As fundraisers, it’s critical to find creative ways to encourage people to donate to our cause. One often overlooked form of charitable giving is through life insurance. Many individuals are unaware of the power that life insurance can hold, not just for their loved ones but for the charitable organizations they wish to support. In this blog post, we’ll explore the benefits of considering life insurance as a charitable gift and how it can make a significant impact on the causes you care about.
What is a Charitable Gift of Life Insurance?
A charitable gift of life insurance is a simple gift that involves the transfer of an existing life insurance policy to a charitable organization. The charity becomes both the owner and beneficiary of the policy, which means when the donor passes away, the charity receives the death benefit. This type of gift allows individuals to make a more significant impact on the causes they care about, without affecting their current standard of living. Charitable gifts of life insurance can also provide tax benefits to donors.
Tax Benefits
Individuals who donate a life insurance policy to a charitable organization can benefit from tax deductions. When the charity becomes the beneficiary of the policy, the donor can take an income tax deduction equal to the policy’s fair market value at the time of the gift. If the policy’s value is greater than the amount of premiums paid, the donor may also be eligible for additional federal income tax deductions.
Legacy Giving
Gifts of life insurance can help donors create a legacy that reflects their values and beliefs. By making this type of donation, individuals can ensure that their favorite charities continue to receive support long after they are gone. Additionally, donors can name a charity as the beneficiary of an existing life insurance policy without making any changes to their will or estate plan. This allows individuals to make a significant impact on causes they care about without any additional work.
Customizable Giving
Charitable gifts of life insurance are customizable and can be designed to meet the unique needs of each donor. Donors can choose to make a one-time gift by donating an entire life insurance policy to a charity, or they can make a more modest gift by naming a charity as a partial beneficiary. This type of gift is also often a good fit for donors who have experienced a change in their life insurance needs, such as after their children have grown up, or they no longer have dependents.