Life Insurance

A life insurance policy can be used to make a future gift to The Seattle Lighthouse for the Blind Foundation with a range of tax benefits. It can also be used to preserve the legacy passed onto heirs, by replacing other assets donated to charity.

Donors can make charitable gifts of life insurance policies in several ways:

• They can name the Seattle Lighthouse for the Blind Foundation as a beneficiary. This may be a good option for those whose beneficiaries have preceded them in death, or whose beneficiaries are covered by other life insurance policies or assets. (The proceeds from group insurance as well as individually owned insurance can be given to the Foundation.) Donors receive an estate tax deduction their lifetimes, as the gift is revocable.
• They can donate a policy that has been paid up. In this case, the donor names The Seattle Lighthouse for the Blind Foundation as a beneficiary and also transfers an immediate income tax deduction, reportable each year up to 50 percent of adjusted gross income; excess may be carried forward for up to five additional years.
• They can donate a new policy or a partially paid policy. The donor receives a deduction approximately equal to the policy’s current cash value, and also receives deductions for continued premium payments. This makes a new policy a particularly economical way to make a significant future gift to The Seattle Lighthouse for the Blind Foundation.

Life insurance can also be used to replace other assets given to charity. Giving away appreciated property, such as securities or real estate, may make sense for tax reasons. Tax savings and income from the gift (if the gift is for a life income arrangement, such as a charitable remainder trust) can be used to purchase a life insurance policy with a value equal to that of the donated assets. If the policy is owned by a properly structured trust, the proceeds may pass to children free of estate tax.

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