AALU: Charitable Giving Approaches Using Life Insurance

A Few Simplified Charitable Giving Approaches Using Life Insurance

As clients search for ways to make their year-end charitable contributions, a gift of life insurance may be an easy solution. A life insurance policy is easily transferable and, among other benefits, can provide a fixed-value gift with minimal administrative requirements, financial flexibility for the donor, and a highly favorable cost-to-benefit ratio. Simple options for giving a life insurance policy or the proceeds to a charity include: (1) a direct gift of a policy to a charity, (2) making annual gifts to a charity for it to purchase and pay premiums on a policy, (3) naming a charity as the policy beneficiary, or (4) adding a charitable giving policy rider. Each of these options may significantly enhance a donor’s ability to meaningfully provide for charity.

Regardless of whether clients desire to maintain control over a policy during life, foster an on-going relationship with charity, or make a one-time gift with no further attachments, combining simple gifting techniques with life insurance can enable charitably-minded clients to achieve significant philanthropic and tax planning goals at minimal investment and administrative cost.

Get the complete primer on the Transfer for Value Rule in the latest Washington Report.