For many people, life insurance affords a practical means of making a gift to Hillsdale College.  If you name the College as the owner and beneficiary of the policy, the policy's value is a charitable contribution in the year of transfer.  If the policy is not fully paid up, you will be entitled to a charitable contribution deduction for each subsequent premium payment.

A gift of a life insurance policy to the College will permit you a deduction equal to the cash surrender value of the policy, its replacement value or its "interpolated terminal reserve" value (a value slightly higher than its cash surrender value), but not in excess of its tax basis (cost).

Naming the College as the primary or alternate beneficiary of a policy (but not the owner) will not provide a current deduction for either the value of the policy or the premiums paid.  However, your estate will be permitted to deduct the amount of the proceeds payable to the College for estate tax purposes and you will be able to confer a significant benefit on the College at a relatively modest annual cost.

Finally, should you wish to ensure that the proceeds of life insurance be available for the support and maintenance of your surviving spouse before going to the College, a variety of trust arrangements can accomplish this while providing your estate with a deduction for the proceeds paid to the trust without causing the property in the trust to be included in the estate of your spouse.
 

Wealth Replacement Option

One of the most important and sophisticated roles of life insurance in planned giving is its potential use in replacing the value of an asset that has been given to Hillsdale College.

How it works: You, as donor, use the tax savings produced by the charitable deduction or the life income stream generated by the gift to purchase and pay the premiums on a life insurance policy whose proceeds should, ideally, be equivalent to the value of the property given to Hillsdale College.  Such an arrangement can assure that the interests of family beneficiaries will not be adversely affected.