Using Term Life Insurance as Charitable Giving
There are many ways to give to charities and one unique way, that is increasing in popularity, is buying a term life insurance policy to give as a gift to your favorite cause. Whether the charity is for the Make A Wish Foundation, People for the Ethical Treatment of Animals, Meals on Wheels or for your high school alma mater, charities everywhere can benefit from a sizable donation such as the pay out from your term life insurance policy. This is wonderful way for your legacy to continue and you will have the knowledge that those in need will use your gift wisely.
How To Get Started
The first step is to purchase a term life insurance policy and list the charity as the beneficiary. Since many people usually buy term life insurance policies when they are younger, chances are you might already have a policy on hand that simply needs to be renewed. Since you were most likely just starting your family when the original policy was purchased, it is likely you have “outlived” the intention of using the policy to send your children to college or provide for your surviving spouse. If the need to take care of family members no longer exists, all you have to do is rename the beneficiary to your current policy or upon renewal. The charity of your choice will be the new recipients of your death benefit.
What Information You Will Need
Upon naming your favorite charity as your beneficiary, you will need to have the following information:
1. The full legal name of the charitable foundation.
2. The charity’s permanent mailing address.
3. Your charity’s federal tax identification number.
4. Your relationship to the beneficiary: simply answer as “Charity”
Charitable foundations always have a liaison in charge of organizing and accepting gifts and donations. You can be certain that these coordinators will be happy to help you should you have any questions on the gift giving process. They are always available to help you fill out and file any necessary forms.
Make sure you consult with your tax accountant for the benefits associated with leaving the face value of your death benefit to a charitable foundation. Since the charity is now the owner of your term life insurance policy, the proceeds will not be added to your overall estate. You may also be able to deduct annual payments for your term life insurance premiums. Be sure to also consult with your financial advisor about your group term life insurance policies. Many employers allow you to transfer your share to a charity.
Since more and more people are seeking ways to make charitable contributions - giving a term life insurance policy is certainly one worth considering.