Life Insurance Policies Can Support Us After Your Lifetime
Gifts of Life Insurance: Getting Started
Most of us think of life insurance as protection, especially for our loved ones. But it is also a powerful tool you can use to champion our work far into the future. Life Insurance is an asset you may not think of donating to Alpha Sigma Phi Foundation until you hear how powerful, practical, and simple it can be. Here's what you need to know.
How It Works
When you own a life insurance policy, with accumulated cash value, you’re essentially sitting on a pile of money. When the original purpose for the protection no longer applies – such as to educate children now grown or to provide financial security for a spouse now deceased – your life insurance can be redirected to help support a worthwhile cause. One option is simply to name the Alpha Sigma Phi Foundation as the primary beneficiary. (Naming us as beneficiary while you retain ownership of the policy, however, does not qualify you for an income tax deduction.) Or, you can name us as the beneficiary and also assign us ownership of the policy as a current charitable gift. Doing so provides you with tax benefits as outlined below.
How You Benefit
When you assign us ownership of a life insurance policy and also name us as the beneficiary, the following good things happen:
- You receive an income tax charitable deduction, available under most circumstances
- You realize tax savings from us of the deduction, and these savings can be invested for future income.
- You reduce your future estate tax liability.
Donating a New Policy – Perhaps you don’t own an existing policy, but still realize how beneficial giving life insurance can be. If so, you can – in most states – purchase a new insurance policy and name a qualified charity like ours as the beneficiary and owner of the policy. Rather than paying premiums to the insurance company, you make tax-deductible cash gifts to cover the annual premiums. Even greater leverage is possible when two donors, usually spouses, purchase a two-life and second-to-die policy. With two lifetimes before the payment of death benefits, a future gift to us will cost you even less.
Is this Gift Right for You?
If you can answer yes to each of the following questions, you may find that donating an existing life insurance policy makes sense for you. If not, we can help you find an option that’s a best fit.
Do you have a life insurance policy that no longer fits the need for which it was originally intended?
Would you like to receive tax benefits from your gift this year?
Would you like to support our organization?
If you think that a gift of life insurance might be right for you, or you want to talk about other options for supporting our work, please contact Matt Humberger, Vice President and Chief Operating Officer of the Foundation at firstname.lastname@example.org.
But What About the Kids?
You want to make a significant gift to the Alpha Sigma Phi Foundation but not at the expense of your kids. Is it possible to do both? As a matter of fact, yes—with life insurance.
If making a donation to the Alpha Sigma Phi Foundation threatens to reduce the amount you can leave to your loved ones, life insurance can make up the difference. Depending on your age, health and marginal income tax rate, the money you save in taxes thanks to the charitable deduction you will receive for your donation can be used to purchase life insurance with death benefits equal to the value of your gift.
Another Option - Rather than owning the new life insurance yourself, it may be preferable to own the policy inside an irrevocable life insurance trust (also called a wealth replacement trust). You would typically name a bank trust department or trust institution as trustee. Doing so will enable your heirs to receive the death benefit of the life insurance without having to pay estate taxes. Plus, life insurance is generally income tax–free to your beneficiaries.
How does a trust work? A trust makes a person or institution the owner of your property, held for a loved one’s or your benefit and administered by the trustee you name.
Please contact Matt Humberger, Vice President and Chief Operating Officer of the Foundation at email@example.com if we can answer any questions you have about this way to support our mission.
How to Complete your Gift
A gift of life insurance allows you to make a sizeable impact on our work without diluting other assets you've earmarked for your family. Start by contacting your insurance company to arrange for assignment of ownership of the policy at its current value to the Alpha Sigma Phi Foundation. Then, one of three scenarios could unfold:
- We might surrender the policy for cash once we receive ownership, providing us much-needed funds and relieving you of the obligation to make ongoing premium payments.
- We may keep the policy in force so that the original face value will ultimately become your gift. In this case, you pledge to make cash gifts at least annually, which we will use to pay the premiums. The gifts are tax-deductible.
- Another alternative is that we might decide to accept a smaller amount of paid-up insurance and still keep the policy in force for your lifetime, and you would be relieved of the obligation to make further premium payments.
For More Information
Consulting an estate-planning attorney is a smart investment that can save you and your family money and heartache in the long run. Please seek legal advice before deciding who will get what in your estate plan. Please contact Matt Humberger, Vice President and Chief Operating Officer of the Foundation at firstname.lastname@example.org if we can answer any questions you have about supporting our organization.
We hope our website has answered many of your questions about supporting our mission through a gift of life insurance. Take these steps to put what you've learned into action.
- Make an appointment with your attorney or other professional advisors to discuss how a gift of life insurance might fit into your plans.
- Please contact Matt Humberger, Vice President and Chief Operating Officer of the Foundation at email@example.com to discuss your particular situation and to ask any questions you may have about supporting us with a gift of life insurance. We're here to help.