According to the National Philanthropic Trust, it is estimated that between $66 trillion to $274 trillion in charitable bequests will be made between the years 1998-2052, that living charitable contributions will total between $212 to $554 trillion between the years 1998-2052, and that 89% of U.S. households engage in charitable giving.

There are two primary reasons why individuals make charitable contributions: to make a positive impact on the world, and to obtain a tax deduction.

Life insurance represents an excellent tool for gifting for numerous reasons:
• It leverages contributions to provide for larger gifts than would otherwise be possible with straight cash  contributions.
• It secures a current income tax deduction for donations made to fund premiums on a policy owned by a charity.
• It secures a future estate tax deduction for life insurance proceeds payable to a charity at the death of the insured.
• It establishes a new asset rather than depriving the donor’s heirs of an existing asset.

This Tool Kit addresses how to utilize life insurance in charitable giving, the tax benefits of charitable giving, and the most common methods by which a donor may give to a charity.

There are four basic approaches to charitable giving that represent an excellent opportunity for utilizing life insurance.

Those basic giving methods are:
1. Designating the charity as the beneficiary under a life insurance policy while making premium payments personally (the donor owns the policy);
2. Giving the gift of a life insurance policy to the charity and making annual donations to cover the premiums (the charity owns the policy); 
3. Submitting to medical underwriting and funding premiums for charity-owned life insurance (CHOLI) on the donor’s life; and
4. Utilizing split-gifts (the donor establishes a trust with life insurance where some of the benefits are retained by the donor and some benefits inure to the charity).  

In addition to satisfying philanthropic goals, a wealth replacement trust in tandem with one of the giving methods listed above allows donors to reduce taxes as well as preserve the inheritances of loved ones