Using Life Insurance as a Charitable Gift
Many people hope to leave a meaningful legacy, one that reflects who we are and what we care about. While cash donations and charitable accounts are familiar ways to give back, life insurance as a charitable gift is an often overlooked option that can make a lasting impact without dipping into your savings.
Whether you name a nonprofit as your beneficiary or transfer ownership of a policy, it’s a meaningful way to support a cause close to your heart – while still protecting your loved ones.
In this guide, you’ll discover how this works, which policy types qualify, donation options, things to consider, a step-by-step overview and how Amica can support your goals.
Why consider life insurance for charitable giving
Charitable giving through insurance can be a way to align your financial planning with your personal values. With life insurance, you can ensure your legacy truly reflects what matters most to you – with little impact to your day-to-day finances.
In addition to the emotional reward of giving, there may be financial or tax benefits. A financial or tax advisor can help you understand how these benefits apply in your situation.
What types of life insurance work best for giving
Not every life insurance policy is suited for donation. Understanding whether your policy qualifies is an important first step.
Whole life insurance : Whole life policies are commonly used in charitable giving because they last a lifetime. You can either gift the policy outright to a nonprofit or retain ownership while naming the organization as the beneficiary.
One common approach is to buy a new life insurance policy and name your favorite charity as the beneficiary. When the time comes, the charity receives the policy’s proceeds, making it possible for you to leave a meaningful, lasting gift to a cause you care about.
Options for donating life insurance to a charity
There are several ways to make a charitable gift using life insurance. Here are some common approaches:
- Name a charity as the beneficiary. This keeps you in control of the policy and allows you to update the beneficiary if your plans change.
- Transfer ownership of an existing policy. The charity becomes both owner and beneficiary. This may qualify for a tax deduction and is generally a permanent decision.
- Purchase a new policy with the charity as the owner. You pay the premiums and the nonprofit receives the full benefit when the time comes.
- Use a charitable trust or gift annuity. These tools are often part of a larger estate plan and may be used when combining charitable giving with tax or income planning.
Each method of donating life insurance to charity involves different steps and implications. A professional can help ensure your donation is structured in a way that matches your goals.
What to consider before making a life insurance gift
Before moving forward, take time to think through both personal and practical questions:
- Can I afford to keep paying premiums if needed?
- Is the nonprofit able to accept and manage a life insurance policy?
- Have I spoken with a financial, legal or tax advisor about this gift?
If you’re passionate about education, the environment or community causes, life insurance for charitable giving can help support those efforts long after you’re gone. For many, this type of gift feels deeply personal. It’s a way to honor what mattered most and continue making a difference.
How to donate life insurance to a charity
Here’s how to take action if you’re ready to give:
- Review your life insurance policy. Make sure it meets your current needs and is eligible for donation.
- Contact the nonprofit. Confirm that they can accept the gift and that your intentions are clear.
- Speak with a financial or legal advisor. They can explain tax implications and help you fit this gift into your trust documents.
- Keep everyone informed. Notify your insurer, the charity, and your executor or loved ones so they understand your wishes.
How Amica can help with charitable life insurance gifts
At Amica, we understand that life insurance is about more than just the numbers – it’s about the legacy you want to leave behind.
If you’re thinking about naming a nonprofit in your life insurance policy or transferring ownership, we’re here to help. Our representatives can assess eligibility by reviewing your history with charity, such as years of support, volunteer involvement and previous donations. We’ll also review your existing coverage, walk you through your options and connect you with resources to support informed and confident decisions.
FAQs about charitable giving with life insurance
Yes. Letting the organization know allows them to confirm they can accept the gift and understand how they are listed in your policy.
If the nonprofit has closed, the benefit may go to a contingent beneficiary or your estate. Consider naming a backup organization if possible.
If you’ve transferred ownership of an existing policy to the charity, the decision is typically final. If you’ve only named them as a beneficiary, you can usually make updates.
Yes. Deduction limits depend on your income and how the policy is structured. A tax advisor can help clarify what applies to you.
Your Policy, Policy Declarations or Amended Declarations in effect on the date of loss is the primary source of reference for your coverage, coverage limits and deductible amounts.
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