Life insurance is often overlooked and underestimated, yet it can be a valuable and financially efficient way of making a planned gift to Elmira College. A charitable gift of life insurance is a wonderful way to use policies that you will not need to benefit future Elmira College students. Elmira College accepts various types of life insurance gifts, including:
- Naming Elmira College as a beneficiary of an existing life insurance policy.
- Donating an existing life insurance policy to Elmira College.
- Purchasing a new life insurance policy for Elmira College.
Naming Elmira College as a Beneficiary of your Life Insurance Policy
You can name Elmira College as a beneficiary (full or % interest) of a permanent life insurance policy. You would simply do this on the beneficiary designation form provided by your life insurance company. Since you are not irrevocably assigning ownership of the policy to Elmira College, you would not receive a tax deduction for your gift; however, you would receive an estate tax deduction for the amount that would ultimately pass to Elmira College.
Donating an Existing Life Insurance Policy to Elmira College
If you have a life insurance policy that does not require additional premium payments (a "paid-up" policy), you might wish to donate it to Elmira College. By irrevocably assigning ownership of the policy to Elmira College, you make a completed charitable gift. Since the policy no longer belongs to you, you can take an income tax charitable deduction equal to the lesser of the replacement value of the policy or your cost basis in the policy.
A gift of a policy that is not fully paid up would also generally entitle you to an income tax deduction. [Note: This amount would be determined by your insurance company.] In both instances, your gift would be deductible up to 50% of your adjusted gross income, with a five-year carryover for any excess.
If you continue to make premium payments on the policy, you will receive a tax deduction for the payments. After your lifetime, the donated policy would be excluded from your estate and be fully deductible for estate tax purposes.
Purchasing a New Policy for Elmira College
You can also decide to purchase a new life insurance policy, designate Elmira College as beneficiary and assign ownership to Elmira College. Whether you make one single premium payment or pay premiums over a number of years, your deduction in the first year will be the gross amount of the premium paid in that year. Payments made in additional years would result in additional income tax deductions.