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Insurance Premium Reimbursement

Can we reimburse a church member for her insurance premium payment, and also count her payment as a charitable contribution?

Question:
We have a church member who, for the last few years, has paid a premium on an insurance policy on herself, with the church named as beneficiary, through an annual draft from her bank account. The church has then allowed her to write a check to the church for the same amount as the premium, thus receiving contribution credit, and the church writes her back a check in the same amount since the premium has already been paid.

Is the premium actually an acceptable contribution to the church? And, under the above scenario, can she receive contribution credit in this manner? She is not actually giving the church anything in the year she is receiving credit.

Answer: An important fact is whether the church is the owner of the insurance policy, in addition to being the beneficiary. Only if the church is the sole owner and sole beneficiary of the policy is it possible for a donor ...

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Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.

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Posted:
  • February 23, 2010

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