Giving through life insurance

Naming a charity as beneficiary

The simplest. You keep ownership and can change the designation at any time. On death, the benefit passes to the charity.

Because you retain control, there's generally no income tax deduction for premiums during your lifetime. Your estate may be entitled to a charitable deduction — confirm with a tax adviser.

Transferring ownership to a charity

You give the policy itself. The charity becomes owner and beneficiary, and you generally give up the ability to change it.

This is where a lifetime deduction may become available, subject to substantiation and valuation rules. It's also irrevocable, which is the trade.

A charity taking out a new policy on you

Some organisations will apply for a policy on a donor's life with the donor's consent, funding premiums through donations.

Insurable interest rules apply and vary by state. This needs the charity's own advisers involved, not just yours.

Insurance as wealth replacement

Where you're giving a significant asset to charity during your lifetime, insurance can replace its value for your heirs — so the gift doesn't come out of what your family receives.

This pairs commonly with charitable trusts and is a genuine planning use rather than a sales device.

Before you commit

• Talk to the charity — some are equipped for this and some are not
• Confirm who will pay premiums, and what happens if payments stop
• Understand which structures are irrevocable
• Get the tax treatment in writing from a tax professional, for your situation
• Check how it interacts with the rest of your estate plan
• Review it if your circumstances or your relationship with the charity change