Are You Interested In Charitable Life Insurance Gifting?
Stretch Your Charitable Gift With Life Insurance Gifting
Giving some, or all, of the proceeds of a life insurance policy is one excellent way to support your favorite charity or organization.
You may not have a large lump sum of cash to leave behind, but you can still leave a large sum of money behind if you use the death benefit of your policy as a gift.
This article is not meant to give advice, but just to expose you to a new thought. You should discuss your thoughts and questions about life insurance gifting with a good insurance agent.
I plan to highlight the following points in this article:
- You can amplify the money you have to give a much larger charitable gift.
- You may be able to take advantage of some tax deductions now.
- Your family may save money on estate taxes later.
- You may be able to give your gift with no out-of-pocket expenses.
- You may also have a good way to keep your family happy while you are giving away assets to charity.
How Does Life Insurance Gifting Work?
There are actually several ways to do this, and you may be able to benefit from one of them while endowing your favorite charity at the same time!
Simple Beneficiary Assignment
Look at a simple example. Let us say you could set aside $500 a year to give to your favorite charity. You could also, in this example, purchase a $250,000 life insurance policy with that money. You have turned your money, and affordable premiums, into a large gift.
No Cash Out Of Pocket Strategy
If you do not want to use any cash out of your own pocket, and you already have a permanent, cash value policy, you might assign the dividends (gains) to the charity. You could do one of two things this way.
- The dividends could go right to the non-profit so they get money right away.
- You can even have these dividends purchase a new policy so they can benefit from the proceeds later.
Keep The Family Happy
Here’s a strategy that should keep your family, and other beneficiaries, happy in case they were expecting the proceeds from your life insurance policy. You could give other assets to the charity, like real estate, vehicles, stock, etc. Your family members will still be named on the life insurance policy so they will get cash. This strategy is used in charitable giving, as well as in business.
Tax Deductions
Some of these strategies can benefit a charity, and they can also save you money on income or estate taxes. Some laws which govern this are federal IRS rules, while others are state laws. Either way, the situation is complicated, which is why you should consult with a good financial professional before you act.
Either way, life insurance can be a great way to give!
Other Uses For Life Insurance As A Gift
Instead of, or in addition to, these strategies, you may also want to explore other common uses of life insurance gifting. Instead of giving the proceeds of your policy to charity, you may actually want to give grandchildren life insurance.
Related posts:
Feedback