Auto Insurance in the Driverless Era: How Enterprises Will Adapt

 

It’s hard to imagine that charitable giving could be tied in with life insurance, but it actually makes sense if you look at it from the perspective of the donor. When you make a donation to charity, you have to pay taxes on your donation; however, the United States government gives tax credits to those who donate to qualified charities and organizations. Tax credits allow you to subtract money from your taxable income; in other words, if you pay $1000 in taxes and have $500 worth of donations, your taxable income will be reduced by $500, saving you money over time.

How do you give back to the people and causes you care about? There are plenty of ways, including writing them a check, donating time and services, or volunteering. If you’re interested in providing support to charity, but don’t want to donate directly or write checks every year, consider life insurance as a vehicle for making your charitable donations. To learn more about how life insurance and charitable giving can go hand-in-hand, read on!

 

Why do I need life insurance if I want to give my money away?

Insurance is an agreement between the insured party and an insurance company. When you purchase life insurance, the company pays a set amount to your beneficiaries when you die. In exchange, you pay premiums every month or year to help keep this agreement running smoothly. There are many different types of life insurance policies that vary by how much coverage they provide (the death benefit), how much you will pay for coverage (the premium), who receives your benefits when you die (your beneficiaries), how long your policy lasts (the term) etc. The purpose of this blog post is to compare charitable giving with insuring oneself which means we'll take a closer look at why individuals might want to apply existence insurance in charitable giving as opposed to solely donating funds or assets.

 

What kind of policy should I get for charitable purposes?

There are a few different options that you can use when donating to charity, including giving cash or selling appreciated securities. In some cases, though, your donations could also be used to fund an insurance policy. This would then allow you to pay a death benefit to your designated beneficiary if the need should arise, such as if you were diagnosed with cancer or Alzheimer's Disease. To apply existence insurance in charitable giving is a good option because it helps the person make sure that their legacy lives on for years to come.

 

 

What about estate taxes and the donor tax deduction?

As with any business, before entering into any contract or investment, it is important to perform due diligence. To avoid the estate tax imposed by the federal government (on assets transferred at death), consider donating life insurance to a charitable organization. The donor is entitled to a federal tax deduction on their donation equal to the total of the cash value (including dividends) of life insurance donations up to 50% of their adjusted gross income. On top of this generous tax break, charitable giving has an intrinsic value – one that cannot be touched by taxes. When providing contributions as an act of philanthropy, donors will have increased peace of mind knowing they are making a positive impact on society that will last far beyond their own lives.

 

Is life insurance still a good idea even if I have significant assets when I die?

The question of whether or not to purchase life insurance is a big one, especially for those who have substantial assets when they die. If you answer yes to the following questions, it may be wise to buy life insurance.

Do I have dependents who will lose all of their financial support if I die? Is my income crucial to providing a living wage for dependents such as children or spouse?Would my surviving family experience more stress from paying funeral expenses than from managing an inheritance that doesn't provide an adequate living wage?

 

If I have an irrevocable trust, can it own life insurance on my behalf?

Generally, a person has to be the owner of life insurance to name beneficiaries. However, irrevocable trusts can own life insurance policies as well. The beneficiary is generally named as the trust, not the grantor. Once you establish an irrevocable trust that owns a life insurance policy, you're allowed to change it during your lifetime and this can lead to confusion about who is actually getting the benefit payments. There are many different types of charitable giving strategies that you can use to apply existence insurance in charitable giving. For example, if a donor gives $1 million to charity but wants to make sure it will continue to receive money even after he or she dies, they could purchase an existing life insurance policy for $2 million with the extra $1 million going into the annuity account for income distribution purposes.

 

How do I make sure that a family member gets the benefit from this policy if he/she needs it more than my charity does?

Life insurance policyholders should know that there are several methods they can use to designate a specific beneficiary, so they can rest assured knowing their life insurance benefits will go where they want them to when the time comes. The life insurance company might require some extra paperwork to formalize this designation ahead of time, but it's an important step for those who want to make sure the benefits get where they're supposed to go. One strategy is naming the charity as your beneficiary; however, another might be simply designating it as my spouse or my children. Your first option is to specify that the proceeds must be applied against any outstanding debt owed on your home loan.

 

Final Thoughts

It's not uncommon for people to want to give back after realizing how much good they've been able to do. No matter what the circumstance, it is a good idea to look into charitable giving. You can set up your own foundation or trust, designate a donor-advised fund (DAF) at your favorite charity, or donate through a Community Foundation. Whatever way you choose, be sure that you understand the tax consequences of donating appreciated assets before making the move.

 

Many people incorporate charitable giving into their financial plans with the hope that their donations will carry on even after they pass away. However, did you know that you can apply your life insurance to support your favorite causes? This can be a powerful way to sustain your philanthropic legacy and ensure that your goals are achieved far into the future. Keep reading to learn more about charitable giving and life insurance and how this match made in heaven can impact the lives of others for generations to come.