Why Life Insurance Matters for Supporters

Faithful donors often give sacrificially to support missions and ministries. Life insurance allows them to continue that support beyond their lifetime without compromising their family's financial security.

Naming a ministry as a beneficiary or contingent beneficiary ensures that a portion of your policy supports God's work even after you're gone.

Ministries can also purchase policies on key donors or board members (with consent) to provide funds for mission continuity if a major supporter passes away.

Donor‑Owned Policies

Individual donors can purchase a policy and name the ministry as partial beneficiary. This allows them to provide for family members and give a significant gift simultaneously.

Use riders or second‑to‑die policies for married couples who want to leave a legacy gift while maximizing income during their lifetimes.

Donations of existing policies can also yield charitable tax deductions if structured correctly; consult your tax advisor.

Charitable Giving Strategies Comparison

StrategyHow It WorksTax BenefitsImpactBest For
Beneficiary DesignationName ministry as beneficiary (full or partial)Estate tax reductionImmediate upon deathSimple, flexible giving
Policy TransferTransfer ownership of existing policy to ministryIncome tax deduction for cash valueMinistry receives full death benefitDonors with paid-up policies
Premium GiftingDonor pays premiums on ministry-owned policyAnnual charitable deductionOngoing support + future giftDonors wanting annual deductions
Wealth ReplacementGive assets to charity, buy life insurance for heirsCharitable deduction + estate planningMaximize charity gift, protect heirsHigh-net-worth donors
Contingent BeneficiaryMinistry receives benefit if primary beneficiaries predeceaseEstate tax reduction (if triggered)Backup support for ministryFamily-first donors

Ministry‑Owned Policies

Some organizations purchase policies on key supporters or board members with their consent. The ministry pays the premiums and receives the death benefit, providing operating funds after a donor's passing.

Ethically and legally, the donor must provide written permission, and transparency is essential to maintain trust.

Work with an attorney to ensure compliance with insurable interest laws and charitable giving regulations.

Tax Benefits and Considerations

Giving MethodIncome Tax DeductionEstate Tax ImpactGift Tax ConsiderationsDocumentation Required
Beneficiary DesignationNoneReduces taxable estateNoneBeneficiary form
Policy Transfer (Paid-Up)Yes (cash value amount)Removes from estateMay trigger gift tax if over limitTransfer documents, appraisal
Premium PaymentsYes (annual premiums paid)Reduces estateAnnual exclusion appliesPayment receipts, acknowledgment
Wealth Replacement TrustYes (for charitable gift)Complex (trust structure)Trust rules applyTrust documents, legal counsel

Note: Tax laws are complex and change frequently. Always consult with a qualified tax advisor and estate planning attorney before implementing any charitable giving strategy.

Communicating Your Intentions

Inform your family about your planned giving so they understand your desire to support missions. This prevents confusion or resentment when the benefit is paid.

Coordinate your life insurance strategy with your estate plan to ensure charitable gifts do not unintentionally disinherit heirs.

Share your testimony of generosity with your church to inspire others to consider similar legacy gifts.

Frequently Asked Questions

Can I give my life insurance policy to a ministry?

Yes. You can transfer ownership to a charity, receiving a potential tax deduction and ensuring the ministry receives the full death benefit.

Is it ethical for a ministry to insure me?

Ministry‑owned policies should be transparent and require your consent. They can provide vital funds when a major supporter passes away.

How do I balance giving and family needs?

Work with advisors to determine how much coverage you need for your family before allocating a portion to charity. Consider naming ministries as contingent beneficiaries.

What's the difference between naming a ministry as beneficiary vs. transferring ownership?

As a beneficiary, you retain ownership and can change the designation. Transferring ownership gives the ministry control and may provide immediate tax benefits.

Can I get a tax deduction for naming a charity as beneficiary?

No immediate income tax deduction, but it can reduce your taxable estate. Transferring ownership or paying premiums on a ministry-owned policy may provide income tax deductions.

How much life insurance should I allocate to charity?

First ensure your family's needs are covered. Then consider your giving goals and financial capacity. Many donors allocate 10-25% of their death benefit to ministry.

Disclosures: For educational purposes only; not tax, legal, or investment advice. Product availability, features, and rates vary by carrier, underwriting, and state. Crocker Financial is licensed in OH, SC, SD, VA, TN, and IN. Consult your professional advisors for personalized guidance.