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  • 1.  Life Insurance Policy - University Owned

    Posted 04-08-2026 08:16 AM

    Hi All,

    I am looking for advice as I am new to handling University owned life insurance policies.

    We (the University) owns a life insurance policy on an alumna. The alumna was no longer able to afford the payments on the policy. It seems that the University was paying the premium amount and then requesting the alumna to reimburse the payment back to the University. So the alumni wanted to close the policy. 

    The University closed the policy to which we then received a "Surrender Payout". My question is, would this payout be considered a gift to the University? My gut feeling is that this is not a gift rather a reimbursement back to the University for the premiums that we paid. However, I wanted to ask for advice on this to make sure.

    Thank you all for your help!

    Jessica



    ------------------------------
    Jessica Fitman
    Valparaiso University
    jessica.fitman@valpo.edu
    ------------------------------


  • 2.  RE: Life Insurance Policy - University Owned

    Posted 04-08-2026 08:19 AM
    You are correct. As you own the policy, any funds received from it either through a surrender or upon the death of the donor are considered investment gains.

    The CASE Standards have details on how best to handle these in the Advancement CRM. Your CFO will treat these as appropriate based on accounting standards.

    John

    John Taylor Principal, John H. Taylor Consulting, LLC 919.816.5903 Big ideas; small keyboard





  • 3.  RE: Life Insurance Policy - University Owned

    Posted 04-08-2026 08:34 AM

    Thank you so much for your quick response, John. I appreciate the guidance.



    ------------------------------
    Jessica Fitman
    Valparaiso University
    jessica.fitman@valpo.edu
    ------------------------------

    Original Message


  • 4.  RE: Life Insurance Policy - University Owned

    Posted 04-08-2026 09:28 AM
    I wanted to add a bit more since this is new for you.

    When a donor transfers a whole life policy to you, that transfer is considered an outright gift, and the existing cash surrender value (legally called the interpolated terminal reserve) is recorded as a gift of property. To claim a deduction, the donor will need a property gift receipt (with no assigned value). Depending on the value, the donor may also need to file a Form 8283 along with a qualified appraiser's signature.

    If the donor continues to make premium payments, those are considered current-use, outright gifts and should be entered and receipted as such. Once the policy is terminated, you have already accounted for all the donations.

    By the way, if the donor states they no longer want to make premium payments, that's alright. However, since you own the policy, they cannot compel you to cash it in. Your Gift Acceptance Committee (usually) must decide whether the University should continue paying those premiums or if it makes more financial sense to cash it in.

    The CASE Standards provide many more details, but please let us know if you have any other questions!

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 5.  RE: Life Insurance Policy - University Owned

    Posted 04-08-2026 09:36 AM

    This is super helpful to know! Thank you!

    I will do more research into what has been done in our CRM to make sure we are complying with CASE standards. From what I have seen so far, it looks like we have been recording the donor premium payments as gifts and have been receipted as such.

    This is great information, John. Thank you, again.



    ------------------------------
    Jessica Fitman
    Valparaiso University
    jessica.fitman@valpo.edu
    ------------------------------

    Original Message


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