With the holiday giving season upon us, it is no surprise that many of us are considering which charities and nonprofit organizations we would like to support this year. One often overlooked avenue for donating money to a worthy cause is gifting a life insurance benefit.
A life insurance policy, while a responsible asset to maintain, becomes less useful as you age and your need for that type of protection diminishes. Here are the top benefits of including the gift of a life insurance policy in your charitable efforts:
- Leverage small donations for a big impact. Many gifted life insurance policy premiums are paid on a monthly basis as a donation to the charity. The charity, as the beneficiary and owner of the policy, uses that small monthly donation to pay for the premium and then receives the full benefit of the policy upon maturity – often a much more generous sum than outright donations could provide.
- Receive a significant tax deduction. For the tax year in which you gift the life insurance policy irrevocably to a charity or nonprofit organization, you will receive an income tax deduction calculated from the cost of the policy.
- Reduce estate tax costs. One of the major benefits of charitable giving at the time of death is to better manage the amount of estate tax implicated in your estate plan.
- Make use of a life insurance policy you do not require. If your employer requires all employees to take part in group life insurance plans, gifting this policy to a charity is a wonderful way to promote good works with a policy you otherwise did not want. However, this type of giving is only possible with policies valued over $50,000.
Ensure the organizations you cherish most thrive into the future! A life insurance pay-out to a charity that champions a cause near and dear to your heart can help that legacy continue far longer than your living contributions.