If you continue to pay the premiums on such policies, you will be entitled to a charitable contribution deduction for the premium payments up to 30 percent of your adjusted gross income. As long as the Medical Center is not under any obligation to pay the premiums, you will be entitled to a charitable contribution deduction for the premium amounts up to 50 percent of your adjusted gross income. You also may name the Medical Center as the beneficiary of your policy. Because the designation is not irrevocable, it cannot be counted for any immediate tax savings. However, at your death, your executor may take a federal estate tax charitable deduction for the entire amount.
Life insurance interacts well with other gift mechanisms.
For instance, you can use all or part of your trust or annuity income to establish an irrevocable life insurance trust. The trust could purchase insurance on your life perhaps in an amount equal to the charitable gift and you could name a spouse or a child as the beneficiary. This way, you can make a charitable gift and replace the assets with life insurance for the benefit of a loved one. Alternatively, you could take all or a portion of the income for a set term of years and purchase a life insurance policy naming a family member as a beneficiary. This is another excellent way to replace the wealth transferred to the charity.