
If you no longer need the death benefit of your policy, but you want to retain ownership, you can give the death benefit proceeds to the Church by naming your parish, the foundation, the seminary or other archdiocesan institution the beneficiary of your policy. You can name one or more of these Church institutions as:
- Primary beneficiary, to take the proceeds upon your death
- Contingent or secondary beneficiary, to take the proceeds if the primary beneficiary predeceases you; or
- Partial or residual beneficiary, to take the proceeds along with ther named beneficiaries
By naming the Church as a beneficiary but retaining ownership of the policy, you will not be entitled to an income tax charitable contribution deduction. However, your estate will receive an estate tax charitable gift deduction when the Church receives the policy proceeds.
If you would like to use your life insurance policy to contribute to the Church, you should contact your insurance agent or your insurance company's home office for the forms needed to assign the ownership or change the beneficiary of the policy.
Other uses of life insurance in charitable gift planning
You may use life insurance to replace assets in your family's estate that you contributed to the Church through a gift annuity or charitable remainder trust. The income tax savings and possibly increased cash flow from those charitable gifts would provide funds for the new policy premiums. Moreover, your new policy can be assigned to an insurance trust that you establish to remove the proceeds from your estate for tax purposes.