Charitable giving through life insurance: Making that special gift

Life and Health Insurance

Charitable giving through life insurance: Making that special giftMany of us have charitable objectives. We would like to repay society for the blessings we’ve received and, at the same time, fulfill a desire to “give back” to those who have given us so much. But many of us may feel somewhat frustrated — having the desire to make substantial gifts and yet feeling that our resources will not permit it. The common perception is that any meaningful charitable giving must be left to the wealthy. This is not necessarily so.

There is a method of giving that provides the opportunity to do far more for a charitable organization than you might think possible, even if your financial resources are limited. Life insurance is traditional fare on the menu of planned gifts. Making a gift of a life insurance policy to one’s favorite charity appeals to a variety of donors because it is a flexible, cost- effective, and in many cases tax-advantaged way to make a major gift that will benefit the nonprofit institution after the donor dies. Life insurance can also be used as an asset- replacement strategy. Under this strategy, a donor makes a gift of an asset (such as real estate or appreciated securities) to the nonprofit and replaces the value of that asset to benefit his/her heirs with a life insurance policy owned in a way that eliminates estate taxes on the benefit that inures to the donor’s heirs.

“Simply put,” states Attorney Michael Dobronos “this is giving from the grave after you have expired. Charitable giving through life insurance, properly structured, can pay dividends for many years.”

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