5 Ways to Leave a Legacy With Your Life Insurance
Ask someone if they want to leave a legacy after theyâre gone, and theyâll almost assuredly answer yes. Ask someone if they know how to go about accomplishing such a benevolent task, and they’ll probably say, âI have no idea.â
You might be surprised to learn thereâs a simple solution: your life insurance policy.
The payout from a life insurance policy (called a death benefit) can be a legacy that far outlasts your time on Earth. And itâs not only for people who want to leave a legacy to their spouse and children.
So if you think life insurance isnât for your particular situation, think again. A life insurance policy can change many different peopleâs lives, or even entire communities, after youâre gone.
1. Care for Your Immediate Family First
The greatest legacy you have is your family. And life insurance can help financially protect the people you love most from the unexpected. If you have people who rely on your income for their day-to-day lives, theyâre the first people you should consider when deciding if life insurance is for you and how much coverage you need.
Your legacy can live on through a death benefit that can help pay off the family home, fund college educations and provide income that helps them continue to meet their financial needs if youâre no longer there.
2. Cement Yourself as the Cool Aunt or Uncle
Your nieces and nephews probably donât need a life insurance policy from you to ensure their day-to-day financial needs are covered. Most likely, they are covered through their parents’ life insurance.
But naming your niece or nephew as a beneficiary of your life insurance policy is a profoundly sweet move that would cement you as the cool aunt or uncle.
Leaving nieces and nephews a nest egg could continue your legacy long after youâre gone. Life insurance proceeds can help you fund that backpacking trip through Europe or contribute to their college tuition as you always intended to do.
There are many uses for life insurance that could help your extended family, which should be considered if you always planned to do so. Just make sure that you have a conversation with your brother or sister to give them a heads up, set expectations and allow them to factor the money into their familyâs overall financial plans.
3. Leave a Legacy to Your Favorite Charity
With the recent election, many social media newsfeeds have been full of photos showing friends and family marching, volunteering, donating and giving back to organizations and movements they are passionate about.
If this resonates with you as well, perhaps your legacy should be giving back to your favorite organizations. Life insurance can offer a way to ensure if youâre no longer around to donate or volunteer, you can still continue giving back and advocating for what you believe in.
One of the simplest ways to give back to a charity via life insurance is to name a trust as the beneficiary of your life insurance policy. Make sure the trust has specific instructions to give a certain amount of your estate to the charity if you were to die.
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4. Set Up a College Scholarship in Your Name
Another way to use your life insurance payout in an altruistic fashion is to establish a scholarship at your alma mater. A scholarship is a profound way to have your legacy, and name, live on after you are gone.
Each college has different rules and guidelines for establishing scholarships. You should contact your chosen collegeâs development or advancement office for help with this. Typically, you need $25,000 or more to be able to endow a scholarship at a university. The college or university will usually invest the $25,000 with their current endowment pool and issue a $1,000 scholarship yearly based on the criteria you and the college establish.
Similar to donating a portion of your life insurance benefit to a charity, itâs simplest to name a trust as your beneficiary and ensure the trust has specific instructions for the donation. You can leave instructions in your will to set up a trust or foundation, but you run the risk of your heirs misinterpreting your intent. An estate attorney can help you set up a 501(c)(3) charity, foundation or trust to help establish, fund and award the scholarships.
5. Build a City Park or Playground
Love your city? Consider leaving a legacy by creating a small park or playground. Youâll typically need to check with your city council on proposed locations and projects. The council can be an excellent help in determining the cityâs need, recommending parcels of land if you donât already have some to donate, and helping to guide you through how to make a difference.
Communities are almost always in need of a safe place for children to play. But they often lack the funds to build the playground and then maintain it. Through a trust, you can allocate a certain amount of money to create a better environment for your community.
Leave a Lasting Legacy
Many of us dream of leaving an impact on our loved ones and communities that will carry on long after weâre gone. Aside from financially protecting your family, directing a life insurance payout for altruistic means is a surefire way to leave a legacy far beyond your years.
If youâre interested in alternative ways of using life insurance to give back long after youâre gone, it’s a good idea to consult an estate attorney who can help you make the best choice for your specific situation.
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