What is a Charitable Gift of Life Insurance?

Here's how it works

Some life insurance policies give you the option to name a charity as the beneficiary – that's the person or organization that gets the money when you're not around anymore. So, instead of the money going to your family, it goes straight to a cause you believe in. It's like leaving a legacy of goodness.

Now, there's another cool trick called a charitable giving rider. This add-on is like a magic spell that lets you donate a part of your policy's death benefit to a charity you love. Imagine you have a $500,000 policy, and you decide to designate 10% of it to your favorite animal shelter. If something happens to you, that 10% – $50,000 – goes right to the shelter. It's like spreading kindness even after you're gone.

But wait, there's more! Some policies even let you donate your life insurance while you're still here. Say you've had the policy for years, and you no longer need the coverage. Instead of letting it sit there, you can gift it to a charity. They'll become the policy's owner, and when the time comes, they'll receive the benefits.

What's super cool is that these charitable moves can also come with some tax benefits. In some cases, your donations might be tax-deductible, meaning you can save money while doing good. It's like a win-win.

Of course, there are some things to consider. You'll want to make sure the charity you choose is legit and aligned with your values. Plus, there might be some rules about how much you can donate and how it all works.

So, why is this whole charitable giving thing awesome? Well, it lets you leave a positive impact on the world, even after you're gone. It's like your life insurance policy becomes a superhero cape for doing good deeds. Just remember, before embarking on this philanthropic journey, it's a good idea to chat with an insurance pro to understand all the ins and outs.