The Benefits of a Gift of Life Insurance (Part 2)
A gift of life insurance can be an effective way to support charity. If you need the charitable receipt in your estate and not during your lifetime, you might choose to retain ownership of the life insurance policy and name a charity as the beneficiary.
Naming a Charity as the Beneficiary of a Life Insurance Policy
When you name a charity as the beneficiary of your life insurance policy, you remain the policy owner. This means you are responsible for keeping up with any ongoing premiums and will not receive a charitable donation receipt for any of these payments. However, this also affords you some additional flexibility.
As the owner of your life insurance policy, you have the option to name multiple beneficiaries. For example, you could name your favourite charity alongside members of your family. You also have the option to change the beneficiaries named in your policy. At your death, the life insurance proceeds would be divided among the named beneficiaries and your estate would receive a donation receipt for the portion given to charity. This donation receipt could be used to offset taxes owing at your death.
An additional benefit is that the proceeds from the life insurance policy would not form part of your estate, would not be subject to probate and would be paid directly to your named beneficiaries.
Securing a Big Future Impact
Abundance Canada client Jamie wanted to do more to help her favourite charities but didn’t have the means to make substantial current cash gifts. As a healthy young woman, it was easy and cost effective for her to take out a life insurance policy and name Abundance Canada as the beneficiary. She is using the policy to accumulate a significant future impact for her favourite charities while maintaining manageable payments that fit her current budget. She loves that she can easily recommend how the proceeds of her policy will be distributed and that she has the freedom to amend the recommendations should she discover an exciting new charity in the future.
Whether you want to name a charity as a beneficiary or transfer ownership of your policy, Abundance Canada can help you navigate the process of donating life insurance to support the causes you care about.
Speak with a gift planning consultant to learn more about how a gift of life insurance could be a part of your Generosity Plan™.
Contributed by Rick Braun-Janzen
Director of Gift Planning