Gifts of Life Insurance - Gift-Replacement: The Details

Is this gift right for you?

A Gift-Replacement Life Insurance is for you if…

  • You are a younger donor, with a family, who is considering a significant gift to Pomona College.
  • You don't want your gift to impact your family's long-term financial security.
  • Income from your gift is less important to you than the charitable deduction.

You're impressed by the benefits of a life-income gift: a donation that significantly helps Pomona College, while also paying income back to you and saves on income and capital gains taxes.

The problem? Taking an asset out of your portfolio to fund a life-income gift could jeopardize the financial benefit your children or heirs are counting on from your estate. A life-income gift will help you, but what will its effects be on them?

There is a solution. Use the income you will receive from your life-income gift which will, in many cases, surpass the yield on the assets you donated and tax savings from the charitable deduction, to pay the premiums on a gift-replacement life insurance policy benefiting your heirs. Set the death benefit of the policy at an amount equal to the value of the assets you contributed to Pomona College (or a larger sum reflecting how those assets would have grown in value).

At your death, Pomona College will receive the remaining balance in your life-income gift. Your heirs will receive the proceeds of the life insurance policy. The result? You've done what you thought you couldn't do make a substantial gift to Pomona College and also fully provide for your heirs in your estate.

Please contact us so that we can assist you through every step of the process.