Why use life insurance for charitable planning?

Using life insurance for charitable planning is a strategic way to support a cause you care about while also benefiting from certain financial advantages:

1. Maximizing Charitable Impact

A relatively small premium payment can result in a significant death benefit, providing a larger donation to the charity than what might be possible with direct cash contributions.

2. Tax Benefits

Income Tax Deduction: If you transfer ownership of the policy to a charity, you may receive a charitable income tax deduction for the policy’s fair market value or the premiums you continue to pay.
Estate Tax Savings: The death benefit paid to the charity may reduce the taxable estate, potentially lowering estate taxes for your heirs.

3. Legacy Creation

Perpetual Support: Life insurance can create a lasting legacy by providing continuous funding for the charity, ensuring your values and commitment to the cause endure beyond your lifetime.

4. Flexibility

Life insurance policies can be structured in different ways to benefit charities, such as naming the charity as the beneficiary, creating a charitable remainder trust, or donating an existing policy.

5. Protection of Personal Assets

By using life insurance for charitable donations, you can support a cause without depleting other assets that might be needed for personal or family use during your lifetime.

6. Simplicity
Ease of Implementation: Setting up a life insurance policy for charitable purposes is often simpler and less costly compared to other charitable giving strategies, such as setting up a private foundation or complex trusts.

Learn more: Charitble Planning with Life Insurance