By retaining ownership of your life insurance policy and naming an organization as the beneficiary of personal or group life insurance, you can create a significant legacy gift.
Upon death, the insurance company will pay the death proceeds directly to the organization.The organization, if it is a registered charity, will issue a tax receipt to your estate for the policy proceeds. Note that you will not receive donation receipts while alive.
| David Denning |
Benefits to you?
- As donor you receive the satisfaction of providing for a significant future gift while retaining full ownership (and thus control) of the policy.
- Modest premium payments translate into a much larger future gift. This is excellent leverage!
- Upon death, the insurance proceeds will be paid directly to the organization. This occurs outside your estate. The proceeds are therefore not subject to probate fees.
- Upon receipt of the insurance proceeds, the organization will issue a donation receipt for the proceeds to your estate. The donation receipt may be used by your estate to offset taxes payable upon death.
See also Gifts of Life Insurance where the policy is given to an organization prior to death.
Important note
Planned gifts can provide beneficial results for a donor but, in order to ensure that all relevant issues have been considered and addressed and that all Income Tax Act, Canada provisions and regulations are met, prospective donors should seek qualified legal and accounting advice.
Give Green Canada acknowledges and thanks Lorna Somers and Frank Minton for pre-approving the use of their book Planned Giving for Canadians as the basis for the information provided about different types of gifts.
