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UK Philanthropy Gift & Estate Planning

Life Insurance: Expand Your Charitable Reach

Life insurance is a tool with many purposes. One satisfying purpose is to use it to make a significant gift to UK. Whether its creating a new policy to leverage the most from your annual gifts, or giving an existing policy that you no longer need, life insurance can be a powerful tool to reach your philanthropic goals.

A gift of life insurance has many perks:

Cost Efficient
You can make a significant gift even if your means are limited today.By making smaller premium payments for a period of years, you can leave a sizable gift.

Tax Beneficial
For a new policy, with the University of Kentucky as the owner and beneficiary, premium payments you gift to UK maybe deductible if you itemize. For existing policies, you may receive an income tax charitable deduction for the value of the policy if you itemize. Also, many donors consider the value of lifetime income tax charitable deductions for the premium payments as an advantage versus a bequest, which produces no current income tax benefits.

Secure and Confidential
Life insurance is a contract and can’t be changed by heirs. If you make the University of Kentucky policy owner and beneficiary, it’s not included in probate and remains confidential. Also, many donors choose to give policies that have a guaranteed contractual death benefit. This way, they know UK will receive the gift they intend to make.

Maximized Philanthropy
Life insurance gives you a low-cost option to make a more substantial gift, helping you make a bigger impact than you may have thought possible. This can be a great way to ensure a scholarship fund, faculty chair or professorship, or programmatic fund is fully endowed to impact generations to come.

Life Insurance

3 Ways to Arrange
a Life Insurance Gift

Create a New Policy

Many donors choose to create a new life insurance policy with UK as the owner and beneficiary to meet a future philanthropic goal. In most states, you can enter into a new insurance contract with a qualified organization such as UK as the beneficiary and owner of the policy.

It is important to work with a qualified agent who can explain the benefits of permanent insurance, guaranteed death benefits, premium payment schedules, and help you select a policy that best suits your goals. We will work with you and your agent to make sure the selected policy meets UK’s requirements for ownership. UK owns many policies and has a dedicated team in place to carefully manage these assets.

When you name UK as the owner and beneficiary of the policy, the annual premium payments gifted to UK will provide a income tax charitable deduction if you itemize. Many donors choose to couple the gift of life insurance with additional annual gifts so they can enjoy the benefits of their philanthropy today. This type of gift strategy can ensure the students and programs you love are impacted now and into the future.

Life Insurance

3 Ways to Arrange
a Life Insurance Gift

2 Give an Existing Policy

When you name UK as the owner and beneficiary of an existing policy, you qualify for a federal income tax charitable deduction for the lower of the policy’s fair market value or your cost basis. For paid-up insurance, the fair market value is the cost of replacing the coverage with a new policy issued today based on the current age of the insured at the same face amount as the original policy.

If premiums are still payable on the policy, the fair market value is usually close to the cash surrender value. You may stipulate to us that you wish to no longer make future premium payments, allowing us to access the surrender value immediately for our cash needs.

An alternative, however, may be even more attractive. The policy can remain ours and will stay in force so that someday we receive the original face amount. You pledge to make yearly cash gifts to UK, which we will use to pay the premiums. The gifts are deductible if you itemize, and the policy is thereby kept in force.

3 Retain Ownership of an Existing Policy and Name Us as a Beneficiary

If you would rather retain ownership of a policy for your own financial security or that of others, you have the following options:

  • Name us as the sole or partial primary beneficiary of the policy, leaving any balance to your heirs. Because you retain ownership of the policy, you have the right to change the beneficiary at any time in any way you wish.
  • Name UK as the contingent beneficiary, so we receive the death benefits only if your primary beneficiary predeceases you.
  • Create a separate trust named to receive the death benefits, with terms providing for the financial support for one or more named loved ones for a specific term of years or for life, after which the trust terminates and its assets pass to the University of Kentucky.

Life Insurance

Next Steps

When considering any of these charitable arrangements, it is critical to have a skilled planning team with expertise in finance, law, taxes and life insurance. We would be happy to answer any questions regarding charitable giving that you or your advisors may have. Feel free to contact us at no obligation.

Gift and Estate Planning
Phone: (859) 257-7886
Email: giftandestate@uky.edu
Sturgill Philanthropy Building
Lexington, KY 40506-0015

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Life Insurance: Expand Your Charitable Reach

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