How to Donate Life Insurance to Charities

For those who have a life-insurancepolicy they don’t really need, one option is to donate it to charity.

There are two ways this can bedone.  The easiest way is to keep ownershipof the policy and name the charity as the beneficiary.  This allows the donor to keep access to thecash value of a policy in case it’s needed for living expenses or to changetheir mind about the beneficiary designation. The downside to naming a charity as beneficiary is that it denies donorsincome-tax deductions and their gift won’t be recognized while they are alive. 

The second option is to transfer theownership of the policy to the charity, making the charity owner andbeneficiary.  The charity can then chooseto maintain the policy or liquidate it.

See Veronica Dagher, Donating a Life-Insurance Policy to aCharity, The Wall Street Journal, Sept. 18, 2013.