Building your legacy with the gift of life insurance is a practical and affordable way to achieve your philanthropic goals through charitable contributions. You don't need to be wealthy to make a significant and meaningful gift.

When an applicant applies for a permanent life insurance policy on his or her own life, a charity can be named as both the owner and beneficiary of the policy. Since the charity is the owner, the applicant/donor's annual premium qualifies as a charitable gift and may be tax-deductible. At the time of distribution, no complex probate procedures will be required to settle a life insurance claim, and the donor's estate will not be subject to gift or estate taxes on the amount of the death benefit.

For those individuals who may want to maintain control and access to a policy's cash value, but still have the charity receive the insurance proceeds at death, a donor may retain ownership of the policy and simply name the charity as beneficiary. While this may accomplish both objectives, premiums may not qualify as a tax-deductible charitable contribution since the charity does not own the policy. The insurance proceeds will also be included in the estate of the donor/owner, but may qualify for an estate tax charitable deduction.

As beneficiary of a life insurance policy, a charity receives proceeds on a tax-free basis upon the donor's death. If the charity is also given ownership of the policy, it will have access to the cash value throughout the donor's lifetime. If the donor needs to discontinue making premium payments at some point, the charity may have the option of making the policy "self supporting". This may be possible if there is sufficient cash value and/or dividends to offset part or all of the out-of-pocket premium costs. Any accumulated policy values may provide a valuable financial resource to the charity, as an emergency fund or as collateral for a loan from another financial institution.

Including a charity as part of your legacy can be very rewarding for you, your family and a charitable organization. Donors can make a substantial and lasting impact with even modest annual gifts and leave a legacy that otherwise may not have been possible.