Friday, September 20, 2013
For those who have a life-insurance policy they don’t really need, one option is to donate it to charity.
There are two ways this can be done. The easiest way is to keep ownership of the policy and name the charity as the beneficiary. This allows the donor to keep access to the cash value of a policy in case it’s needed for living expenses or to change their mind about the beneficiary designation. The downside to naming a charity as beneficiary is that it denies donors income-tax deductions and their gift won’t be recognized while they are alive.
The second option is to transfer the ownership of the policy to the charity, making the charity owner and beneficiary. The charity can then choose to maintain the policy or liquidate it.
See Veronica Dagher, Donating a Life-Insurance Policy to a Charity, The Wall Street Journal, Sept. 18, 2013.