• Upstate Wealth Management

4 Ways to Use Life Insurance in Your Charitable Strategy

Thinking of giving to your favorite charity this holiday season? You have company. According to a survey from World Vision and Harris Poll, 63 percent of Americans give to charity in the final two weeks of the year. Many of those donations go to churches, poverty-related organizations and children’s charities.1

The holidays are a great time to donate your money, time or other resources. However, you also may want to consider ways to make a more lasting year-round impact. There are a number of financial strategies and tools you can use to support your favorite cause.

Life insurance can be a powerful charitable tool. In fact, there are several different ways you can use life insurance to support a charitable organization. Below are four such strategies. Your financial professional can also help you analyze your life insurance policies and develop a charitable strategy.

Make the charity a beneficiary.

The simplest way to use life insurance as a charitable gift is to name the charity as a beneficiary. You can leave the entire death benefit to the charity or name it as a partial beneficiary. When you pass away, the life insurance company simply pays the charity the appropriate portion of the death benefit.

This is an effective and straightforward approach because it usually only requires a beneficiary change form. You can complete this in a few minutes. It’s also private, as your loved ones and other beneficiaries don’t have to know you’re leaving money to a charity.

Transfer ownership of the policy to the charity.

Do you have a permanent life insurance policy that you no longer need? Perhaps you purchased it when you had minor children in the home. Now that they’re grown and you’re retired, you may feel like the policy is unnecessary.

You could transfer ownership of the policy to a charity. In doing so, the charity becomes the owner and beneficiary. When you pass away, it gets the death benefit. You get a current tax deduction for all the paid premiums, however, and ongoing tax deductions for any future premiums.

Gift policy dividends to the charity.

Perhaps you have a whole life policy that earns annual dividends. In most policies, the dividends accumulate in the cash value on a tax-deferred basis. You can let the dividends grow or take them as a distribution.

Your policy may also offer the option to gift your dividends to a charity. Some insurers handle this transaction for you. Instead of crediting the dividend to your policy, the insurer pays it directly to an eligible charitable organization. You may be able to deduct the gifted dividend from your taxes.

Use a charitable rider.

Some life insurance policies offer an optional rider that pays a death benefit bonus to an eligible charitable organization. The bonus is usually a small portion of your overall death benefit, like 1 or 2 percent. It’s paid on top of your death benefit amount, so it doesn’t reduce the benefit to your loved ones. This type of rider isn’t available on every policy and is usually only an option if your policy has a significant face value.

Ready to use life insurance to support your favorite charity? Let’s talk about it. Contact us today at Upstate Wealth Management. We can help you analyze your policies and develop a strategy. Let’s connect soon and start the conversation.


Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

18277 - 2018/11/27

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