South Christian
High School

Foundation Insurance Gift - Questions and Answers

What is a Life Insurance Gift?

Your life insurance is a remarkable asset, more valuable than you may have imagined. A life insurance gift means you make SCHSF the beneficiary on a life insurance policy you no longer need or on a new policy taken out for charitable purposes.

How do modest payments yield substantial results?

Say your children are grown, you are living comfortably-and then you get a cash inheritance from your parents. You consider honoring their legacy by writing a $5,000 check to SCHSF. But you can make a more dramatic impact with that same amount by purchasing a whole life policy.

For example, with a single, tax-deductible $5,000 payment, a 50-year-old woman could buy a $14,000 whole life insurance policy from a well-known company-and make SCHSF the owner and beneficiary. By age 65, dividends would increase the account value to $25,000. If you died at age 81, her whole life policy would yield $50,000, a substantial ten-fold yield on her relatively modest one-time gift.

Imagine how satisfying it would be to designate that life insurance gift for a specific foundation goal, such as the start-up of a new programs to enhance students' education.

Can I give a paid-up Life Insurance Policy?

Yes, many parents do this when their children are grown and married and no longer living with them. If you hang on to a $50,000 life insurance policy you no longer need, the proceeds at death may be depleted by federal estate taxes. If, however, you make SCHSF the beneficiary, then, at your death, the full $50,000 proceeds will go to SCHSF--undiminished by estate taxes.

Can I give a policy I haven't finished paying for?

Yes, and your remaining premiums will be fully tax deductible.

Does it make sense to buy and donate a new policy?

Many donors choose this method when they are living comfortably in a high tax bracket. Buying a life insurance policy for SCHSF can make your charitable dollar accomplish more. Say you make an immediate property gift, such as land or appreciated stock. That immediate gift saves you enough in income taxes for you to buy-and donate-a life insurance policy worth far more than the premiums it costs you. New policies can often be paid off in five to seven years.

How do I arrange for a Life Insurance Gift?

It's easy to arrange. You simply contact your insurance company and name SCHSF as the beneficiary. Though we strongly advise all Christians to have a will, you can usually make a life insurance gift even if you don't have a will.

Do Life Insurance Gifts provide any tax advantages?

If you give a paid-up policy, you get an income tax charitable deduction roughly equivalent to the policy's cash surrender value. Cash surrender value is less than face value. For example, a $50,000 life insurance policy may have a $20,000 cash surrender value.

If you give a brand-new policy or an existing policy on which you're still paying premiums, you get the same income tax charitable deduction-plus every premium you pay on the donated policy will be deductible in the year you pay it.

How will my Life Insurance Gift benefit South Christian High School Foundation?

If SCHSF cashes out your life insurance policy, the foundation principal gets an immediate boost. If SCHSF waits till your death to receive the policy's face value, then the proceeds will be received without delays, income and estate taxes, probate and administrative costs, brokerage fees, or other transfer clauses.

Who can answer my questions about Life Insurance Gifts?

South Christian High School's Development Office can tell you exactly what a life insurance gift will do for you. Call us at 455-1675 or email us at office@schs.org to work out the details.