Did you know you can leave part (or all) of your death benefit from a life insurance policy as a donation to a charity or nonprofit organisation? Permanent life insurance policies, such as whole life insurance and universal life insurance, with their guaranteed death benefit, are perfect candidates for charitable giving.
Leaving a gift to charity can be a great way to continue supporting a cause even after you’re gone. If you’re thinking of leaving part of your death benefit to an organisation, here are some aspects to consider:
The first step is to choose which charity or organization you want to donate to. Is there an organisation you’ve been contributing to or working with throughout your life? Maybe you’ve been fostering for a particular animal shelter for years. Is there a cause that’s particularly important to you? Perhaps you survived a particular type of cancer and want to ensure other people have access to the same level of care as you did.
Once you know which organisation you want to donate to the next step is to decide how much you want to leave. When designating beneficiaries, you can choose what percentage of the total death benefit to leave them. You may want to consider your other financial obligations when making this decision. For example, if your children are still dependents, you may want to leave a larger portion of the death benefit to your spouse. You may choose to change how much you leave to charity later, after your kids are out of the house and living independently and you have fewer financial responsibilities.
You can choose to leave gifts to multiple charities or organisations the same way you can leave your death benefit to more than one person. This can be a great option if multiple organisations have been important to you.
If you choose to leave part of your death benefit to multiple organizations, you’ll want to consider how much to leave to each one. You may leave a larger gift to an organization you’ve been more involved with or choose to give more to a bigger organization that requires more funding in general. Or, you may simply decide to divide the amount evenly.
If you choose to leave part of your death benefit to a charity or organisation, you may want to let your other beneficiaries know. Letting them know now can help them understand your wishes and may help avoid any confusion in the future.