Your life insurance may have a new purpose to serve
You may have purchased a life insurance policy years ago when you wanted to protect your family from financial hardship in the unlikely case of untimely circumstances. Now that your children are grown and independent, your mortgage is paid off, and you have accumulated sufficient assets in your estate to pass on to your family, you may no longer need your life insurance policy for its financial protection.
If this is your situation, consider making a gift of your life insurance policy to St. Lawrence University. The value of your policy can provide generous support to our mission without affecting your cash flow.
Give a paid-up life insurance policy
A paid-up life insurance policy is a policy that will stay in force without any additional premium payments. A paid-up life insurance policy is a valuable asset and makes an excellent gift.
When you give your paid-up insurance policy to us, we will either cash in the policy immediately and use the proceeds, or maintain the policy until maturity and receive the death benefit of the policy.
Because this kind of gift is irrevocable, you will receive an income tax charitable deduction for the value of your gift at the time you transfer your policy to us, providing tax savings if you itemize. You will also remove your insurance from your estate, potentially saving estate taxes, as well.
In order to make your gift, you must assign St. Lawrence all ownership rights to your policy and make St. Lawrence the irrevocable designated beneficiary of the policy. Usually this can be accomplished by completing a simple form from your insurance provider. Be sure to identify us as: St. Lawrence University, 23 Romoda Drive, Canton, NY 13617, Federal Tax Identification Number: 15-0532239
Make St. Lawrence a designated beneficiary of your policy
Another great way to make a gift to us with your life insurance policy is to make St. Lawrence a designated beneficiary of your policy. When your insurance reaches maturity, we will receive the amount or proportion you designate. You can change your designation at any time, giving you the flexibility to revise your gift for any reason.
Because your gift is revocable, you do not receive an income tax charitable deduction at the time you create the designation. Rather, your estate will receive an estate tax deduction for the amount your insurance policy distributes to us if your estate is subject to tax.
It is very easy to make St. Lawrence a designated beneficiary of your life insurance policy. Simply contact your insurance agent to make a change on your policy's beneficiary designation form. Be sure to identify us as: St. Lawrence University, 23 Romoda Drive, Canton, NY 13617, Federal Tax Identification Number: 15-0532239
Loan against policy will create taxable income
If you give a life insurance policy on which you have an outstanding unpaid loan, you will be considered to have sold your policy for the amount of the unpaid loan. As a result, you will have to declare a portion of the loan as taxable income. You may want to pay off your loan prior to making your gift in this case.
If you plan to designate St. Lawrence as a revocable beneficiary of your policy, the existence of an unpaid loan against your policy will not affect your tax picture.
A few states will not allow you to give life insurance to a charity
For your gift of life insurance to be valid, your state of residence must consider a charity to have an "insurable interest" in your policy. Most states do, but verify that this is true in your state before you make your gift.