The charity holds the policy for the balance of the donor's life and the donor makes a gift to the charity of the premium due annually to maintain the policy in existence--NOT such an expensive annual burden, which is TAX DEDUCTIBLE to the donor. Also, upon the death of the donor the charity has a relatively large gift from the decedent who could not afford? to gift that amount" to the charity during his or her life. Now the annual expense of the premium payment, which is "bearable" by the donor turns into a significant gift to the charity.

Remember, during the balance of the donor's life the charity has access to the cash value of the policy, so if an emergency or some unexpected event occurs during the life of the donor and he or she feels the necessity to discontinue the payments by gifting the charity the premium payments, the accumulated policy value still represents a nice gift the charity would not have otherwise received; or in the event of a disability, depending on the terms of the policy, it may provide for its own continuation.

The charity does receive the policy proceeds upon death tax free or upon policy maturation, and the donor's estate does not incur gift or estate taxation on the amount of the insurance proceeds---remember, you no longer own the policy, it is owned by the charity, you "merely" gifted an amount necessary to pay the premiums annually. So a manageable expense of the annual gift to pay the premium turns into a sizable gift to the charity!! In truth, the gift of a life insurance policy becomes a win-win for the donor and the charity; the donor has (A) an annual tax deduction and (B) an expense that is tolerable in addition to (C) the feeling he or she did something nice for the charity of choice, while the charity has a significant gift at some point--all accomplished with no gift or estate taxation---this is a win-win!!.