What is charitable life insurance?

Charitable life insurance is a special type of life insurance policy that is designed to benefit a charity upon the death of the insured. The key aspect of this policy is that the proceeds from the life insurance are directed to a charitable organization, which can enable the policyholder to leave a significant legacy to a cause they care about. This type of arrangement not only fulfills the philanthropic intentions of the policyholder but may also provide certain tax benefits, such as a charitable deduction on the policyholder's income tax, since the proceeds are given to a non-profit organization.

The nature of charitable life insurance allows individuals to leverage their financial planning strategies to support charitable organizations, making it an attractive option for those who want to make a positive impact while also considering tax implications. The direct connection between the life insurance policy and the charity underscores its purpose, reinforcing the idea that the primary beneficiary is a charitable entity. This aligns with the concept of gifting and planned giving, where individuals can enact significant contributions to their favorite causes.