Are you leery of paying premiums for a life insurance policy you no longer need? Reluctant to use cash for charitable donations? By donating a cash value policy to charity, you can save cash outlays, maintain your philanthropy, and get tax deductions.
To execute this strategy, irrevocably assign or transfer the life insurance policy to the charity as owner and beneficiary. Typically, your tax deduction will be the lesser of your cost basis in the policy or the policy’s fair market value.
* Your cost basis usually is the total of the premiums you’ve paid minus any dividends received.
* The fair market value probably will be the policy’s cash surrender value. However, you probably will need an appraisal from an insurance agent or broker who has not sold you any policies.