Take for example Elaine and Jack. They purchased a Life Insurance policy for Jack shortly after the birth of their only child over 40 years ago. They then purchase a policy for Elaine when she returned to work. At the time their son was in junior high school. Their original purpose for having life insurance was to provide income replacement for the surviving spouse and ensure that he or she could afford to send their son to college.
Elaine and Jack are now retired and their son finished his graduate studies over 15 years ago. When they decided to make a substantial Gift to their favorite Nonprofit organization they initially overlooked their paid-up Life Insurance policies. The couple soon realized that they no longer needed their insurance for its intended purpose and giving it as a gift to charity would provide some tax benefits for them as well.
If this is your situation please consider donating the policy to favorite charity. You usually may claim a charitable deduction for approximately the policy's cash surrender value, and the proceeds are completely removed from your estate. Every person's situation is different. Before making this or any other Charitable Contribution please consult your legal or financial advisor.
About the Author
Jane King is a philanthropy consultant and writer. She is the author of The Giving Blog.