Life Insurance Policy Contributions

Pack a Punch with this Smart Giving Tip

If you want to make a significant non-cash contribution to the UU Saratoga Capital Campaign, here’s a strategy that may work for you.

Perhaps you own a permanent life insurance policy, purchased years ago as a safety net for your family if you died prematurely. You might not need it anymore—kids are grown and on their own, your home mortgage is paid off or nearly so, and you’re planning to leave other financial assets to your family in the future.

Indeed, maybe you’ve thought about cashing out your no-longer-needed life insurance policy, so you won’t have to pay more premiums. However, if you do that, you’ll owe income tax on the money you receive. What to do?

As an Alternative, Donate Your Life Insurance Policy

When you name UUCSS as the irrevocable policy owner and beneficiary, you get an immediate federal income tax charitable deduction That’s the lower of your policy’s fair market value (the price of replacing the coverage with a new policy) or your cost basis (usually what you paid in premiums). Oftentimes the fair market value is close to your policy’s cash surrender value. (If your gift value is over $5,000, you’ll also have a formal appraisal done for IRS purposes.) You’ll specify that UUCSS has the right to access the policy’s surrender cash value immediately.

For those who want to make an important donation to the Capital Campaign without giving cash or liquidating other assets to write a check, this may be a better way to donate.

You can sign over a life insurance policy completely, or with some insurance companies, you can even divide a large policy into two policies. Then you may donate one of those policies to UUCSS while keeping the other one.

Ask your financial professional or tax preparer about the best way to make your Capital Campaign contribution to UU Saratoga. To learn more, visit https://www.irs.gov/pub/irs-pdf/p561.pdf or contact Capital Campaign team member and UUCSS Treasurer, Mike Goodwin at jmgoodwin55@gmail.com or team member Kathleen Rehl at KathleenRehl@gmail.com.