Probably not. The decision will depend on the specific circumstances. Although the face value of the policy is larger than any cash value within the policy, ADLF likely will surrender any policy that goes into default for nonpayment of premiums rather than apply non-budgeted unrestricted funds to cover the premiums due. ADLF will apply the proceeds from surrender to the purposes you’ve designated.

ADLF is grateful to be the beneficiary of any insurance policy, and all policies can provide important support for our mission. However, when ADL is made the owner and beneficiary of an insurance policy, we prefer whole life policies. This is because while premiums for term policies are a fraction of those required for whole life policies, term policies never build up internal cash value. This means that if you stop making gifts to cover the premium payments, or if the term policy expires naturally, ADLF will not benefit from the policy or your many premium payments.

If you have just purchased a new whole life policy, it is unlikely that the policy will have any internal value at the time you contribute it to ADLF. That means that the policy will not have a current value on which to base a charitable deduction. If you have already made initial premium payments, however, there may be a value on which a deduction can be based. Your life insurance company and accountant can help you determine whether the policy has a value that will allow you to claim a tax deduction. There is no deduction for a contribution of a term policy. Your future contributions to cover the premium payments are tax-deductible.

A gift of a new policy is irrevocable, and ADLF will not be able to give the policy back to you once you’ve made your gift. Thus, it’s important to consider possible future needs before deciding to contribute your policy to ADLF.