Leverage Your Gift Using Life Insurance

Imagine this scenario: A couple in their late 50's humbly and honestly asks their pastor if he would rather have $37,000 today, or $250,000 when they die from the proceeds of a paid-up life insurance policy that would be owned by the parish. The parish is solvent and can meet its financial obligations.  What is the correct response?  Should the pastor take the unrestricted gift, or allow the generous parishioners to make a gift that will be transformative when it is realized?  

This scenario recently played itself out in one of our parishes.  The pastor prudently took it to the parish finance council, and it was ultimately decided to accept the paid up life insurance policy.  The donor got a tax deduction for the full amount of the gift and in the future the parish can surrender the policy for the cash value or wait until the donor dies to collect the death benefit.  

Matthew 5:14-16 - Be light for others
Follow-up: T
he donors humbly allowed their story to be shared.  Several other parishioners thought it was such a good idea that they also took out policies and gave them to the parish.  One couple's example of leveraging their giving was additionally leveraged for far reaching impact for their faith community by the idea being shared.  The parish now has 19 Catholic Legacy Society members.

Ways to Make a Life Insurance Gift

  1. Give a policy you already own.  Many people have small policies from when they were children, or even larger policies for which they no longer need the death benefit.  Ownership of a paid up policy can be transferred to the parish, the archdiocese or CFNEK.  If you are able to itemize your taxes you may be eligible for a tax deduction for the gift.
  2. Get a new paid-up policy, and give it to charity. Consult with your pastor. Your parish may greatly appreciate a gift like this.  If your health allows you to qualify for the insurance it may be possible to make a gift that is much larger than you would be able to otherwise.  
  3. Make the church the beneficiary of a policy you own.  This may be the simplest way to leave a gift to the church at your death. This is not a substitute for a will or proper estate planning, but it can be a simple way to incorporate charitable giving into your estate plans.  Notify your attorney and/or accountant of your desire to make a gift to the church.  Always consult professional guidance when making changes to your will or estate plan.

There are many ways to use life insurance in estate planning and charitable giving.  Please contact CFNEK if you would like a free consultation with a certified gift planning professional - (913) 647-0365 or cfnek@archkck.org.