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How to Name a Charity as a Life Insurance Beneficiary



You can name a charity as the beneficiary of your life insurance policy. Here’s what you should consider before making the estate planning decision.

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If you’re thinking about taking out life insurance, you’re probably doing it to take care of loved ones who would be left behind in the unfortunate event that you were to pass away. Your spouse or partner, for example, together with any relatives. But there are other loved ones you might want to consider as well – those whose lives and/or happiness are supported by a non-profit organization or charity.

If there’s a charity that’s meant a lot to you over the years — or if you just want to be generous with your end-of-life planning — you’re not alone. According to Giving USA, Americans gave more than $427 billion (with a “b”) to nonprofits in 2018 (the most recent year for which information is available).

However, how much of that came from afterlife planning is not specified. (One expert told us that’s a relatively small portion, because tax breaks tend to favor the living, and because so many people fail to make an estate plan.)

For those looking to include a charity in their end-of-life planning, there are some tips to consider, as well as some pros and cons to consider. We spoke with Patrick Hicks, estate planning attorney at Trust & Will, whose online will services are included free of charge as part of the Haven Life Plus rider, available to eligible Haven Term policyholders. (Trust & Will is also available independently of the Haven Life Plus rider, as a paid service).

Hicks told us what you need to know about giving life insurance to charity.

In this article:

Identify the causes you want to support

Many of us sometimes think, “Hey, I really should support [my kid’s school/my local hospital/my favorite cause].” But for better or worse, the number of causes worthy of our time, attention, and resources is overwhelming. Figure out where you really want your money to go and who can use it the most to determine how you can do the most good.

“It sounds simple,” Hicks says. “But it’s important to make sure you’ve identified the organization you actually want to support. There are lots of charities doing wonderful things and many of them have very similar names. Some charities have regional offices or branches, so you can choose to support the national organization as a whole or support the local chapter directly.”

In other words, decide whether you want your money to support an organization’s broader mission, nationally or even internationally, or whether you want your money to have an impact closer to home.

And while it may seem obvious, you should make sure the organization is legitimate. “Be sure to get the organization’s full legal name (which is often different from their regular name) and their EIN or Tax Identification Number,” says Hicks. “Most charities include this on their website, but you can also check fundraising sites, like Charity Navigator.”

Speaking of: Organizations like Charity Navigator also rate nonprofits by how efficiently they spend their (read: your) money. It’s always worth checking out their site to make sure you’re getting the most nonprofit bang for your buck.

Consider donating part of your estate plan

When it comes to naming an organization as a life insurance beneficiary, it’s really as simple as writing the organization’s name on your documentation, and if you die during the policy’s coverage period, the policy will pay out to your beneficiaries. as set out in your policy.

Of course, you have the option of naming multiple beneficiaries and contingent beneficiaries, so don’t worry that this is an all-or-nothing proposition.

Keep in mind that there is no federal or state tax benefit for naming a charity as the beneficiary (whether the primary or secondary beneficiary) of your life insurance policy. You also cannot write off your premium payments as an income tax deduction.

However, if you donate the proceeds of a permanent life insurance policy, which provides coverage for your entire life, you have more tax strategies available to you. Consult a financial expert or tax adviser before giving a permanent policy to a charity.

“Most charities are more than happy to help with this process—their websites usually have giving or donation pages that provide helpful information and even examples of gift language,” says Hicks. “Many organizations also have planned giving experts who can help you discuss various giving options to help you make a gift that is appropriate for your situation, and that will have a lasting impact for a cause you support.”

Reach out to your favorite charities ahead of time

Contacting a charity also helps ensure that the gift is properly planned, such as entering the correct legal name and EIN. This also helps if you have specific uses that you want the donation to support with the death benefit.

“If you’re giving a very large gift or if you’re giving specific assets, it might be a good idea to contact the charity first,” says Hicks. “It can help ensure the process is seamless and avoid unexpected complications.”

Finally, it can make things easier for your loved ones later. “Some people hesitate to contact the charity because they don’t want to draw attention or they don’t want to be involved in something that might change in the future,” says Hicks. “Charities know that situations change, and the $50,000 you planned to donate may turn into $5,000. Working with the charity can make these changes easier by ensuring your gift planning is appropriate for you at all stages of life.”

Make the rewarding decision that works best for you

Hicks lists a few reasons why it might be a good idea to include a nonprofit in your estate planning.

“Charities can greatly increase the impact of a donation,” he says. “These organizations are set up to leverage all of their donors, partners and service providers to maximize their impact. For example, it might cost you $5 to provide a meal to someone in need, but a charity that is already active in that sphere might be able provide twenty meals for the same $5.”

There is also your life and legacy to consider. “You’ve spent your whole life making an impact on the world,” he says. “It doesn’t have to stop at your death. Leaving a legacy ensures that your impact will continue.”

In conclusion, naming a nonprofit organization as a life insurance beneficiary is another way that end-of-life planning can provide peace of mind — not only for you, but for your family members as well.

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About Louis Wilson

Louis Wilson is a freelance writer whose work has appeared in a wide range of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children.

Read more by Louis Wilson

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Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they fit your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to provide and should not be used for tax, legal or investment advice. Individuals are encouraged to obtain advice from their own tax or legal advisor.

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Haven Term is a term life insurance policy (DTC and ICC17DTC in some states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in some states, including NC) issued by CM Life Insurance Company, Enfield, CT 06082. Police and driver form numbers and features may vary by state and may not be available in all states. Our agency license number in California is OK71922 and in Arkansas 100139527.

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