Life insurance is designed to help you provide financial support after you are gone. While many people choose a significant other or loved one to receive their death benefit, you can also assign that money – or some of that money – to a cause you care for and wish to fund.
Many organizations and nonprofits heavily rely on monetary donations to keep themselves operational. If you have a cause or charity near and dear to your heart, you might want to make that a part of your legacy and the beneficiary of your life insurance. A permanent life insurance policy, such as universal life insurance, is well-suited to this as it can have the option to provide a guaranteed death benefit regardless of how long you live.
If you’re considering donating some of your death benefit to a charity, here are a few things to think about:
Decide which cause or causes you want to support
You may already have organizations you regularly donate to, but if not, make sure you do your research. There are so many nonprofits registered in the United States, so chances are good you will be able to find one that aligns with your values and inspires you to donate. You can consider things like, what has personally moved you in the past year? Do you want your impact to be felt locally or globally? Was there a time that you needed help and you want to pay it forward?
Once you’ve narrowed down your list, you can also vet the charities to be sure they are spending their donations in ways that make a difference. Certain websites and apps provide neutral evaluations of the inner workings of most nonprofits. If you’re torn between a few causes, you can always designate more than one organization as a beneficiary.
How much do you want to leave?
If you decide to make a charitable organization your life insurance beneficiary, you can determine how much you want it to receive in advance. You can also name multiple life insurance beneficiaries, so part of your money can go to loved ones and the rest to a charity – or even multiple charities. You have control over how your death benefit gets divided. You can name beneficiaries when you purchasing a policy or make changes to your existing one.
Do you want your donation to go toward something specific?
Many charitable organizations have a lot of different moving parts, departments, and outlets. Take some time to consider what about the organization moves you; where you want your dollars to have the most value and impact. If giving to a hospital, would you like it to go to a certain department? If you have named your alma matter as a beneficiary, do you want the money to go to a scholarship fund for your old major? If so, you can let the organization know so they can follow through on your wishes.
Let the charity know you’re making it a beneficiary
This may seem like an obvious step, but it is nonetheless an important one! Don’t forget to tell the charity you are naming it as a beneficiary. They can then provide you with important information you may need, like their legal name or EIN number – basically all the information you will need to provide to your life insurance company. This is also the time you can talk to them about where you want your money to go within their organization so you both have a clear plan.