How Business Owners Use Life Insurance to Make Charitable Gifts
What is one trait that successful business owners share? An attitude of gratitude! Business owners who have advanced in their field don’t forget those who helped them get to the top. They honor their parents, they give credit where credit is due, and they see the importance of every contribution to the cause, whether from the janitor or the CEO.
On top of that, they also value and appreciate charities and the work they do. It might be that the business owner was touched and assisted by a religious congregation. Maybe a family member benefited from the services of a medical research group, hospital, or home care facility. Many business owners support universities or advocacy groups. Regardless of the reasons or the particular charities, they often desire to give back to the organizations that made a difference in their life. Other than donating funds from time to time, how can successful business owners give back in a way that will significantly impact the charities they choose?
Using Life Insurance to Give Back
Life insurance is ideally suited for charitable giving. By taking out a policy on yourself for the benefit of the charity, you can turn a small amount of money into a substantial gift. Each dollar of the benefit only cost pennies in the original investment. This means that the gift does not have to be an excessive expense for the donor, but the investment adds up and the charity’s cash flow is considerably impacted.
Here are three quick tips for business owners for using life insurance to make charitable gifts:
Familiarize Yourself With The Legalities
Make sure you understand the laws regarding the use of life insurance for charitable giving. Many states recognize that charities have an insurable interest in contributors. They realize that these organizations can be as dependent on donors as businesses can be dependent on key personnel. Work with an attorney who can guide you on the best way to structure the policy and help you answer the questions of who should be the owner, beneficiary or premium payer.
Get Creative With Permanent Life Insurance
The life insurance policy you are gifting will be part of your estate plan, and thus must last as long as you do. That means you need permanent life insurance. But just because the policy will last your lifetime doesn’t mean you have to pay for it for your entire life. You can design the policy so you can make one single payment, payments for ten years, or even payments for twenty years, yet still retain a lifetime guarantee. Work with your broker to generate some options and pick the one that best meets your financing preferences.
Work With a Team
Collaborate with your fellow contributors to maximize the benefits to the charity. The healthy charity is the one that receives support on an ongoing basis. Long-term contributions could be generated for a charity if donors of all different ages took out policies for its benefit. Year after year after year, big dollars could roll in as donors pass on and benefits are paid out.
Generous business owners can increase their donations to their charities by using life insurance. By naming a charity as a beneficiary, you can give that charity an extraordinary amount of money that can create a lasting legacy for a cause that is important to you. If you are interested in contributing to a life insurance policy for the benefit of a charity, I’d love to walk you through the process and answer any questions you may have. Connect with me here.