Philanthropy

Why Make a Life Insurance Gift?

An insurance policy has the potential to create a substantial, cost-effective gift to charity through the policy’s death benefit. The result is a gift that is much larger than the donor may otherwise have been able to make. Also, unlike a charitable bequest made in a will, a life insurance gift does not become a matter of public record and is made without the delays of probate.

Premiums paid by the donor after a lifetime gift of a policy to charity are deductible for income tax purposes when the donor itemizes. When the charity is named as the policy beneficiary, the death proceeds paid to the charity are deductible for federal estate tax purposes.

 

What’s the Conclusion?

Because death benefits paid to a charity at the donor’s death typically far exceed the premiums paid for the policy, life insurance can create a gift that is much larger than might otherwise have been possible. A gift of life insurance permits a donor to make a generous charitable contribution while retaining other assets.