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Gifts of Life Insurance Death Benefits: Getting Started

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See how easy it is to make a charitable donation using life insurance.

How It Works
Once a life insurance policy has served its original objective, you might consider giving it a new life with a charitable purpose. Naming Colorado College as beneficiary while retaining ownership of the policy is actually the easiest way to use life insurance to make a future gift to us. Here are your two main options:
  • You can name Colorado College either as the sole beneficiary or a partial beneficiary of your policy.
  • You can name us as the contingent beneficiary, in which case we receive the death benefits only if your primary beneficiary dies before you do.

Question MarkDid you know?
The benefits of life insurance left to an individual can be subject to estate taxes, but when you change the beneficiary to a charitable entity such as ours, the benefits are tax-free.

How We All Benefit
Naming us the beneficiary of your life insurance policy provides you the satisfaction of making a very generous donation and leveraging the full value of your policy. Alternatively, when a life insurance beneficiary is not a qualified charity, the amount your loved ones receive in the end could potentially be less due to estate taxes. But when you name Colorado College as beneficiary, we receive the full amount and estate taxes are eliminated. (With this arrangement, you will not receive a charitable income tax benefit during your lifetime because you are not giving away the policy ownership. Your estate, however, will receive an estate tax charitable deduction.)

What About Term Insurance?
As the name implies, term life insurance is usually purchased with a particular time frame in mind. When a policy outlives its useful time frame, rather than let it lapse, you could simply name us as the beneficiary. If you keep up the payments, we will receive the full face value of your policy at your death. When term insurance is provided by your employer, it could be to your benefit to donate any coverage over $50,000, the amount above which you are required to pay income tax. You get all the benefits of giving while avoiding the tax.

Download a free guide to learn more about the benefits of giving life insurance.

Please contact Nancy Baxter, CIMA®, ’78 at 719-389-6231 or if we can answer any questions you have about these ways to support our work.

Copyright © The Stelter Company, All rights reserved.

The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.