Life insurance is not typically promoted as a vehicle for charitable giving, but there are some wonderful benefits for those who have the interest and ability to make charitable gifts through life insurance policies.

There are a variety of ways in which a life insurance policy can be used as a charitable donation.  Here are a few options:

  • Designate a charity as the beneficiary of an existing policy. By doing this, the death benefit is paid directly to the charity after you pass away.
  • Donate an existing life insurance policy to a charity. The charity can continue making premium payments on the policy and receive the full death benefit when you pass away, or they can redeem the policy for the current cash value.
  • Give your policy, either existing or new, to a charity, and agree to make contributions in the amount of the annual premiums. This option allows you to possibly claim a charitable deduction for your contribution, and when you pass away, the charity receives the full death benefit.

Here are some examples regarding the use of life insurance policies for charitable donations:

Example 1: George and Janet purchased insurance policies for each other in the amount of $100,000. Now in retirement, they realize they don't need that level of coverage anymore. They worked with a financial planner to create a plan that ensures financial stability for the remainder of their lives. After years of paying premiums on their insurance policies, they don't really want to take the cash value at this point in their lives.

 George and Janet meet with their insurance agent and change the beneficiaries on their policies. They both agree to designate KML as the recipient of the funds, but they disagree as to how the money should be used. Janet wants to support a major project and feels that the money should be used right away. George is committed to long-term support and likes the concept of endowment funds. So Janet designates KML as her beneficiary, and George choose the KML Foundation as his beneficiary. By making this decision, George and Janet make very generous gifts to the ministry of KML, and yet their overall investment is very affordable.

 Example 2: Sam and Joyce don't make a lot of money, but they always appreciated the tuition assistance they received when they sent their two children to KML. They also want to give a large gift to their church. Their concern is that they don't have the cash at this point in their lives to make those larger gifts, and they really want to leave a nice estate gift to their children and grandchildren.

After some consultation, Sam and Joyce decide to take out two insurance policies and donate one to their church and the other to KML. Each year, Sam and Joyce make contributions to their church and KML that cover the cost of the premium payments. For Sam and Joyce, those contributions qualify as deductions on their tax return. This plan allows the two of them to make generous gifts to their favorite ministries and also designate a sizable inheritance for their heirs.

If using life insurance as a charitable donation seems appealing to you, consult with your insurance agent and your financial planner to ensure this is a wise decision for you.


To discuss a planned gift to KML, contact your KML Estate Plan and Deferred Gift Counselor, 
Paul Snamiska, at 262-677-4051 x1116 or

The information that is provided on this site is for educational purposes only. Consult your personal tax consultant, attorney, or financial planner for specifics that apply to your personal situation.