DOCSLIB.ORG

Long-Term Care (LTC) Riders

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Long-Term Care (LTC) Riders BECAUSE YOU ASKED ADVANCED MARKETS Long-Term Care (LTC) Riders The purpose of this article is to address some of the most frequently asked questions concerning long-term care riders associated with life insurance contracts (and associated riders for chronic and critical illnesses) and the differences between these types of riders. Because this article is meant to provide a general overview of long-term care riders, state specific law and exceptions have not been considered or addressed. State law should always be considered before advising clients. This material does not constitute tax, legal or accounting advice, Generally, when LTC benefits are paid from the LTC rider, and neither John Hancock nor any of its agents, employees, or the death benefit available on the policy is reduced dollar-for- registered representatives are in the business of offering such dollar and such benefit payments also reduce cash value to advice. It cannot be used by any taxpayer for the purpose of some degree (see question 8). Consequently, LTC benefits avoiding any IRS penalty. It was written to support the marketing generally are available up to the point that the policy’s death of the transactions or topics it addresses. Anyone interested in benefit has been completely exhausted, unless otherwise these transactions or topics should seek advice based on his or her provided in the contract. particular circumstances from independent professional advisors. At the insured’s death, the portion of the death benefit that 1. What is a Long-Term Care rider? has not been used to pay LTC benefits will be paid to the beneficiaries as a death benefit. A Long-Term Care (LTC rider) is a rider attached to a permanent life insurance policy that accelerates death benefit For most LTC riders, the LTC benefit payable under the rider is to help pay for the costs of long-term care services for limited to a maximum monthly benefit — usually determined chronically ill insureds.1 To qualify as an LTC rider, the services based on a percentage of the death benefit or the IRS per required by a chronically ill individual must be provided diem limit (depending on the type of rider — see question 2). pursuant to a plan of care prescribed by a licensed health care practitioner. An individual is considered chronically ill if he/she is unable to perform at least two of six Activities of Example of Maximum Monthly Benefit: Daily Living (ADLs) without substantial help from another An LTC rider on a $750,000 life insurance policy with a person for at least 90 days due to a loss of functional 2% maximum monthly benefit would allow for a $15,000 2 capacity. An individual may also be considered to be acceleration of death benefit per month to pay for qualified chronically ill if he/she needs substantial supervision to long-term care expenses. protect his/her health and safety because of a severe cognitive impairment. Page 1 of 7. Not valid without all pages. BECAUSE YOU ASKED Advanced Markets For insurance carriers who offer an LTC rider, generally such prescribed in the contract. This style of rider allows the policy riders can be added to an insurance contract for an owner to receive payments in excess of the IRS per diem limit additional fee. Most life insurance contracts offering an LTC without adverse tax consequences. Under a reimbursement rider today treat the charge for the LTC portion of the style rider, the LTC rider payment will be paid directly to the contract as a charge against cash surrender value. policy owner unless the owner elects to have the care- LTC riders may be classified as “qualified” or “non-qualified” provider* paid directly. riders. A “qualified” rider is intended to meet the requirements To qualify for LTC payments under an indemnity rider or of a qualified long-term care contract for the purposes of reimbursement rider, the policy owner must demonstrate Sections 7702B(b) and 101(g) of the Internal Revenue Code that the insured meets the definition of “chronically ill” (Code), thus providing income tax advantages similar to (i.e. cannot perform 2 of 6 ADLs or has a cognitive stand-alone LTC insurance policies. A rider that does not meet impairment), which is certified by a licensed physician, and these requirements is a “non-qualified” rider and likely will must meet the elimination period specified in the contract. not provide favorable tax treatment. See question 3 for more A reimbursement rider requires the policy owner to provide information about the taxation of benefits from a qualified the insurance carrier with bills associated with the insured’s LTC rider. LTC care and services received; depending on the carrier, 2. What are the primary differences between an an indemnity rider may not require bills to be provided to indemnity and reimbursement LTC rider? receive payment. Most LTC riders available today fall under one of two models John Hancock currently offers a reimbursement-style LTC — indemnity or reimbursement. rider, which includes an extension of benefit (EOB) provision, An indemnity rider pays out LTC benefits based on the guaranteeing additional LTC benefits will be paid in specific maximum monthly benefit allotted under the rider regardless circumstances.4 of the amount of actual long-term care expenses incurred by 3. How are amounts received for LTC expenses from a the insured. Most carriers offering an LTC indemnity rider qualified LTC rider treated for income-tax purposes? limit the monthly benefit to the lesser of (i) a percentage of The Health Insurance Portability and Accountability Act death benefit or (ii) the IRS per diem limit.3 For 2014, the IRS of 1996 (HIPAA) allows for certain federal income tax per diem limit is $330/day (up from $320 in 2013), which is advantages for long-term care insurance contracts that are approximately $9,900 per month. When LTC payments are designated as “qualified,” as defined in Code Section 7702B. made under an indemnity rider, the payments are made Per Section 7702B(a), amounts received from a qualified directly to the owner of the contract. long-term care insurance contract are treated as amounts Alternatively, a reimbursement rider pays out LTC benefits received for personal injuries and sickness and are treated as based on the LTC care expenses actually incurred by the reimbursements for expenses actually incurred for medical insured, limited only by the maximum monthly benefit care (as defined by Sec 213(d)). Code Section 104(a)(3) EXAMPLE: John owns a life insurance policy with an LTC rider. Indemnity rider: John’s policy has a $750,000 death benefit with a maximum monthly benefit for LTC purposes of the lesser of 2% of death benefit or the IRS per diem limit. In January 2014, John has $12,000 worth of LTC expenses. John will receive $10,230 ($330 x 31 days) for these expenses from the indemnity rider. The next month, John only has $8,000 worth of LTC expenses, but receives $9,240 ($330 x 28 days) from the indemnity rider. Reimbursement rider: John’s policy has a $750,000 death benefit with a maximum monthly benefit for LTC purposes of 2% of death benefit — i.e. $15,000/month. In January 2014, John has $12,000 worth of LTC expenses and will receive $12,000 to reimburse him for those expenses. The next month when John has only $8,000 worth of LTC expenses, John will receive $8,000 from the reimbursement rider. In either case, the $750,000 death benefit will be reduced by the amount of LTC benefit received. This is a hypothetical example for illustrative purposes only. * Not all care providers may qualify for direct payments. See contract for details. Page 2 of 7. Not valid without all pages. BECAUSE YOU ASKED Advanced Markets generally provides that amounts received for personal reimbursement contract) or pays a per diem amount toward injuries or sickness are not includible in gross income. long-term care (an indemnity contract). However, if an For LTC riders provided as part of a life insurance or annuity indemnity contract pays a per diem benefit that exceeds the contract, Section 7702B(e) specifically provides that such IRS per diem limit ($320/day in 2013; $330/day in 2014), the riders shall be treated as separate long-term care contracts excess is taxable income to the extent it exceeds actual long- for the purposes of Section 7702B. Accordingly, “qualified” term care expenses incurred. If multiple indemnity-style LTC rider accelerated death benefits generally should receive contracts are owned on a single insured, the payments the same tax treatment as stand-alone qualified long-term received from these contracts are combined for the purposes care contracts.5 See question 9, however, for commentary on of determining whether amounts received exceed the greater taxation of third-party ownership of contracts with LTC riders. of total LTC expenses incurred by the insured or the per diem limit.6 Most LTC riders offered today are intended to be “qualified” long-term care contracts under Code Section 7702B(b) and An example of the possible taxation of multiple-owned meet the acceleration of death benefit for chronic illness indemnity-style contracts can be found below. Distributions provisions of Section 101(g). This is true of the LTC rider received from a life insurance policy with an LTC rider, other offered by John Hancock. than those payments associated with long-term care benefits, are taxed according to the rules governing the underlying life The tax treatment of the amounts received for LTC expenses insurance contract. paid from a qualified LTC rider generally is the same whether the contract reimburses actual long-term care expenses (a EXAMPLE OF MULTIPLE INDEMNITY CONTRACTS OWNED ON SAME INSURED (ADAPTED FROM INSTRUCTIONS TO IRS FORM 8853): Mrs.
Load more

Recommended publications
  • Introduction the Insuring Agreement...Deductible
    WORTH AVE. GROUP _ ELBCTRONIC DEVICE PROTECTION Introduction ................2 The Insuring Agreement................. ..................3 What This Agreement Covers....... ..........3 Deductible. ........3 Insurable Interest....... ...........3 Limit of Insurance........ ....,...3 Policy Period....,,.. ................3 Policy Territory.... ........,...,...3 Losses We Will Not Cover.. ................... 3 Property We Will Not Cover ..................4 Your Duties in the Event of Loss or Damage .....................4 Settlement Options ........................4 GeneralRules and Conditions .......5 Coverage Begins .................5 Abandonment ............... ....... 5 Appraisal ..........5 Assignment.................. ........ 5 Benefit to Others.... ..............6 Cancellation ,........................6 Misrepresentation, Concealment or Fraud ... ............6 Nonrenewal ................. ........6 Pairs, Sets or Parts...... .........7 Policy Changes ....................7 Salvage and Recoveries ............ .............7 State Law... .......7 Subrogation .........................7 Suit Against Us ........... ........8 GlossaryofTerms........ ..................8 INTRODUCTION This is a Policy between you and us. Your rights and duties under this Policy may not be assigned without our written consent. Please read your policy carefully. The items covered under this policy, limit of insurance, deductible amount and your premium are shown on your Policy Declarations page. Your Personal Electronic Device Protection Policy will only cover
    [Show full text]
  • Insurance Fraud Awareness Casualty
    TB-GL27 (11/10) THE State Auto Group Your Business Insurance Specialists Risk Control Services Insurance Fraud Awareness Casualty THE State Auto Group Corporate Headquarters Address: 518 E. Broad Street, Columbus, Ohio 43215 Middle Market Insurance Office Address: 580 N. Fourth Street, Fifth Floor, Columbus, Ohio 43215 Phone: (614) 464-5000 The information contained in this publication was obtained from sources believed to be reliable. The State Auto Insurance Companies make no representations or guarantee as to the correctness or sufficiency of any information contained herein, nor a guarantee of results based upon the use of this information and disclaims all warranties expressed or implied regarding merchantability, fitness for use and fitness for a particular purpose. State Auto does not warrant that reliance upon this document will prevent accident and losses or satisfy federal, state and local codes, ordinances and regulations. You assume the entire risk as to the use of this information. Further, this document does not amend, or otherwise affect the terms, conditions or coverage of any insurance policy issued by the State Auto Insurance Companies. Much research has been done about insurance fraud committed in the processing of a claim, qualifying for insurance or creating an artificial insurable interest. Insurance fraud occurs when a person intentionally lies to obtain a benefit or advantage to which he or she is not otherwise entitled. By the same token, fraud also occurs when a person knowingly denies a benefit that is due and to which a person is entitled. In the processing of a claim, there are phases during which a person could knowingly misrepresent information to the insurance company in order to obtain a benefit.
    [Show full text]
  • Over Insurance Statutes by State State Statute Statutory Wording Alabama Alaska Over-Insurance Prohibited
    Over Insurance Statutes by State State Statute Statutory Wording Alabama Alaska Over-Insurance Prohibited. (a) Over-insurance shall be considered to exist if property or an insurable interest in property is insured by one or more insurance contracts against the same hazard in an amount in excess of the fair value of the property or of the interest, as determined on the effective date of the insurance or the renewal of it. AS 21.60.010 (b) In this section the term "fair value" means the cost of replacement less depreciation that is properly applicable to the subject insured. (c) A person may not knowingly issue, place, procure, or accept an insurance contract that would result in over-insurance of the property or interest in the property proposed to be insured, except as provided in AS 21.60.020 . (d) Each violation of this section shall subject the violator to the penalties provided in AS 21.90.020 . Arizona 6-909 Prohibited Acts (Banking Law) P. A mortgage broker shall not require a person seeking a loan secured by real property to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer. 44-1208 44-1208. Loans secured by real estate; prohibited practices; insurance Except for consumer lender loans regulated pursuant to section 6-636, for any loan that is secured by real property, a person shall not require as a condition of the loan that the borrower obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer.
    [Show full text]
  • Chawla, Irrevocable Life Insurance Trusts, and the Insurable Interest Problem
    Chawla, Irrevocable Life Insurance Trusts, and the Insurable Interest Problem By James R. Robinson and Stephen "Bo" Wilkins Introduction Although it is a concept with solid policy underpinnings and a long pedigree, the notion of "insurable interest" has, until recently, been given little thought by the planning community. That changed dramatically with the ruling of the U.S. District Court for the Eastern District of Virginia in Chawla v. Transamerica Occidental Life Insurance Company. 1 In that case, the court, applying Maryland law, determined that a trust established by the decedent insured did not have an insurable interest in the decedent's life, and therefore the policy issued by the insurer (Transamerica) was void. Although this aspect of the court's ruling was overturned on appeal, the case nevertheless served to bring to light a problem lurking in the laws of many states: that a common planning device, namely the irrevocable life insurance trust, or ILIT, may lack an insurable interest in the life of its settlor, and therefore the policy issued to the trust may be void. This article examines some of the implications for planners of the Chawla decision and the issues it raises, as well as some of the policy concerns supporting the insurable interest rule. After a brief discussion of the rule itself, the article examines the facts of the case, its implications for planners who establish ILITs, and the larger (and more contentious) issue of "stranger owned life insurance," or SOLI. The article concludes with a recommendation that states examine their insurable interest statutes, with an eye toward conforming them with modern practice, particularly regarding trust ownership of policies.
    [Show full text]
  • Charitable Giving Through Life Insurance – the Other Right Stuff
    Charitable Giving Through Life Insurance – The Other Right Stuff Louis S. Shuntich, J.D., LL.M. Director, Advanced Consulting Group Nationwide In Tom Wolfe’s 1979 book, “The Right Stuff” he celebrates the qualities of the test pilots that became our first astronauts. In doing this he likened them to warriors who receive the honor and adoration of their people before going into battle on their behalf. This brings to mind another kind of right stuff mirrored in the character of those that go forth to better our world through their charity. While less celebrated, if you wonder at the significance of what they do consider the words of Margaret Mead who said: “Never doubt that a group of thoughtful, committed citizens can change the world. Indeed it is the only thing that ever has.” So now you may be wondering what all of this has to do with life insurance. The answer is that life insurance is the tool with the right stuff for people with the right stuff that want to make a difference. This is because it is the only financial instrument that enables us to leverage our good to the one or the many. Indeed it is intended by design to do that through premiums representing pennies on the dollar, tax deferred cash values and income tax free death benefits. In essence, if you want to make a difference, give but if you want to make a big difference give through life insurance. The specific advantages of giving to a charity through life insurance are: The death benefit is generally many times larger than the total premium payments.
    [Show full text]
  • Property Insurance - When Interest in Property Must Exist J
    Louisiana Law Review Volume 5 | Number 4 May 1944 Property Insurance - When Interest in Property Must Exist J. N. H. Repository Citation J. N. H., Property Insurance - When Interest in Property Must Exist, 5 La. L. Rev. (1944) Available at: https://digitalcommons.law.lsu.edu/lalrev/vol5/iss4/8 This Note is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital Commons. It has been accepted for inclusion in Louisiana Law Review by an authorized editor of LSU Law Digital Commons. For more information, please contact [email protected]. LOUISIANA LAW REVIEW [Vol. V provocation in mitigation of actual or compensatory damages.20 The leading case in these decisions is Robison v. Rupert,21 in which the Pennsylvania court said that if there were a reasonable ex- cuse for the defendant arising from the fault of the plaintiff but not enough to entirely" justify the act there can be no exemplary damages and the circumstances of mitigation must be applied to the actual damages. Provocation and malice on the defendant's part are punished by awarding damages exceeding the measure of compensation, and on the plaintiff's part by giving him less than that measure. Despite the contrary holding at common law, there is much to be said in favor of the Louisiana theory which denies recovery to the person who provokes the attack by abusive languages. A person must come into court with clean hands and if both parties are at fault neither of the two wrongdoers can recover. The prin- cipal case, Manuel v.
    [Show full text]
  • Core Standards for Individual Long Term Care
    Date: 8/13/10 December 2015 Adopted by the IIPRC Industry Comments: 5 Year Review CORE STANDARDS FOR INDIVIDUAL LONG-TERM CARE INSURANCE POLICIES Scope: These standards apply to individual long-term care insurance. Any product advertised, marketed or offered as long-term care insurance shall be subject to these standards. Long-term care insurance shall provide benefits for one or more of the following: nursing home care, assisted living care or home health care and adult day care. Only those policies, riders, endorsements or amendments that provide all such benefits may be titled “long-term care insurance” without further clarification. Policies, riders, endorsements or amendments that provide less than all such benefits shall be titled appropriately to indicate to the owner the types of coverages available under the policy, and may be filed and approved under these standards. With regard to accelerated death benefits that are advertised, marketed, offered or Formatted: Font color: Red designed as providing coverage for long-term care services, these standards shall apply, as stated above, but in addition, these benefits are also subject to the Interstate Insurance Product Regulation Commission’s standards for accelerated death benefits, as applicable. Formatted: Font color: Red Partnership: Approval by the Interstate Insurance Product Regulation Commission (“IIPRC”) of long-term care insurance product filings in compliance with one or more of the Uniform Standards for Individual Long-Term Care Insurance shall not be deemed as approval to use or provide any component of the product filing pursuant to any federal or state Individual Long- Term Care Insurance Partnership Program (“Partnership”).
    [Show full text]
  • If You Need Long-Term Care
    Pacific Life Insurance Company Pacific PremierCare1 Universal Life Insurance with Long-Term Care Benefits Get MORE out of LIFE 1 Pacific Life Insurance Company’s Pacific PremierCare (Policy Form #P11PPC or ICC11 P11PPC—policy form number based on state in which policy is issued) is a flexible premium adjustable life insurance policy with long-term care insurance payable through reimbursements. Pacific PremierCare is not a Partnership Qualified product. For more information on Partnership Qualified products, please contact your state department of insurance. This policy has certain exclusions and limitations. For costs and complete details of the coverage, contact your life insurance producer. ICC12 PPC-1A Get MORE out of LIFE Pacific PremierCare You and your family enjoy a special quality of life because you’ve wisely nurtured your financial well-being. Yet what would happen to your financial independence if you were to suddenly fall ill and require long-term care? Who would pick up the pieces for unplanned expenses? How could the cost of care impact what you’ve carefully saved for retirement? Pacific PremierCare’s universal life insurance with long-term care benefits can help. It may increase the funds you have available to help pay for long-term care, should you need it, and help you maintain the quality of life you’ve come to expect and the freedom of choice you want to protect. Pacific PremierCare: • Increase Funds Available for Long-Term Care Expenses2 • Money Back Option (Return of Premium Benefit)2 • Tax-Free3 Death Proceeds to Beneficiaries2 Help DEFEND Your RETIREMENT 2 Policy benefits are reduced by any policy loans, withdrawals or Terminal Illness Benefit paid under the policy.
    [Show full text]
  • In the United States Court of Appeals for the Eleventh
    Case: 13-15859 Date Filed: 01/25/2017 Page: 1 of 5 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT ________________________ No. 13-12135 ________________________ D.C. Docket No. 9:10-cv-80804-JIC PRUCO LIFE INSURANCE COMPANY, Plaintiff/Counter-Defendant/Appellee, versus WELLS FARGO BANK, N.A., as Securities Intermediary, Defendant/Counter-Claimant/Appellant. ________________________ No. 13-15859 ________________________ D.C. Docket No. 1:12-cv-24441-FAM PRUCO LIFE INSURANCE COMPANY, Plaintiff/Appellant, versus U.S. BANK, N.A., as Securities Intermediary, Case: 13-15859 Date Filed: 01/25/2017 Page: 2 of 5 Defendant/Appellee. ________________________ Appeals from the United States District Court for the Southern District of Florida ________________________ (January 25, 2017) Before TJOFLAT and JULIE CARNES, Circuit Judges, and DUBOSE∗, District Judge. PER CURIAM: These consolidated appeals require us to determine the validity of two individuals’ Stranger-Originated Life Insurance (“STOLI”) policies that the issuing insurance company sought to have invalidated several years after their issuance. Arguing that the policies were invalid, the insurance company relied on a Florida statute that requires a person who procures life insurance to have an insurable interest in the life of the insured at the inception of the policy.1 The insurance company contends that no such interest is present when a STOLI policy is purchased and accordingly such policies should be considered void ab initio. The owners of the policies relied on a second Florida statute that requires all insurance ∗ Honorable Kristi K. DuBose, United States District Judge for the Southern District of Alabama, sitting by designation.
    [Show full text]
  • Insurance Act
    Province of Alberta INSURANCE ACT Revised Statutes of Alberta 2000 Chapter I-3 Current as of December 9, 2020 Office Consolidation © Published by Alberta Queen’s Printer Alberta Queen’s Printer Suite 700, Park Plaza 10611 - 98 Avenue Edmonton, AB T5K 2P7 Phone: 780-427-4952 Fax: 780-452-0668 E-mail: [email protected] Shop on-line at www.qp.alberta.ca Copyright and Permission Statement Alberta Queen's Printer holds copyright on behalf of the Government of Alberta in right of Her Majesty the Queen for all Government of Alberta legislation. Alberta Queen's Printer permits any person to reproduce Alberta’s statutes and regulations without seeking permission and without charge, provided due diligence is exercised to ensure the accuracy of the materials produced, and Crown copyright is acknowledged in the following format: © Alberta Queen's Printer, 20__.* *The year of first publication of the legal materials is to be completed. Note All persons making use of this consolidation are reminded that it has no legislative sanction, that amendments have been embodied for convenience of reference only, and that the original Acts should be consulted for all purposes of interpreting and applying the law. Amendments Not in Force This consolidation incorporates only those amendments in force on the consolidation date shown on the cover. It does not include the following amendments: 2020 c36 s3 adds s585.1. Regulations The following is a list of the regulations made under the Insurance Act that are filed as Alberta Regulations under the Regulations Act. Alta. Reg. Amendments Insurance Act Adverse Contractual Action .........................
    [Show full text]
  • California Insurance Code
    CALIFORNIA INSURANCE CODE TABLE OF CONTENTS GENERAL PROVISIONS .................................................. 1-48 DIVISION 1. GENERAL RULES GOVERNING INSURANCE PART 1. THE CONTRACT CHAPTER 1. CLASSES OF INSURANCE ............................... 100-124.5 CHAPTER 1.5. RISK RETENTION ..................................... 125-140 CHAPTER 2. PARTIES, EVENTS, AND INTERESTS Article 1. Parties to the Contract: Generally .................. 150-151 Article 2. Parties to Contract: Mortgagor and Mortgagee ........ 170-172 Article 3. Events Subject to Insurance ......................... 250-253 Article 4. Insurable Interest: Generally ....................... 280-287 Article 5. Insurable Interest: Effect of Transfer .............. 300-305 CHAPTER 3. NEGOTIATIONS BEFORE EXECUTION Article 1. Concealment ......................................... 330-339 Article 2. Representation ...................................... 350-361 CHAPTER 4. THE POLICY Article 1. Definition and Scope ................................ 380-395 Article 2. Types of Policies ................................... 410-413 Article 3. Insurer's Name on Policy ............................. 430 Article 4. Warranties .......................................... 440-449 Article 5. Inception Hours ...................................... 460 CHAPTER 5. THE PREMIUM .......................................... 480-491 CHAPTER 5.2. RENEWAL NOTICES ..................................... 500 CHAPTER 5.3. CONSUMER COMPLAINTS ................................. 510 CHAPTER 5.4. PROOF OF COVERAGE DISCLOSURE
    [Show full text]
  • Charitable Gift of Life Insurance Policy
    Charitable Giving CHARITABLE GIFT OF A LIFE INSURANCE POLICY Presented for Valued Client Presented by John M. Webster HMS Insurance Associates, Inc. [email protected] 443-632-3436 Page 1 of 7 Charitable Giving CHARITABLE GIFT OF A LIFE INSURANCE POLICY The Rationale… ■ Life insurance can be used to make a substantial, cost-effective gift to charity. ■ A life insurance gift allows heirs to inherit other assets. ■ Life insurance proceeds are paid to the charity without delay. ■ A life insurance gift is private, whereas a gift in a will is a matter of public record. ■ An outright gift of a policy to charity creates a current income tax charitable deduction equal to the lesser of the policy’s fair market value or the donor’s basis in the policy. ■ Death proceeds paid to charity from an estate are deductible for federal estate tax purposes. ■ Remaining premiums paid by a donor are deductible when a charity owns the policy, or when the donor gifts premium amounts directly to the charity. The Choices… There are three basic options when making a charitable gift of a life insurance policy: ■ The policy owner gives an existing policy to charity, assigning all incidents of ownership to the charity by naming the charity both owner and beneficiary of the policy. ■ The donor applies for a new policy on his or her own life with the charity as the policy owner and beneficiary (subject to state insurable interest laws). ■ The donor names the charity as a beneficiary of a policy the donor continues to own. The Tax Impact… ■ A gift of an existing life insurance policy to charity qualifies for an income tax charitable deduction, provided the donor itemizes deductions and assigns all rights to the charity by naming the charity owner and beneficiary.
    [Show full text]