Leave a gift you never thought possible
To date we have helped donors leave over $4,000,000 of gifts to various charities in Ontario.
Using life insurance as a charitable gift allows you to leave a gift you did not think possible to the charity you support.
Instead of donating an annual cash gift to your favourite charity, use the cash to fund a life insurance policy that will be paid off in 10 years. Make the charity the beneficiary of the policy.
Adam and Sarah Johnson (both 40 years of age) have been donating $3,000 annually to their favourite charity for a number of years.
Their insurance advisor told them they could alternatively use that $3,000 each year to fund a life insurance policy. After 10 years they will have donated a fully paid up life insurance policy with a value of $190,000!
The best part is the flexibility of how you want the charitable tax credit issued:
Click each question below to display the answer.
Yes, if you own a permanent life insurance policy that you no longer need you can donate the policy to the charity of your choice. You will be issued a charitable tax credit for the fair market value (FMV) of your policy. Further, if you continue to pay for the policy you can receive a charitable tax credit on the annual premium.
Depending on how you structure your policy will determine the tax benefit. If the charity is the owner and beneficiary of the policy and you are the payor, then you will receive a charitable tax credit on your annual premium. If you are retain ownership of the policy but the charity is the beneficiary, you will forego the charitable tax credit on your annual premium to receive a charitable credit to your estate for the death benefit when you pass away.
A charitable life insurance policy is a permanent life insurance policy where the beneficiary is a charitable organization. With any permanent life insurance policy you can choose a specific payment plan. The premium can be paid indefinitely until you pass away or the premium can be truncated over a specific time period, say 10 or 20 years.
You will need to speak with the charity to discuss the length of your payment plan. Most charities prefer paying the policy off in 10 years so they aren’t left on the hook to pay the premium if you choose to stop. Many donors prefer paying the policy off in 10 years as well because they do not want an added expense in retirement.
There are two types of life insurance policies that can be donated to a charity, whole life policies or universal life policies. The description of these two policies can be found on the life insurance page under FAQ. Most donors choose to donate a specific type of universal life policy, called level cost universal life.
With a level cost universal life policy you pay a known premium each year to donate a specific death benefit (gift). There is no change in cost, there is no change in the size of gift, everything is known. Boring, I know, but this is exactly what you and the charity you are supporting will want.
Contact your insurance advisor. If you do not have an insurance advisor feel free to send me a message or contact the charity you want to donate a policy to.
After speaking to dozens of charitable organizations, most have been scorned in the past with life insurance gifts. The three big reasons are:
How do we combat this?