Make a difference with your life insurance

If you are passionate about a cause, you may make periodic donations to a charitable organization or volunteer your time. But did you know you can significantly expand your impact on your favorite charity through your life insurance? If you find yourself in a position where your family doesn’t need your life insurance benefit, donating your benefits to charity can be an excellent opportunity to make a difference for a personal cause.

Why use life insurance to contribute?

Life insurance may enable you to make a contribution beyond your normal means. With a life insurance policy, you may pay relatively small payments (premiums), and your beneficiaries receive a larger lump sum benefit when the claim is approved. In addition, the death benefit in a life insurance policy is a fixed amount, so it is not subject to the volatility of financial markets.

How do I set up a policy to contribute to a charity?

There are two ways to set up your life insurance to contribute to your favorite charity:

  • Make the charitable organization the beneficiary

If you already have a permanent life insurance policy, you can change the beneficiary to be the charity you want to receive the death benefit. Since most policies allow you to change this information as you need to, if you find that your situation changes and you no longer want to contribute the entire life insurance benefit to that charity, you can update the beneficiary.

  • Make the charitable organization  the owner and beneficiary of a life insurance policy

You can purchase a permanent life insurance policy on yourself and make the owner and beneficiary the charity of your choice. This strategy does not allow you to make changes to your beneficiary designations—once you make the charity the owner of your policy, the charity must remain the beneficiary. Fortunately, any premium you pay to this policy may be considered tax deductible, which could lower your payable taxes.

 Life insurance is one way you can make a plan to have a lasting impact on an organization you are passionate about.

This article is not intended to and does not provide tax advice.


Wall Street Journal, Donating a Life-Insurance Policy to a Charity, accessed August 18, 2015,

SLPC 26702 08/15 (exp. 08/17)

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