There are many different ways you can donate your life insurance policy to your favorite charity, and each method has its pros and cons. One of the most common methods is to add the charity as one of the beneficiaries of your policy. With this type of method, however, the charity receives the money only when you die. Another method is to donate your existing life insurance policy to the charity. While you can claim an income tax deduction, this method may leave the charity with high premium payments. If you’re thinking about donating your life insurance policy to a charity, a life settlement may be your best option. A senior life settlement is a donation that offers advantages to both parties.
A life settlement allows the donor to sell his or her life insurance policy on the secondary market for a greater value than the cash surrender amount but less than the expected death benefit of a policy or certificate. While your life insurance policy will only benefit your favorite charity when you die, life settlements investment options will provide instant cash towards charitable causes while you are still alive. You will have the opportunity to see how your contribution makes a difference. In addition, the donor can receive a tax deduction and the saved tax money can be used to purchase a better life insurance policy. According to Advanced Settlements, seniors can buy more affordable policies because insurers are providing lower rates due to new mortality expectations.
In order to qualify for a life insurance settlement, Advanced Settlements says you will need to be over 70, with a life expectancy of less than 12 years, and must have owned a life insurance policy with a face value of $250,000 or more for not less than two years.