Buying life insurance has a lot of value. Besides insuring your life, it will give cash benefits to your family and nominees after your death. If you grow old, need money and don’t want to break into your savings, your insurance policy comes in handy. It can be sold under certain circumstances and you can get the money you need.
There is yet another use of your insurance policy. You may want to give money to your favorite charity but don’t have enough money to do so. Or if you want to get the maximum tax rebates and deductions, you can donate money from your life insurance policy and avail yourself of that.
A life insurance policy is an excellent tool for charitable giving. It will not cost you anything, it will raise you in the eyes of the people and also give you tax benefits from rules that apply to gifts of insurance.
You have to consult your legal advisor or your tax advisor for the exact rules and regulations governing tax exemption or tax benefits from giving donations to charity. You should also consult your family members before making this donation. You can use the life insurance policy that has served its original purpose. There can be several reasons. Your spouse who was the nominee of your policy has passed away; hence there is no one to claim the benefit after your death. Or you bought an insurance policy for your business but the business no longer exists. Or the young child for whom you bought the policy has grown up and does not need it, as he is financially independent. It can also be a new policy bought specially to benefit a special charity. A gift of life insurance can definitely give more financial support to the charity than what you could have given in your lifetime.
There are many ways in which you can structure the gift of life insurance to charity. You can make the charitable institution the beneficiary of an existing policy. On your passing away, the full amount will go to the charity. To do so you can just fill in a form, which can be obtained from, your employer or the insurance company and submit it with the relevant details. You can make the charity the owner and beneficiary of an existing paid-up life insurance policy. Or you can make the charity the owner and the beneficiary of a policy on which you are still paying the premium. You can also purchase a new policy and make the charity the owner and beneficiary. By consulting your lawyer or your insurance consultant or the tax consultant you will know exactly what tax benefits you will get by donating to charity. Different states may have different laws regarding this and your legal advisor will be able to inform you about it.
Life insurance is a flexible tool for giving to charity. It can be used to suit your individual financial needs and also substantially support your favorite charity
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