December and the holidays bring to mind parties, festivities and, of course, giving. This is the time of year when we make a list of people we care about and those who have helped us through year and give them something thoughtful as a token of our love or thanks.
Many people don’t equate life insurance with holidays or giving, but at its heart, life insurance is all about giving. Most people buy life insurance because they love someone and want to make sure they are taken care of financially if they were to die prematurely. That’s truly selfless giving.
Life insurance can be used to give in other ways, too, specifically to help charities that are close to our hearts. Many people dedicate their time, energy and money to causes that matter to them; it may be the local animal shelter, the children’s hospital, or perhaps their alma mater. It may have even crossed their mind that they’d like to donate more money or leave a legacy to that cause.
So, how would that work with life insurance? When your need for protecting the financial well-being of those you care about with life insurance has passed, say your children are out on their own and your mortgage is paid, you may think you no longer need your life insurance. But instead of canceling that policy, you can use it to support a charity or cause of your choice by naming them the beneficiary of your life insurance policy. It’s an easy way to leave a legacy! (If you’re not quite sure how to change the beneficiary of your policy, just ask a life insurance agent for help.)
Keep in mind, however, that if you have a term life insurance policy, the death benefit will go to the charity or cause only as long as the policy is in force (during the term). That’s why a better choice for charitable giving with life insurance may be permanent life insurance. Unlike term life insurance, permanent life insurance is there for your lifetime, as long as the premiums are paid when due. So using permanent life insurance and naming a charity as the beneficiary is a good way of making sure that your charitable legacy is passed on.
Additionally, when permanent life insurance is used in conjunction with specific legal and estate-planning documents there can be both income-tax and estate-tax benefits. The life insurance can become a way for both beneficiaries and charities to benefit from your legacy planning.
And remember, any gift—large or small—will always be appreciated by the charity that you support. Why not ask a life insurance agent for help on learning more about this type of charitable giving?
When it comes to life insurance, many people rely on what is offered through their employer, and that may not be enough.
While age and health are important factors that underwriters will consider, there are other factors as well.
The kids are gone and you’re officially an empty-nester, so it’s a great time to get rid of your life insurance, right? Not so fast.