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 to make a deductible contribution to the church to cover the cost of the premiums. If that is the case, the church should pay the premiums directly. There should be no need for any reimbursement to the donor.

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Posted: February 23, 2010
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