When it comes to philanthropy, most people think of traditional forms of giving, such as donating money, volunteering time, or contributing goods.
However, gifting insurance to a charitable organization is an innovative and impactful way to support a cause you believe in. By donating an insurance policy, you can make a lasting difference in the lives of others while maximizing the benefits for both the charity and you. In this article, we explore the advantages of gifting insurance to charity and how it can create a positive legacy.
The Power of Charitable Giving
Charitable organizations play a vital role in addressing societal needs, supporting communities, and advancing important causes. By gifting an insurance policy to a charity, you enable them to access a valuable financial asset that can be used to support their mission. This form of giving allows you to make a significant impact on a cause you care about beyond your lifetime.
Tax Benefits and Estate Planning
One of the key advantages of gifting insurance to charity is the potential for tax benefits and effective estate planning. For example, if you transfer ownership of a currently paid-up life insurance policy, you may receive an immediate tax deduction for the policy’s fair market value. Alternatively, if you choose to retain ownership but name the charity as beneficiary, your estate can get a tax deduction for the higher value of the death benefit thereby reducing taxes payable by your estate.
Flexibility and Customization
Gifting insurance to a charity offers flexibility and customization options to suit your philanthropic goals. You can choose to donate an existing policy or purchase a new one specifically for charitable purposes. This second method of donating an insurance policy has become even easier recently with a new innovative product from Canada Life – the My Par Gift policy. This is the only single premium policy available in the market and allows you to multiply your initial donation many times over. For as little as a one-time payment of $10,000 (for which you would receive a tax receipt), you can purchase a policy that will be worth 5 to 18 times to the charity when the policy pays out. (In many cases the donor receives recognition from the charity for the higher value amount).
Creating a Meaningful Legacy
Gifting insurance to a charity allows you to create a meaningful legacy. By designating a charitable organization as the beneficiary of your policy, you ensure that your support continues even after you are gone. Your generosity can fund important programs, research initiatives, scholarships, or other charitable activities, leaving a positive and lasting impact on the cause you care about.
Consider exploring this innovative approach to philanthropy and work with your Foster & Associates financial advisor and your chosen charity to ensure your gift aligns with your goals and values.
Disclaimer: This article is for general information purposes only, and is not legal, financial, or tax planning advice. Everyone’s situation is unique, and this article cannot apply to every person. The reader should not take any action, or refrain from taking any action, as a result of this article without first obtaining legal or professional advice.
