How to Donate Life Insurance Benefit to Charity or Non-Profit?

Your life insurance policy and the benefits are your responsibility, and so they are your assets. As a result, you are free to do anything you want with your benefits. Some people decide to leave the benefits to their family members.

However, there are others that opt to donate the benefits to charities or non-profit organizations. It is all upon you to decide what you want. Millions of people donate their money and other things for charity every year. Life insurance benefits can also be donated as long as you follow the right procedure and know what to consider.

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Before you can donate your life insurance benefits to a charity or non-profit organization, there are many things you have to know and understand about the process.

Factors to Consider

The process is affected by many things that are worth noting down and looking at. If you want to do this, then you have to put the following things into consideration.

Tax Deductions

Tax deductions are the first thing that you need to consider before donating your benefits. This is because when you donate, you will find that the tax-deductible benefits are of equal amount to the policy’s value. At the same time, you find out that the premiums paid already are part of the benefits.

Based on this information, you can decide on how to leave the policy to the charity. You can either name the charity as the owner and beneficiary to take advantage of the income tax benefits or just the beneficiary.

Type of Policy

The kind of policy you would like to use to donate to a charity is essential. This is because there are specific policies that are not suitable for a charity donation. You have to make sure that your policy will fully benefit the charity if you want to make an impact.

A term life insurance policy would not be ideal for donating. This is because the policy may expire before you even die. However, permanent insurance policy is the best in this case. This is because they ensure benefits to the charity or non-profit organization you intended.

How Much to Donate?

The question of how much you would like to donate to a specific organization is crucial before you make a decision. In some cases, you may not be interested in donating all the benefits. In this case, you have to make a decision and indicate how much or what percentage of the benefits you would like to donate even after naming a charity the beneficiary.

Charity to Donate Benefits to

In some cases, people may not be 100% of the charity they would like to donate the benefits to. In such a case, you have to be keen on what steps to take. Whenever you want to donate your life insurance benefits, and you are not sure which charity to work with, you keep your options open.

All you have to do is maintain the ownership of the policy. Then you can name a charity of your choice later once you have made a decision.

When deciding which charity to donate your insurance benefits to you have to make sure that you find a charity that is worth the benefits. That is by looking for a charity with a serious structure of management. A charity that will be able to put the benefits into good use.

Ways of Donating Benefits to a Charity or Non-profit Organization

Several techniques can be used to donate life insurance benefits to a charity. All you have to do is compare the available options and go for a method you feel is better for you.

Policy Donations

Policy donations are one of the easiest ways of donating your benefits to a charity. All you have to do is make the donations to the charity, and it will receive all the benefits of your insurance policy.

In return, gifting a life insurance policy will reduce the donor’s taxable estate, as a result, it will help in saving a lot of money that may come from estate taxes. A gift policy to a charity will have low costs of the donor as a small fraction of the amount per year and premiums paid past the date of the gift.

One of the advantages of gifting or making policy donations is that there is no limit to the size of policy that can be donated to a charity. It also acts as an excellent way through which as a donor, you can use to dispose of a policy taken to cover a need that is no longer exists.

Use of a Charitable Giving Rider

It is a process in which you can donate your benefits to a charity or non-profit organization by including them in your group of riders. In this case, the riders will be added to a policy with a face value of above $1 million.

In return, an addition of 1-2% if the policy’s face value is paid to a qualifying charity according to the policyholders choice.

However, you will find out that there are limitations to the maximum gift amount allowed. However, the riders do not affect the policy in any way that increased the premiums, reduces the cash value, or benefit upon death.

Name a Charity as Your Beneficiary

Naming a charity or non-profit organization of your choice as your beneficiary is one of the easiest ways of donating your life insurance benefits. All you have to do is identify a charity or non-profit organization of your choice and name them your beneficiary.

Upon your death, the charity will receive all the benefits. This method, however, it does not offer so much of income tax advantages as compared with gifting a policy. However, it still reduces your estate by the number of death benefits.

It is an excellent method as it allows privacy of the transaction since it will enable you to keep the activities of donating your benefits a secret from your family members and other people in case you want.

Transfer Ownership of the Policy

It is a method that involves a few steps, and it is very straightforward. Whenever you decide to take this method, it means that you will transfer all the ownership of the policy to a charity of your choice.

In this case, it means that the charity will have full control of the insurance policy, including all the benefits. It is also a simple way that allows privacy of your actions in case you want to keep them hidden from other people.


Donating benefits of a life insurance policy to a charity or non-profit organization is a good thing to do. However, you have to make sure that you understand everything that is involved in this process. You have to evaluate all the methods that can be used and arrive at one that you feel is okay for you.

Also, be keen whenever you are choosing a charity to work with. If you want your benefits put into good use, then you have to make sure that you select a charity wisely. You have to go for charity with the means to utilize the benefits well.