If you would like to make a substantial charitable donation, consider a gift that involves life insurance.
* Such transactions might benefit your favorite charity, school, or other nonprofit group significantly without requiring a huge cash outlay on your part.
* Using life insurance for charitable donation can provide you with tax savings, just like a cash gift.
* You also can get current recognition for a future charitable gift. Most charities will list you as a donor of the amount of the death benefit even though the payoff will come at your death.
You can accomplish all this by donating an existing but no longer needed life insurance policy to charity. If it’s a cash value policy, you can deduct the premiums you’ve paid, subject to all the tax code rules on charitable donations. Generally, charitable tax deductions in any one year can’t exceed 50% of your income while excess charitable contributions can be carried forward for up to five years.
If you want, that can be the end of the transaction: the charity can make the required premium payments until your death, then collect the insurance benefits. Alternatively, you can make ongoing deductible donations of the premium amount, which the charity can use to keep the policy in force.
