From Life Insurance to Philanthropic Legacy
Imagine giving a large gift to charity. Are you picturing a secret, anonymous donation? A large novelty cheque and a photo opportunity? Of all the scenarios you might have imagined, I bet life insurance didn’t even cross your mind. However, a gift of life insurance can be a convenient, practical, and effective way to provide significant support to the causes you care about.
While all gifts of life insurance allow you to keep supporting charity after you die, there are several different ways to structure your donation.
Donating a Life Insurance Policy to Charity
If you donate a new or existing life insurance policy to charity, you will receive a donation receipt for the value of the policy at the time the charity becomes the owner and beneficiary of the life insurance policy. You also receive a donation receipt for any future premiums you pay on the policy. When you die, the charity receives the insurance proceeds. No further donation receipt is issued to your estate because the charity owned the insurance policy. This gift planning strategy works best for people who need donation receipts during their lifetime. But what if you need a donation receipt in your estate?
Make Charity Your Beneficiary
Many people take out a life insurance policy to provide for their children or spouse in the event of a tragedy. However, the level of financial protection needed often changes as we age. Did you know that you can name a charity as the beneficiary of a life insurance policy? As long as the policy remains in force, the charity will receive the insurance proceeds at the death of the last life insured. The charity will issue a donation receipt for the amount of the insurance proceeds received, which can help offset taxes owing on the estate of the deceased. Furthermore, a gift of life insurance does not have to go through probate, so it often reaches the charity much faster. This gift planning option works best if you require a donation receipt for your estate rather than during your lifetime.John and Carol take comfort in knowing that supporting their favourite charities can continue even after they are gone. Click To Tweet
Gifting Life Insurance Within a Generosity Plan™
John and Carol* supported a variety of charities and had slowly built-up a diverse financial portfolio. In consultation with their professional advisors, they determined that a donation receipt at death would help offset taxes owing in their estates. As they thought about the future, they wanted to create a legacy gift that would continue to support their favourite charities after they died. They named Abundance Canada as the beneficiary of their life insurance policy and structured their gift as part of their Generosity Plan™. This gave them the freedom and flexibility to simply name one charity as the beneficiary of their life insurance policy, and then recommend how they wanted the life insurance proceeds to be distributed. John and Carol take comfort in knowing that supporting their favourite charities can continue even after they are gone.
Are you looking to leave a substantial gift to charity? Abundance Canada can help you examine all your options and determine if a gift of life insurance fits in to your legacy of generosity.
* Pseudonym used and details changed to preserve client privacy
Contributed by Katherine Smart
Gift Planning Consultant