Beneficiaries and Donations for Final Expense Insurance
When you buy a final expense insurance policy, you’ll name a beneficiary or beneficiaries, usually spouses, children, or immediate family. But your recipient(s) doesn’t have to be a family member. We’ll talk about this, and provide information about donating the funds to a charity or your church. Every case is different because everyone has different needs.
Non-Family Alternatives for Beneficiaries
Your beneficiaries must be people you trust to carry out your final wishes, as you and your family have requested. When choosing or updating your beneficiaries, here are some options besides family members:
- Lawyer
- Spiritual leader
- Health Care facility
- Friend, or other third parties
Any of these could be qualified people in your life that have an insurable interest in you.
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Charitable Donations as a Beneficiary
With a life insurance policy, it’s common to designate a percentage of the benefit to a charity of choice. To name a charity as a beneficiary, write in the charity’s name on your beneficiary designation form. Life insurance policies, including final expense insurance, let you select multiple beneficiaries and declare what portion of the payout should go to each recipient.
If you want 100% of your benefit to go to a charity, you can decide that. Or, 80% can go to your family and 20% to charity, or whatever combination you choose. Here’s what else to know:
- It has to be a qualified 501(c)3 charity that fulfills the IRS definition of a nonprofit organization.
- Ensure that the charity you want to support will take your life insurance policy.
- Naming a charity as your beneficiary does NOT make the premiums tax-deductible.
Final Expense Direct Quick Tip: There is no federal or state tax benefit for naming a charity as your beneficiary. But since final expense insurance is a permanent policy, the proceeds will qualify for the federal estate tax charitable deduction.
Beneficiaries and Donating to Your Church
Members can name their church as a primary or secondary beneficiary under a life insurance policy. If you’d like to do this, consider the following:
- Example scenario: You may name your spouse as the primary beneficiary and list the church as an alternate recipient if you outlive your spouse.
- Suppose you name the church as EITHER a primary or secondary beneficiary. In that case, you (the member) continue to pay the premiums and complete a “change of beneficiary” form that lists the church as a beneficiary.
- In some cases, you may want to name the church as the sole recipient, which will enable you to leave a significant gift to your church.
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