Charitable Giving With Life Insurance

Very few individuals decide one day to write out a check for $100,000 or more to

their favorite charity. But with life insurance, it can effectively cost very little to be

so generous. Life insurance enables a charitable individual to make a substantial

future gift by making small premium payments over time.

The advantages of funding a charitable giving plan with life insurance include:

prompt payment of death benefits to the charity; a policy’s growing cash value

also may be borrowed by the charitable institution for special needs; giving

without disrupting other assets reserved for your family; and qualifying for

income, gift and estate tax deductions.

There are many ways to make charitable donations through life insurance. One

of the simplest is to name a charitable beneficiary to receive all or a portion of the

proceeds of a current policy. Or a donor may purchase a new policy, naming a

favorite charity as beneficiary. In either case, the donor owns the policy and

pays the premiums. While the donor can’t deduct the premium payments, he/she

maintains control of the policy and could decide to change the beneficiary at

some point.

A very simple way to make a current charitable gift through life insurance is to

donate policy dividends from cash values to a favorite charity. Another option is

to make cash donations to the charity for the purpose of purchasing life

insurance. This provides the donor with a current income tax deduction, while

the charity pays the premiums and maintains ownership of the policy.

Where there are more sophisticated estate planning needs, charitable giving may

be a valuable component of a comprehensive estate plan. In this case, life

insurance in combination with various estate planning instruments can provide

current income tax deductions and may generate income for the insured and

his/her family.

To learn more about making a charitable gift through life insurance or to discuss

complicated estate planning needs, a financial planner, tax adviser or attorney

should be contacted for further information. Generous support of charitable

organizations can help fulfill their missions while providing financial planning

benefits as well.

This material was prepared by Raymond James for use by Arthur Rottenstein,

Registered Security Principal of Raymond James Financial Services, Inc.

Member FINRA/SIPC.