How Can I Donate My Life Insurance Policy to Charity?

Life insurance can be a tool that supports more than just your family beneficiaries. Donating life insurance to charity is another way you can use your policy after you pass. There are several ways to donate to a charitable organization that’s important to you, each with different implications. 

Why Donate a Life Insurance Policy to Charity?

Donating life insurance to charity can create a meaningful charitable gift and can make a larger impact than a cash donation. There also may be potential tax advantages, including estate tax benefits for those with large estates. Check with your tax advisor for more details about your tax benefits and make sure your selected charitable organization can use what you donate.

Ways to Donate Life Insurance to a Charity

When you donate your policy to a charity, there are two ways you can donate. You can name your selected charity as a beneficiary or you can transfer ownership of your policy to the charity. These two approaches depend on your goals and financial situation. 

Naming a Charity as a Life Insurance Beneficiary

When you name a charity as a beneficiary, it allows you to maintain control of the policy during your lifetime, which lets you make updates to your beneficiary designations at any time. When you change a beneficiary, you may need to talk with your financial institution, agent or financial advisor. 

Donating Ownership of a Life Insurance Policy

If you choose to transfer ownership of your policy to a charity, it gives the charity control over your policy for your lifetime and is generally a permanent choice. Additionally, if you donate your policy to charity, you can claim a charitable income tax deduction.

Important Considerations Before Making a Donation

Before you donate or add a charity as a beneficiary, carefully review your existing beneficiaries and family needs first. It’s also important to document your changes to avoid contesting and disputes if your plans are unclear or outdated. 

When to Talk With a Professional

To ensure your charitable giving decisions align with your overall estate planning goals, speak with a financial advisor or agent before making changes to your policy to help ensure your donations are set up correctly. 

Turn Your Life Insurance Into a Lasting Gift 

If you’re considering donating a life insurance policy to charity or naming them as a beneficiary, a Farm Bureau agent can help you understand your options and make sure your coverage supports both your goals and the causes you care about.