Life Insurance

Life insurance plays an important role in the estate plans of many people. Though most people have some form of insurance, its common to have a policy that may no longer be needed for its original purpose. For example, do you have a policy:

  • To provide money for a spouse or children who no longer need it?
  • To cover a mortgage on a home or other property that is now paid off?
  • To cover educational expenses youve already paid from other funds, or to protect a business that no longer exists or needs help?

It may be beneficial to donate such policies to Scouting. Many donors also buy new policies to give to their local council. In general, if you donate a new or existing policy to Scouting, you can deduct from your income taxes an amount roughly equal to the policys cash surrender value, as well as any annual amounts you pay to help keep the policy in effect.

Example: A donor has a $50,000 life insurance policy she no longer needs. It has a cash surrender value of about $32,000 and she continues to make annual premium payments of $1,100. If she names the council owner and beneficiary of the policy, she receives a tax deduction of about $32,000. She also receives a deduction for her annual gifts to the council to help keep the policy in force.

There are a number of ways you can use life insurance in your charitable gift planning for Scouting:

1.   Name your local council as primary or secondary beneficiary of an existing policy.

2.   Name your council owner and beneficiary of an existing policy.

3.   Buy a new policy and contribute it to the council.

4.   Buy a policy on the life of someone else and contribute it (for donors who may not qualify personally for affordable coverage).

5.   Buy a policy that benefits your heirs to replace a gift to Scouting youve already made.

Example:  A donor gives his council highly appreciated land worth $100,000. However, his children were not excited about losing part of their inheritance. So the donor replaces the land with a $100,000 second-to-die policy and names his children as beneficiaries. He pays for the policy with part of the tax savings he got from his land gifts charitable deduction. The children are happy again.

  • Income tax deductions for a gift of insurance may vary depending on the type of policy donated. Seek advice from your own advisor, and get an appraisal of your policys value before you donate an existing policy.
  • You will receive a tax deduction, and the value of the policy will be removed from your estate for probate purposes, only if you name a charity both owner and beneficiary of the policy.