When donating a life insurance policy to a charity, which components are typically considered for the charitable benefit in a Whole Life policy?

When donating a life insurance policy to a charity, which components are typically considered for the charitable benefit in a Whole Life policy?

• A. Cash surrender value and premiums
• B. Face value only
• C. Premium payments only
• D. Death benefit only

Answer: (A)

When valuing a donated whole life policy for a charitable gift, the practical value to the charity comes from two things: the policy’s current cash value and any ongoing premium commitments tied to the policy. The cash surrender value represents the actual liquid assets the charity could access if the policy were surrendered or if funds were needed to keep the policy in force. Any premiums the donor continues to pay after the donation add to the charitable value because those payments are additional support to the charity. The death benefit, while indeed the eventual payout at the insured’s death, is not the immediate measure of the gift’s value and depends on the policy remaining in force until that time. The combination of cash value and ongoing premium payments best captures the present value of the charitable gift.

When valuing a donated whole life policy for a charitable gift, the practical value to the charity comes from two things: the policy’s current cash value and any ongoing premium commitments tied to the policy. The cash surrender value represents the actual liquid assets the charity could access if the policy were surrendered or if funds were needed to keep the policy in force. Any premiums the donor continues to pay after the donation add to the charitable value because those payments are additional support to the charity. The death benefit, while indeed the eventual payout at the insured’s death, is not the immediate measure of the gift’s value and depends on the policy remaining in force until that time. The combination of cash value and ongoing premium payments best captures the present value of the charitable gift.