You’ve experienced success in your life and you’ve always dreamed of giving back to a charity or a specific organization. If leaving a legacy is important to you, donating a life insurance policy may be a great way to do so. If you choose to donate a life insurance policy, you have two options: naming the organization as the policy beneficiary, or transferring ownership of the policy to the organization. Which is your best choice? There are benefits and drawback to each. Let’s take a closer look:
Naming the Organization as the Beneficiary
If you choose to name the organization as the beneficiary on your life insurance policy, you will still have access to the cash value of the policy. If you should face an unexpected expense and need to draw upon your cash value, you will have the freedom to do so. As the owner of the policy, you also have the option to change the beneficiary. If your opinion of the charity should ever change, or you decide to list additional beneficiaries, maintaining ownership of the policy will enable you to make changes as you see fit.
It is, however, important to keep in mind that maintaining control of the policy will make you ineligible for certain estate tax deductions and will keep you from enjoying the sentiment of having your donation recognized during your lifetime.
Transferring Ownership to the Organization
If you choose to transfer ownership, the organization will be both the owner and the beneficiary of the policy. The charity then has the option to maintain the policy or liquidate it at the time of your donation. Should they choose to maintain the policy, you will have the option to continue making premium payments. Those who choose this method are eligible for charitable tax deductions for both the amount of the policy as well as any additional premiums paid.
In either situation, making a charitable donation via your life insurance policy is a great way to give back.
If you would like to explore your life insurance options, we encourage you to compare rates today. Learn how affordable it can be to purchase a policy that will one day serve as a charitable contribution. At IntelliQuote, we proudly work with the industry’s leading life insurance carriers in order to help our customers compare rates quickly and conveniently. Request your quote today!
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