Kappa Alpha Order - Educational Foundation

Most people have some form of life insurance, either term or cash value insurance. But also, many people who purchased insurance when they were young find in their later years that the purposes for which they originally purchased the insurance no longer apply.

If you're one of these people, let our organization suggest another use of your insurance policy: as a way to eventually make a significant charitable gift that might not be possible during your life.

Giving an Existing Policy
When you make a gift of an insurance policy that you own, we must become the new owner and beneficiary. This will allow you to receive an income tax deduction for either the total of the premiums paid or the fair market value of the policy, whichever is less.

Actually, the phrase used by insurance companies for policies for which premiums are still due is "interpolated terminal reserve," which is slightly different than the cash value of the policy. The deduction is limited to 50 percent of your adjusted gross income, with the ability to use any excess deduction over the next five years.

Most term insurance policies do not have any cash value, and so donors receive no deduction for making a gift of a term life insurance policy.

Giving a New Policy
If you buy a new policy and then donate it to us, the premiums you would continue to pay are generally deductible on your income tax return. For example, you could give us enough money to pay the premium, and then we could pay the insurance company. (Remember, our organization must be the owner of the policy; the insurance company will send the premium notices to us, not the donor.) This is also true for term insurance policies.

Leverage Your Gift
Life insurance is an asset that allows a donor who does not have large assets to make a significant gift. By making small payments each year for a limited number of years, a donor can leave a bequest of sizable proportions.

If you'd like more information about gifts of life insurance, we will be glad to discuss the options for your particular situation. Please contact Erik Showalter at 540-460-1401 or 540-463-1865 or eshowalter@ka-order.org.

Click the icon to request a FREE guide to giving life insurance.


Copyright © The Stelter Company, All rights reserved.

The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.

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