Assigning Insurance
You will continue to pay the policy premiums. From a tax point of view, you will receive an annual charitable tax receipt from the charity in respect of the premiums paid. Very much akin to an annual cash donation ... instead of cash you are paying an insurance policy premium.
Assigning an insurance policy can create a very sizeable gift. It presents a great way to give much more than what you would ever be able to afford to give through annual cash donations. An example will best illustrate the strategy.
For instance, say a 40 year old female has been giving $250 to the Canadian Cancer Society for years as her mother is a breast cancer survivor. She wishes she could give more but feels this is all she can afford. We can show her that there is a way. Alternatively, using the same dollars, she could apply for a $25,000 Universal Life Insurance policy on her life and assign the ownership of the policy to the Canadian Cancer Society. Each year, she would continue to "donate" the $250 (now as a life insurance premium payment) and receive the identical charitable tax receipt but now she would have the satisfaction of knowing she was ultimately giving a much larger gift. In effect, after the charitable tax credit, she would be paying about $150 a year to create a $25,000 planned gift.
There are many alternative versions of this strategy. For instance, if an existing policy with cash value is assigned, an immediate donation tax receipt in respect of the cash value amount would be issued.
You truly can make a huge contribution even with modest means. Contact us and we'll evaluate what giving strategy meets your goals and financial plans most effectively.
