By assigning the Chillicothe-Ross Community Foundation as your insurance policy’s owner and sole beneficiary, you could receive an immediate federal income tax charitable deduction in the year of the assignment. The value of the deduction is equal to the lesser of the policy’s replacement value or the cost (in terms of net premiums paid).
If the policy is not yet paid up, an income tax deduction is also allowed for contributions made to the foundation to pay subsequent premiums. There is an immediate tax deduction and substantial estate tax savings later. Any type of fund can be established with an insurance policy.
Life insurance allows you to make a much larger gift than you might have thought possible. A gift of insurance will not reduce your current flow of income.
You also can take out a new policy, vesting all ownership rights in the policy in the foundation and irrevocably naming the foundation as the beneficiary of the proceeds. Each year you pay the annual premium, which is fully deductible as a charitable contribution. On your death, proceeds pass to the foundation free of estate taxes.
There are many different life insurance products today. There are policies with premiums that “vanish” upon retirement or those that mature on the death of your surviving spouse (second to die insurance). As with all methods of charitable giving, it is wise to review these with your advisers.
Chilliothe-Ross Community Foundation as Primary or Contingent Beneficiary
If you prefer that a member of your family remain the primary beneficiary, you can make the foundation the contingent or successor beneficiary to receive the proceeds if your primary beneficiary predeceases you.
Using this method, there is no charitable deduction for the value of the policy or for subsequent premium payments. Any proceeds payable to the foundation at your death will not be subject to federal estate tax.