Life insurance provides an effective way to make donations but there are drawbacks for most donors and charities.
- If you donate the death benefit, you get small ongoing donations for the premiums. The charity gets benefits when you’re dead but worries about premiums being paid until then.
- If you donate the cash value, you get a deduction now but it may be smaller than the deposits you made. You lose the large deduction from the death benefit. The charity gets an asset now but can only get cash by selling your gift.
Why not give now and replace the value of your gift with life insurance proceeds going to your heirs? The tax savings from your donation help offset the insurance premiums.
- You get a big tax deduction now. The charity gets the money now.
- You get ongoing tax deductions
- You can get a large tax deduction at death, if you choose. Or use the death benefit to offset your original donation.
There are other strategies, depending on your goals.
Get an Actuarial Insurance Review.