The Benefits of Naming a Charity as Beneficiary of your Life Insurance Policy
There are a number of options with using life insurance policies to make gifts to a charity. You may have charities that you donate to and wonder if you can make a gift at the time of your death. Let’s focus on naming a charity as beneficiary of your life insurance policy.
Below, I outline some points to consider when naming a charity of your choice as beneficiary of your life insurance.
The insured may retain ownership of the policy and name a charity as beneficiary and upon death, the donor’s estate is reduced by the death benefit paid to a charity.
There are no income tax advantages to naming a charity as beneficiary of the life insurance policy. The life insurance premiums are not tax deductible. The insured can leave a substantial gift by using life insurance, as the premiums paid into the policy may be minimal in relation to the death benefit payable to a charity.
A charity can be named as a revocable beneficiary giving the insured the opportunity to change the beneficiary should the need arise. The insured does not have to name a charity as the only beneficiary, as multiple beneficiaries can exist.
Naming a charity as beneficiary of the life insurance policy ensures the confidentially of the donor. The death benefit proceeds are paid directly to a charity from the insurance company. A charity can arrange the distribution of the proceeds with the insurance company that meets its needs.
The insured maintains control of the life insurance policy and may cancel it at any time, by no longer making premium payments. Naming a charity as a beneficiary ensures the death proceeds are not contestable by anyone contesting the decedent’s estate.
About the author: Ken Buccico holds a LUTC designation and has been in the life insurance business for 39 years. His wealth of experience empowers clients to make best possible decision regarding a life insurance policy. To explore the best life insurance option, contact Ken at 1-800-651-1953 or KBuccico@Pivot.com.