If you're a big-hearted person who is always concerned about the welfare of others, you may be considering donating your life insurance to a charitable organization. If you do decide to go through with it, not only will you be helping others, but you will be helping to get yourself a tax-deduction as well.
If using your life insurance policy to make a charitable donation sounds like something you want to do, there are a few things you need to consider before signing your life insurance policy over:
If you are donating to get a tax deduction, be sure to name the charity as both the beneficiary and the owner of the policy. If you name it as one or the other, you will not be able to deduct the donation proceeds from your taxes. The rule of thumb is if you donate a term life insurance policy, you can deduct the premium from your taxes, where as if you donate a whole life insurance policy, you can deduct the cost of the premiums and the cash value from your taxes.
Show of hands: Who wants your policy
Many charities appreciate the thought of a life insurance donation, but they prefer to have use of the donation immediately. Smaller and local charities don't have the resources that larger ones have and will more than likely welcome any contributions they can get, even if they have to wait for the payout. When it comes to larger organizations and universities, a team of money managers is on-hand to decide how to make the most off of your life insurance policy. By investing the money you spend on the policy, charities and organizations may be able to earn far more off the initial donation you give them.
An example of this is when a university accepts a whole life insurance donation ($400,000 death benefit with a $30,000 cash value), but then immediately cancels the policy and collects off it. Instead of letting time go on and allowing the death benefits to grow, university money managers may decide to invest the $30,000 in the stock market to get a quicker return from the donation.
If you are interested in getting a life insurance quote, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers - helping you find the best life insurance coverage for you and your family.
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