Many have found a gift of life insurance is a practical and affordable way to make a meaningful charitable gift, and there’s great flexibility depending on the donor’s financial situation.
By making InFaith the owner and beneficiary of the life insurance policy contract, the donor can take a charitable tax deduction for the value of the policy, as well as any ongoing premium payments they make. Upon the insured’s death, the death benefit goes to the donor’s charitable fund at InFaith, benefiting charities selected by the donor over time.
How to Establish a gift of Life Insurance at InFaith
- Create a Fund online at InFaith, or complete and send the Fund Workbook to InFaith. Please include a copy of an in-force illustration of the policy if possible.
- InFaith drafts a Fund Agreement based on the charitable intentions of the donor, and sends it to the donor for signature. The financial representative also receives a copy.
- For new policies, complete the life insurance application with the insured as owner and InFaith as beneficiary. (Donors may also choose to give an existing policy).
- Donor assigns ownership of contract after fund is established. To ensure the donor receives the maximum tax deduction possible for their gift of a new contract, have your client complete and sign Absolute Assignment Form 10AA on the same date as the insurance application.
- InFaith’s tax ID number: 41-1802412
- InFaith’s address:
InFaith Community Foundation
625 Fourth Avenue South, Suite 1500
Minneapolis, Minnesota 55415
- The form must be signed by the contract owner in the presence of an impartial witness or notary public.
- Send the insurance application, absolute assignment form and the first premium payment directly to Thrivent Financial.
- The insured retains the contract and receives premium notices.
- Premium payments on charitable life insurance contracts qualify as charitable contributions and are substantiated for tax purposes by InFaith. Premium payments should be made payable to Thrivent Financial. Thrivent will notify InFaith premium is received, and InFaith will send donor gift receipt. Please contact InFaith if the donor wishes to pay premiums using publicly-traded securities or mutual funds. *Note: This process does not apply for QCDs used to pay premiums. In this case, the QCD should be made directly to InFaith, and then InFaith will use the gift to pay the premium to Thrivent.
Tax and Financial Benefits of Giving Life Insurance
- Donors receive a charitable tax deduction for each premium paid.
- Once the policy has been assigned to InFaith, donors can pay premiums using cash or publicly-traded securities, bypassing capital gain on securities held more than one year.
- Since life insurance is typically a non-probate asset, the life insurance proceeds will be paid directly to InFaith, potentially avoiding any delay in payment.
- Thrivent Financial will send premium notices directly to your client. Your client should make premium payments directly to Thrivent, unless you expect the amount of the premium to exceed 30% of your client’s adjusted gross income in that calendar year. If so, it may provide a greater tax benefit to make the payment directly to InFaith, because charitable deductions for premium payments paid directly to the insurance company are limited to 30% of the donor's adjusted gross income, excess deductions may not be carried over to future tax years. Payments made directly to InFaith are limited to 60% (for gifts January 1, 2018 and thereafter) of donor's adjusted gross income and can be carried over for up to 5 additional tax years. Contact an InFaith Gift Planner to discuss this situation.
The IRS now requires an independent qualified appraisal for all non-cash charitable gifts of $5,000 or more. These "non-cash gifts" include life insurance made through absolute assignment to a charity, such as InFaith. Please note this ruling only applies to the absolute assigned value of an insurance policy, not the death benefit nor the continuing insurance premium payments made once InFaith is named owner.
InFaith has retained the services of an independent qualified appraiser to assess insurance gifts of $5,000 or more. This may be an issue for gifts of existing policies, or new policies with large initial premium. There will be no out-of-pocket cost to the donor for this service. The only effect to donors is the reduction of the charitable contribution (and the corresponding charitable deduction), by the amount of the appraisal fee, which is estimated to be $200.
Benefits to you, the FINANCIAL PROFESSIONAL
InFaith will support you with a full range of charitable products and services, and you'll be compensated for your efforts by Thrivent (including Thrivent's 10% Life Insurance bonus for contracts assigned to InFaith).
More about Gifts of Life Insurance
There are a number of benefits to giving life insurance through InFaith:
- Donors can name multiple, diverse benefiting charities through one life insurance contract owned by InFaith;
- Donors can change charities that will benefit without needing to change ownership of the life insurance contract – they simply contact InFaith to change parameters of the charitable fund;
- Donors can give anonymously if that’s their wish;
- Gifts provide ongoing support to charities far into the future. Based on the gift size, a portion of the death benefit may be distributed in a lump sum to one or more charities if that’s the donor’s wish; and
- Your clients can also give an existing contract or designate InFaith as beneficiary to receive all or a portion of a contract’s proceeds. Contact a Gift Planner for more on the benefits of giving insurance in these two ways.
- While the age range for people giving life insurance through InFaith ranges from 4 to 95, the most ideal market is pre-retired persons (ages 50-64) and retired persons (ages 65-75).
- Clients who wish to make a significant gift with a smaller investment.
- Clients who want an annual charitable tax deduction for the premiums they pay.
- Charitably-minded clients age 70+ who are receiving required minimum distributions (RMDs) from retirement plans, but don't need the income.
Resources to Support Your Work
- A Gift of Life Insurance Product Sheet
- Create a Fund at InFaith online
- Create Your Charitable Fund: Fund Workbook
- Tools & Resources Webpage