For individuals and families who see their wealth as a tool to make a lasting difference, charitable giving is more than an annual obligation, it’s a legacy. And while outright gifts and donor-advised funds remain popular vehicles for philanthropy, one tool is often overlooked: life insurance.
Used thoughtfully, life insurance can magnify the size of your gift and perpetuate your charitable intent long after you’re gone. It can also provide something donors often lack in their giving: clarity about what they want to accomplish, confidence that their gift will endure, and coordination with the rest of their estate and financial plans.
Clarity: Defining Your Charitable Goals
Many generous individuals give year to year based on emotion, timing, or tax planning. These gifts matter, but they don’t always reflect a clearly defined vision.
When you build life insurance into your charitable planning, you begin by asking bigger questions: What do I want my legacy to support? What kind of lasting difference am I trying to make? What will this gift mean for my community, or for generations to come?
By articulating your goals and identifying specific causes or organizations to support, you bring clarity to your giving. That clarity allows your advisors to structure a life insurance strategy around your intentions, so your giving becomes purposeful, not just possible.
Confidence: Creating a Gift That Will Endure
Life insurance provides a unique kind of confidence that few other tools can offer. It allows you to convert relatively small annual premiums into a substantial, income-tax-free gift at death, magnifying your generosity many times over.
Whether you’re thinking about leaving a $250,000 gift or creating a multimillion-dollar charitable legacy, life insurance gives you the confidence that:
- Your gift won’t fluctuate with markets or depend on future liquidity
- Your legacy will be delivered in full, regardless of when you pass
- Your gift can be structured to reflect your exact intentions
It also lets you make that commitment without jeopardizing your current financial goals. This is particularly powerful in today’s environment, where high interest rates and market volatility have donors more cautious about liquid giving.
Life insurance shifts your giving from if I can to when I will.
Coordination: Aligning with Your Broader Planning
Life insurance becomes even more powerful when it’s coordinated with your estate, tax, and wealth transfer strategies. There are several ways to structure a charitable gift using life insurance, each with its own implications:
1. You own the policy, and the charity is the beneficiary.
This allows for future flexibility (you can change the beneficiary if your plans evolve) and keeps the policy outside of the charity’s balance sheet until death. Premiums are not tax-deductible, but the death benefit is delivered tax-free to the charity.
2. The charity owns the policy, and you fund the premiums.
You make annual contributions to the charity, and they use those funds to pay the premiums. In this case, you may be eligible for a charitable income tax deduction on your contributions. The charity owns and benefits from the policy from day one.
3. You use a trust (like a Charitable Remainder Trust or Irrevocable Life Insurance Trust) to coordinate gifts, tax savings, and family legacy.
In some cases, life insurance is used alongside charitable strategies to replace wealth passed to charity, preserve inheritance for heirs, or help smooth out estate liquidity needs.
In every scenario, coordination is key. The right professionals, working together, can align your charitable goals with your financial, estate, and tax planning so that everything works in concert, not in conflict.
A Tool for Today and Tomorrow
We often think of charitable giving as something that happens during our lifetime. But for many donors, the most significant gifts happen after they’re gone.
Life insurance can help you make that lasting statement. It can also bring comfort, knowing that your generosity will be felt even after you’re no longer here to write the check or attend the gala.
And if you have an older, unneeded policy, perhaps purchased for estate tax reasons that no longer apply, repurposing it for charity can breathe new life into a dormant asset and align your planning with your purpose.
Final Thoughts
Wealth isn’t just about what you accumulate. It’s about what you activate. When you use life insurance as a charitable planning tool, you gain clarity about your legacy, confidence in your gift’s impact, and coordination across your broader financial strategy.
Whether you’re just beginning your philanthropic journey or ready to formalize your charitable intent, at C3 Financial Partners we’re here to help guide the conversation, so your giving is not only generous, but intentional and enduring
This material is intended for informational purposes only and should not be construed as tax advice or investment recommendations. Consult a tax advisor, investment professional, or insurance agent about the issues discussed herein.
Securities offered through Valmark Securities, Inc. member FINRA, SIPC. Investment advisory products and services offered through Valmark Advisers, Inc., an SEC Registered Investment Advisor. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. C3 Financial Partners is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.
