Life Insurance as a Charitable Gift

What are the benefits of life insurance as a charitable gift?

Life insurance as a charitable gift means you are naming a charity as both the owner and beneficiary of the policy. Many charitable organizations have taken advantage of this form of long-term funding in order to prepare for the future.

What are some advantages of life insurance as a charitable gift?

  • It is a much cheaper way to provide a substantial gift to a charity of your choice
  • There is no delays in payment, unlike if you were to leave a donation to a charity in your will
  • There is no taxes or fees on a policy payment, the benefits are paid directly to the charity in cash
  • The financial situation of the estate does not affect a life insurance policy charitable gift, whereas bequest made by a will may be challenged or reduced by creditors

There are two methods of providing life insurance as a charitable gift, either giving an existing policy or the giving of entirely new policy.

Existing Policy

You can donate an existing policy by way of absolute assignment to the charity. After the assignment a change of beneficiary designation is required and the charity can then issue a tax receipt for the value of the policy. *Note CRA has rules for determining the value of a policy, we recommend you contact us directly to discuss the tax implications around the giving of an existing policy.

New Policy

When you apply for a life insurance policy and make the necessary assignments to transfer the policy to the charity, the charity will then issue a receipt each year showing a charitable contribution equal to the premium paid by you.

Tax Credits

You are entitled to tax benefits when providing life insurance as a charitable gift to your favourite non-profit organization. There are some options to consider and we recommend giving us a call directly at 1-877-304-3368 to discuss in more detail.

The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.

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