Life Insurance
Life insurance makes it possible for a donor to convert a modest lifetime contribution into a much larger gift at death of insurance proceeds.
What are some benefits of giving life insurance?
Many donors whose families are grown find themselves overinsured and capable of donating an insurance policy to Oxfam America.
Donors who wish to make a revocable gift of life insurance proceeds may do so by simply designating Oxfam America as beneficiary. Or, a tax deductible gift can be made by irrevocably designating Oxfam America as both policy owner and beneficiary.
What are some details and tax issues regarding gifts of life insurance?
The income tax charitable deduction for a gift of a paid-up policy equals the replacement cost of a comparable policy (except to the extent it exceeds the donor’s original cost). If Oxfam America is designated as a beneficiary but not policy owner, the gift is revocable and therefore does not qualify for the income tax charitable deduction.
The amount of the income tax charitable deduction for a policy on which future premiums are payable is roughly equal to the policy's cash surrender value. The exact value is the "interpolated terminal reserve" value available from the insurance company policyholder service department.
The value of the insurance proceeds will be included in the policy owner's estate for federal estate tax purpose, and is offset by the estate tax charitable deduction for the proceeds paid to Oxfam America.
If Oxfam America owns the policy and the donor pays future premiums, the premium payments qualify for the charitable income tax deduction (limited to 50 percent of Adjusted Gross Income for payments directly to Oxfam America, or 30 percent of AGI for payments made directly to the insurance company.
Contact our gift planning specialist for more information.