Life Insurance as a Gift
- Many alumni and friends of Northern Illinois
University have made significant financial commitments to the institution
by using life insurance as a sensible and affordable way of giving.
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- Quite often the comment is made, "I want
to do something significant for the university someday. I hope I will
be in the financial position to make a meaningful contribution for a
scholarship or something." Have you heard yourself saying that?
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- Perhaps a gift of life insurance can be an ideal
and cost-effective way for you to do something today that can have a
tremendous impact on tomorrow. The use of life insurance as a gift is
a versatile and valuable asset. Relatively few dollars in premiums can
ensure relatively large benefits being directed to Northern Illinois
University.
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- Purchasing a New Life Insurance Policy as
a Gift
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- The purchase of a new life insurance policy,
where the university is named owner and beneficiary, is a widely used
method for contributing.
- Although donors may purchase whole life or term
policies at their discretion, a majority of donors have chosen the whole
life policy as best fitting their economic circumstances and charitable
intent.
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- When the method of contributing insurance is
through a whole life policy, many donors structure the premium payments
with the anticipation of accelerating cash value. By creating a rapid
cash buildup, it is possible within a five to ten year period to have
annual policy earnings from cash value equal annual premium requirements.
Thus, it is possible for the policy to effectively pay for itself.
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- Giving an Existing Life Insurance Policy
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- Regardless of the type of life insurance plan
that you currently have (whole life or term) most policies can be contributed
to the university with relative ease. Whether in whole or in part, the
university can be named as beneficiary in your policy. You can make
a wonderful gift without disturbing other assets and without loss of
income.
Tax Consideration in Giving Life Insurance
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- Taking a charitable deduction for a gift of
life insurance can only occur when the university is named as the owner
of the policy in addition to being the irrevocable beneficiary.
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- For the gift of a paid-up policy, your charitable
deduction generally amounts to what it would cost to replace the policy.
For a policy on which premiums remain payable, the deduction is slightly
higher than the policy's cash surrender value. These figures are easily
obtainable from the insurance company.
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- If you elect to continue paying the premiums,
you are allowed a further deduction for each payment. Payment can be
made either directly to the insurer, or by making periodic gifts to
the university to cover our cost of maintaining the policy in full force.
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- Remember, life insurance makes an ideal and
affordable charitable gift. It has significant advantages to you and
the university. We welcome any questions you may have about specific
details.
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- For more information, please contact John Sentovich,
Director of Gift Planning, at 815-753-1344 or e-mail sentovich@niu.edu.
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