Epworth Children's Home

Epworth Children’s Home
2900 Millwood Ave
Columbia SC 29205

Gifts of Life Insurance

A brief guide to the opportunities of giving life insurance

How often have you thought about making a substantial gift to us, but didn’t feel your financial circumstances would allow it?

Perhaps there is a way—a way that is easier than you thought possible.  Through a gift of life insurance, you can make a substantial contribution to us—at a low out-of-pocket cost.  This webpage discusses many of the benefits and advantages of life insurance gifts, some of which may be applicable to your own circumstances.



A gift of life insurance is an excellent way to make a substantial, meaningful gift for a modest annual cash outlay.  For example, just a few hundred dollars a year in premium payment can often purchase a $100,000 policy.  Yet $100,000 earmarked for our endowment or similar purposes would be a significant commitment to our future.  Keep in mind, too, that many of the newer insurance products require that premiums be paid for only a period of perhaps ten years, after which time the insurance will continue in force with no additional premium payments.


Through the charitable income tax and estate tax deductions, Congress encourages philanthrophy.  If appropriately structured, a gift of life insurance qualifies for these deductions.  For example, if you name us as the owner and beneficiary of an existing policy, you will receive a charitable income tax deduction for the value of the policy contributed.  In addition, you will receive a charitable deduction each year for the continued payment of premiums.


If you are currently making annual gifts to us and would like for these gifts to continue beyond your lifetime, you may wish to consider a gift of life insurance.  Through naming us as the owner and beneficiary of a policy (or even by naming us as just the beneficiary), the proceeds from the policy could be used to endow your annual gift for many generations to come.  What easier way is there to make a lasting gift?


Making a gift to us at no cost to you seems too good to be true.  But it is possible. And better yet, the gift can be structured so that you will continue receiving income from the assets you contribute.

This use of life insurance is sometimes called asset replenishment or asset replacement.  It enables you to give us cash, stock, or other property now and use the tax savings to purchase an equal or greater amount of life insurance for the benefit of your spouse, children, or others.  Thus, the life insurance replaces the value of the donated assets so as not to reduce your heirs’ expected inheritance. Additionally, if you contribute cash, stock, or other property to us in the form of a “charitable remainder trust,” you will receive annual income from us—based on the assets contributed.

Asset replenishment thus provides you with an opportunity to make a significant gift without having to forego the income from your assets and without diminishing your estate.  In fact, because life insurance proceeds can be structured to be estate tax free, the beneficiaries of your estate may actually be better off than had they inherited the contributed property from your estate.


Almost everyone has some degree of life insurance coverage.  That insurance could be in the form of group protection provided by your employer or in the form of an individual policy you purchased from a professional life insurance agent or financial planner.  Whatever its origin, you may have more life insurance than you realize.  And, since the primary purpose of life insurance is to provide coverage for financial loss resulting from death, it could be that you have more coverage than you actually need.  After considering the benefits and advantages of a gift of life insurance, you may decide that it is one of the best possible ways for you to make a substantial charitable contribution.


Although everyone’s circumstances are different, the following examples represent situations in which a gift of an existing life insurance policy may be appropriate.

1.  When your children were younger, you may have purchased a life insurance policy to insure their education, or for some other purpose.  Now, years later, you find that your children are grown, well-educated, and out on their own.  Yet you continue to pay premiums on a policy originally purchased to meet a need that no longer exists.

2.  You may have purchased a policy to help assist you in retirement.  But your financial situation is now such that you no longer need it. It could be that your employer has provided you with an adequate retirement plan or simply that your financial circumstances have changed.

3.  Maybe you have an insurance policy in force primarily to pay the mortgage on your home in the event of your premature death. And now the amount left on the mortgage may be so modest (or zero!) that it is no longer necessary to maintain the policy.  Or, perhaps the house has long since been sold and your new home has no indebtedness.

4.  Perhaps you purchased a policy for some business purpose.  And now the additional financial protection is no longer needed.  Maybe the business has been sold or there is now enough cash available to meet the obligations in the event of your death.

5.  Because of concerns over the future payment of estate taxes, you may have purchased a policy to protect your estate and heirs from having to sell assets in order to raise cash for the payment of taxes.  But now your estate may be sufficiently liquid.


Maybe your circumstances are such that you are making premium payments on a life insurance policy you really no longer need.  By making a gift of the policy to us, you are no longer obligated to pay the premiums.  Instead, we will either pay the premiums or exercise some other option available to us under the policy.  However, if you do choose to continue paying the premiums, you would be entitled to an income tax charitable contribution deduction for the amount of premiums you pay each year.


It’s easy to contribute a life insurance policy to us.  Just check with your life insurance agent for details on which forms to complete.  Keep in mind, too, that you need not contribute an entire life insurance policy or designate us as the sole beneficiary of the policy in order to make a gift.  You can name us as a co-beneficiary, i.e., designate us as the beneficiary of a portion of the proceeds.

Or, perhaps a more sophisticated arrangement, such as a life insurance trust, would be better for your particular circumstances.  For instance, you could arrange for your insurance proceeds to be used first for the support of your spouse and children, and then, at a later date, be distributed outright to us.

Or, perhaps a more sophisticated arrangement, such as a life insurance trust, would be better for your particular circumstances.  For instance, you could arrange for your insurance proceeds to be used first for the support of your spouse and children, and then, at a later date, be distributed outright to us.

There are numerous ways of making gifts through life insurance.  What is discussed here is only an introduction.  For information on how to apply this general information to your specific situation, contact your life insurance agent or other estate planning professional.  We would be please to provide you, your life insurance agent, your attorney, or other advisor with additional information and be of assistance in any way possible.


Copyright 2000-2013 by Calder P. Sinclair.  All rights reserved.  This information is designed to provide accurate and authoritative information in regard to the subject matter covered.  It is provided with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services.  If legal advice or other expert assistance is required, the services of a competent professional person should be sought.