Giving back is more than a gesture for many high-net-worth individuals (HNWIs); it reflects their enduring values. Whether supporting a long-time cause or a nonprofit aligned with their legacy, charitable giving can have a lasting impact.

Life insurance is an effective yet often overlooked tool that can significantly increase the size and certainty of charitable contributions. With thoughtful planning, HNWIs can use life insurance to enhance their support for cherished causes, preserve assets for heirs, and reap tax benefits.

When structured correctly, life insurance allows donors to leave a much larger gift than might be possible during their lifetimes. If a charity owns the policy on the donor's life, deductible contributions can be made to help pay premiums, offering potential tax savings and reducing the net cost of the gift.

Leveraging premium payments into a significant death benefit, alongside potential tax advantages, makes life insurance an efficient tool for creating a legacy of generosity. As the charity receives the gift upon the insured's death, it becomes critical to compare the value of a charity-owned policy to alternatively investing deductible premiums in the donor's estate and distributing accumulated assets upon death.

Which approach is better regarding timing and economics? What are the trade-offs? What other options should donors consider? Stay tuned for more insights.