Joan’s Toolbox is an occasional series in which Joan Hoge-North, DCF vice president for philanthropy, shares information about different ways of making charitable gifts that maximize impact and tax advantages.

Donating a life insurance policy is great way to make a significant charitable gift for pennies on the dollar – and you may already have one available to give.

Through the Delaware Community Foundation, you can give a life insurance policy to establish a charitable fund that benefits the causes or organizations you are passionate about, establishes your legacy and may result in tax advantages.

There are several ways you can use life insurance to make a charitable gift:

First, you can directly donate a life insurance policy you already have, or purchase one to donate.

Donating a life insurance policy may enable you to make a more generous gift than you can with cash. It also benefits the DCF by building its future financial capacity.

Donating the policy provides two opportunities for donor tax savings. Immediately, you can claim a tax deduction for part of the policy’s value, up to 50 percent of your adjusted gross income.

If you are still making premium payments on the policy, you also can deduct the cost of the payments after making the gift to the DCF. This decision also provides tax savings later on by reducing the size of the taxable estate.

Second, designate the DCF as the beneficiary of your life insurance policy.

If you don’t want to give up ownership of your policy, but still want a charitable organization to benefit, you might consider making a fund at the DCF the beneficiary of your life insurance policy. Doing so won’t provide you with a tax deduction while you are alive, but it will help secure the future of organizations that matter to you.

Upon your death, the proceeds from the life insurance policy are paid to the DCF, which will apply them to the fund you designated when the donation was made. In this way, your generosity lives on through the programs you choose to support.

We buy life insurance to protect the ones we love, after our lifetime. Considering using your life insurance policy to protect the causes and organizations you love.

Contact Joan Hoge-North at 302.504.5224.