Acts of Kindness Through Life Insurance: Choosing Charitable Beneficiaries
February 11, 2025
Random Acts of Kindness Week (February 9 to 15, 2025) highlights the power of generosity, inspiring everything from paying for a stranger’s coffee to volunteering at food banks. But what if kindness could extend far beyond a single week? With life insurance, policyholders can amplify charitable giving by designating a portion of their death benefit to causes they cherish — a gesture that outlives them and creates lasting change. Here is how it works.
Life Insurance as a Tool for Charitable Giving
A charitable giving rider is an optional feature added to a life insurance policy. It allows individuals to allocate a percentage — typically 1% to 2% — of their death benefit to a qualified charitable organization (QCO). Unlike traditional methods of charitable giving, this approach avoids complex legal processes or trust management, making it accessible and straightforward.
Charities can benefit significantly from these contributions. For example, a $500,000 policy with a 1% rider provides $5,000 directly to the chosen organization. These funds often support vital initiatives such as disaster relief, education, or medical research. For nonprofits, receiving proceeds from life insurance policies can be transformative. It could supplement donations that might otherwise be sporadic.
How To Choose a Charity as Your Beneficiary
Choosing a charity as a life insurance beneficiary allows you to extend your values while making a lasting impact.
Identifying Worthwhile Causes
Selecting a charity that aligns with your personal values is essential. Focus on organizations that address issues close to your heart, such as healthcare, education, or environmental conservation. It’s also important to evaluate the financial efficiency of potential charities. Tools like Charity Navigator can help verify that the majority of donations directly support programs rather than administrative costs.
Legal and Financial Considerations
Once you’ve identified a charity, confirm its tax-exempt status, such as 501(c)(3) recognition in the United States, to ensure it qualifies for legal and tax benefits. You should also check with your life insurance provider to be sure it’s a qualifying charitable organization according to the provider’s terms and conditions.
Setting up the beneficiary designation typically involves requesting a change-of-beneficiary form from your insurance provider and completing it with the charity’s details. Consulting with legal or financial advisors can help you understand tax implications and ensure the designation aligns with your overall estate plan.
Steps to Adding a Charitable Giving Rider
First, review your current policy. Term and whole life insurance often accommodate riders, but eligibility varies. Contact your provider to confirm options. Many insurers, including 1891 Financial Life, include charitable riders at no extra cost.
Next, consult an agent to formalize the designation. They’ll help draft legal language, select a qualified charity, and adjust premiums if needed. For new policies, riders can be added during enrollment, while existing policies may require a simple form submission.
Pay It Forward
Choosing a charitable beneficiary transcends financial planning — it becomes a testament to values. During Random Acts of Kindness Week, consider how a life insurance policy could fund scholarships, medical research, or community projects for decades.
For example, a $250,000 policy with a 2% rider donates $5,000 to charity. Over 20 years, that’s $100,000 in potential support, far exceeding typical annual donations. This not only aids nonprofits but also inspires others to view life insurance as a vehicle for social good.
At 1891 Financial Life, we specialize in tailoring life insurance solutions that align with your financial and philanthropic goals. Our team can help you explore charitable giving riders, ensuring your policy reflects both protection and purpose. Contact us today to create a legacy of kindness.
About 1891 Financial Life
Our culture is about looking out — for you, for others, for family, for the community. That is how we go “Beyond Life Insurance.”
At 1891 Financial Life, we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. In 2023, 1891 Financial Life was listed by Forbes as one of "The World's Best Life Insurance Companies."
Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.