If you’re a charitable person, you may have an organization or two
to keep in mind when you have something to spare at the end of the month.
This charity may be your alma mater, an organization researching the cure
for cancer, or a church. Whatever issue is most near and dear to your
heart, you may want to ensure your charity continues to receive something
every month, even after your death. There are a few ways to accomplish
- Naming the charity as a beneficiary
- Gifting dividends
- Using an optional rider
- Donating the life insurance policy
Naming the Charity a Beneficiary
One of the easiest ways to accomplish donation through your
life insurance policy is to list your charity as a beneficiary. Like naming a loved one
as a beneficiary, the charity you name on the policy would receive the
amount of the life insurance policy upon your death. This choice is extremely
flexible, because you can change your mind at any time and name a new
beneficiary, or you could add an additional charity as a second recipient.
If you choose this option, however, you will not receive a tax deduction,
because you are still considered the owner of the insurance policy.
If you want to claim tax deductions for your donations, you can give dividends.
While it would not yield the same amount as naming the charity a beneficiary,
you could still use the life insurance to donate
while claiming the tax deduction. You would do this by ensuring your dividends
were paid to you in cash during your life, then donate that profit to
Using an Optional Rider
Some insurance companies have begun to add optional “riders”
to their policies. These could be additional benefits to existing riders,
such as a terminal illness rider that yields a higher percentage upon
death, they could be returns of premium riders, or they could be charitable
giving riders. If your life insurance policy has a charitable giving rider,
it may give an additional percentage of the total policy amount to your
charity, up to a certain amount. Selecting a rider keeps the bulk of your
insurance policy for your beneficiaries while also guaranteeing your charity
receives a large donation.
Donating the Life Insurance Policy
Selecting this option could give your charity a larger portion of the life
insurance policy while also providing you with a significant tax deduction.
If you gift your policy to your charity, the charity becomes the owner
of the policy, which reduces your taxable estate. The charity would also
receive the maximum amount of the policy upon your death, and there is
no limit on the size of the policy donated (charitable donations have
Whichever option you choose, make sure you have all the information you
require to proceed with the donation. Call one of our Atlanta insurance
administrators at (888) 451-0883 or use our online form to discuss your needs.