WHAT IS IT?

Often, we see clients who have a strong affinity for a particular cause or non-profit, who cannot support it to the degree they wish to during their lifetime. Utilizing life insurance, one can leave a substantial legacy and forge true change while incurring minimal relative-costs and receiving a substantial tax credit. The life insurance product itself is the same as any other life insurance product.  However, who the applicant names as the beneficiary or as the owner augments that strategy such that a charitable organization benefits and the applicant secures a tax credit.

HOW DOES CHARITABLE GIVING WORK?

There are multiple ways to structure an insurance strategy for the purpose of charitable giving.  One’s individual estate planning needs will help determine when the resulting tax-credit would be of best use to the individual.  Detailed below are two of the most common implementation strategies:

NAMING A CHARITY THE BENEFICIARY

Upon your death, a personal tax credit is available equal to the policy’s face amount

Premiums do not produce tax credit

Payout bypasses the estate and, consequently, avoids probate fees

You, the policy owner, maintain control of the policy

NAMING YOUR ESTATE THE BENEFICIARY

Upon your death, a tax credit for your estate is available equal to the policy’s face amount

Premiums do not produce tax credit

Probate fees are present

You, the policy owner, maintain control of the policy

NAMING A CHARITY THE OWNER

Premiums qualify for tax credit

Death benefit does not produce tax credit

The chosen charity maintains control of the policy

After reviewing your unique situation, our advisers will guide you to the best option.

THE COST

Below are a few price estimates which assume non-smoker status and standard health:

Male Age 50

$100K – $130/month
$250K – $330/month
$500K – $570/month
$1M – $1100/month

Female Age 50

$100K – $110/month
$250K – $260/month
$500K – $500/month
$1M – $970/month

A brief review of the above effectively illuminates how one can exponentially enhance their giving ability while simultaneously capitalizing on strategic tax-benefits.  Part of what makes giving to charity by means of life insurance so wonderful is the dynamic nature of the process.  Premiums and death benefits are highly flexible; this allows the strategy to fit neatly within a wide array of financial conditions.

Obtaining an insurance policy for the purpose of charitable giving is the same as obtaining a life insurance policy for any other purpose.  You can find a detailed description of the process here.  The only difference with a strategy of this sort is who the applicant names as the owner and the beneficiary.  Often, the applicant will discuss this structuring with their personal accountant, their insurance advisor, and also the benefiting charitable organization.

WHO BENEFITS FROM CHARITABLE GIVING?

The chosen charitable organization most certainly benefits greatly from a life insurance policy designed for charitable giving.  The amount one is able to leave to charity by means of life insurance often significantly exceeds that which one could donate directly.  Additionally, either the insured or the insured’s estate receives a significant benefit in the form of a tax-credit.  Moreover, the purchaser of the policy benefits from the peace-of-mind associated with knowing that, as long as the monthly payments are fulfilled, their chosen charitable cause will receive an enormous gift.

WHO CAN APPLY?

Anyone eligible for life insurance can apply for life insurance for charitable giving.  More information about general life insurance eligibility can be found here.  Specifically, those who meet the following criteria are uniquely well-suited to implement a life insurance policy for the purpose of charitable giving:

  • Maintain a strong desire to support a particular charitable cause
  • Can afford to cover the monthly premium payments for the required duration
  • Can benefit from the resulting tax credit

To get a free quote, or if you have questions on charitable giving please fill out the form below and we will get back to you as soon as possible.