Did you know that over 95 percent of US households give money to charity each year? As part of a giving nation, you may be interested to know that your donations don't have to end with a check. In fact, you can use life insurance to give even more to a charity that holds a special place in your heart. People may wish to do this if they have no dependents, or if their families are no longer dependent on their finances. Laws differ from state to state so it's best to speak with your independent insurance agent first, but generally speaking, there are three main ways that your life insurance can be donated to a charity.
- Make the charity the beneficiary: One easy way to support your favorite charity is to name it the beneficiary on an existing life insurance policy that no longer needs to support a spouse or family. In this case, the charity will receive the entire death benefit. Keep in mind, there are no tax benefits with this option; but the policy's value will be removed from your estate for federal estate tax purposes.
- Make the charity the owner and beneficiary: You can also transfer ownership of your existing life insurance policy to your charity of choice, which will also ensure that the organization receives the death benefit. The extra benefit of this option is that is provides you with current federal income tax deductions.
- Purchase a new policy for the charity: The last option is to purchase a new life insurance policy and name your favorite charity as the policy owner and beneficiary. After which, you can arrange to pay the premiums through gifts to the charity. This option provides federal income tax deductions, but the policy's value is not included in your estate.
Ready to help your favorite charity grow so it can continue serving the community? We'll help you get started.
We're here to help. Call All About Insurance at (817) 589-0006 for more information on Dallas life insurance.