Many business owners look for sensible ways to share their wealth with family and/or charities. Life insurance is an often-overlooked way to multiply gift or legacy dollars.

Recently a client took out a survivor universal life insurance policy for his wife and himself. The policy beneficiaries are their three grandchildren. The couple decided that as part of their annual gifting plan, they would take just $9,000 of the $26,000 they can give to each of their grandchildren and buy life insurance. A simple Irrevocable Life Insurance Trust (ILIT) was set up and is the owner of the policy.

By making an annual gift totaling $27,000, these 68-year-old retired business owners secured $1.5 million in tax-free benefit for their grandchildren’s future. Because the insurance policy is owned by the trust and not by the individuals, their estate will not be taxed on the $1.5 million. They would have to give $27,000 annually for more than 55 years to equal $1.5 million in gifts to their grandchildren.

Other business owners divide gifts to their favorite charities in a similar fashion, paying an annual life insurance premium for an insurance policy devoted to their charity, while also making direct cash contributions. These philanthropists want the joy and recognition of giving cash or appreciated stock annually but have the foresight to recognize the power of amplifying their giving through life insurance.

Life insurance can provide the leverage entrepreneurs are looking for to significantly multiply their gifts to family and charity. Get competent advice and explore the possibilities.

This article was written by Dr. Michael Sullivan and published in Bloomberg Businessweek magazine.