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Life Insurance Policies

• Your client can make the Community Foundation or another nonprofit the irrevocable owner of a life insurance policy by transferring a policy that is no longer needed by the client’s family. Here’s how it works.
• Your client can also name a charity as the revocable beneficiary of a life insurance policy by completing the policy’s change of beneficiary form. Here’s how it works.
• Because life insurance policies cost “pennies per dollar” of coverage, donating a policy to a charity is a way to make a sizable gift at a modest cost.
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  Gift of life insurance policy example:

  • Client profile:
    • Marian holds a life insurance policy with a cash surrender value of $400,000. Every year she makes a charitable gift to a local nonprofit environmental conservation group that manages her local park.
    • Marian is worried that after she dies, in the absence of her yearly gifts, the nonprofit will be unable to maintain this piece of land and will end up selling it to developers.
  • Client opportunity:
    • Marian transfers ownership of the life insurance policy to the Community Foundation.
    • Marian and the Community Foundation create an endowed designated fund description.
    • Marian continues to make premium payments on the life insurance policy, but because she does this by making yearly gifts to the Community Foundation, who then uses the gift to make the payments themselves, Marian is able to claim an income tax deduction on the payments.
    • After Marian’s death, the policy pays the Community Foundation as designated beneficiary. The Community Foundation places the proceeds of this payout into Marian’s fund, which is invested in the Community Foundation’s larger Investment Objectives. Marian’s donor advised fund grows with earnings over time.
    • The fund then provides yearly grants to the nonprofit that maintains the park she loved.

  Please contact Elena for further details about this type of gift.

  Life insurance policies received by the Community Foundation are subject to the approval of the Community Foundation’s Board.