Donating to a charity can be a rewarding personal experience. Whether you choose to do this during life or by naming an organization as a beneficiary, it is a win-win situation.
By either giving the policy to an organization or naming the organization as a beneficiary, you will ensure your favorite charity will receive the funds they need to help others. If you like to think outside the box, the death benefit proceeds given to your family can provide the financial flexibility to make donations to the charity of their choice.
Marc Belletsky, spokesperson for The Hartford, said one of the biggest reasons against designating a charity as a beneficiary, is that it is more advantageous to both sides if you make it a gift instead.
“If you list a charity as a beneficiary to be paid upon death, you won’t receive any income tax benefits while still alive,” Belletsky said. “You can also tell the charity to take out a policy on your life so that they can double any financial gift you give them.”
Investopedia.com outlines the various ways people can donate to charity through insurance, which can include charities as beneficiaries, additional riders and gifting dividends.
Belletsky also said that by making a charitable gift during your lifetime, you will get charitable deductions that can be used to offset any estate taxes after you die.