Using life insurance for charitable giving allows you to make a much larger gift to the charity of your choice.

People typically make direct monetary contributions when they donate to charities and while most people would like to give more, they simply do not have the money available to give. Charitable gifting with life insurance a great solution to this problem.


3 Ways To Maximize Your Charitable Giving

Name a charity as the beneficiary of a life insurance policy.

As the owner of a life insurance policy you can name a charity of your choice as the beneficiary. You control the policy and the charity collects the insurance proceeds upon your death. Additionally, the death benefit qualifies as a tax credit on your final income tax return. In this scenario, the premiums paid are not eligible for a tax credit. However, since there is a direct beneficiary designation, the life insurance death benefit bypasses your estate to avoid probate fees.

Your estate is named the beneficiary.

In this scenario, your estate is named as the beneficiary of your life insurance policy and you simply leave instructions in your will indicating that the proceeds of the policy are to be paid to the charities of your choice. The death benefit then qualifies as a donation, giving your estate a tax credit on your final income tax return. However, the proceeds of the policy will not be protected from probate fees, as the death benefit becomes part of your estate.

Transfer the policy to the charity.

A life insurance policy is purchased with your charity of choice named as the owner. The premiums for will qualify for a tax credit but, the future death benefit will not qualify for a tax credit. Also, since you’ve relinquished control of the policy, you will no longer have any rights (such as the right to change the beneficiary) in the policy.


Which solution is best for you? Our team of experts can help you decide.

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