Generally, life insurance for charitable purposes can be used in two principal ways. First, for the person who is currently making cash gifts to a charity. Second, for the person who plans to leave a bequest to a charity in his or her will.

Here are some reasons why you should substitute a life insurance policy for part or all of these cash gift programs.

Why Gifts of Life Insurance?

Your gift is made on the installment plan
You can make a substantial bequest to your favorite charity through small contributions during your lifetime.

The value of your gift is guaranteed

The value of your life insurance policy is guaranteed, therefore, your gift is guaranteed. There is no doubt that the charity will collect the face amount as long as the premiums are paid.

You get an income tax deduction

You get a current income tax deduction for the premiums paid as a charitable contribution on the policy.

Your gift is self completing

For example, if you were to give $1,000 a year to your favorite charity, your contributions could cease if you were to die or become disabled. However, a $1,000 annual premium with waiver of premium on a cash value policy would provide a substantial death benefit, even if you should become disabled.

You get the best of both worlds

The charity receives a substantial bequest while your estate remains intact for your family. You need only part with the annual premium.

Your gift is received promptly and tax-free

The charity will recive the policy proceeds promptly and free from federal and income state taxes, estate administration costs and personal debts.

Your wish and privacy are protected

Your gift to charity is assured privacy and is protected from challenge by disgruntled heirs, since the proceeds are not part of your probate estate.

You are not locked in

You are not locked in as you can stop future appreciation of the gift by discontinuing to make the premium payments.

You’ll have a small annual outlay

A gift of life insurance allows a small annual outlay without reducing the rest of your estate or forcing liquitation of your assets at a loss.

Small annual cost

The annual cost of the policy gift is approximately one to four percent of the amount to be given, depending on your current age.