WHAT IS IT?
Many clients in Winnipeg have a strong affinity for a specific cause or non-profit but feel they cannot support it to the degree they wish during their lifetime. By utilizing life insurance, you can leave a substantial legacy and create true change while incurring minimal costs and receiving a significant tax credit.
The insurance product itself is the same as any other policy. The strategy changes based on who you name as the owner or beneficiary. This allows a charitable organization to benefit while you secure a tax advantage.
HOW DOES CHARITABLE GIVING WORK?
There are several ways to structure an insurance strategy for charitable giving. Your specific estate planning goals will determine when the resulting tax credit provides the most value to you. The following are three of the most common implementation strategies:
NAMING A CHARITY THE BENEFICIARY
Upon your death, a personal tax credit is available equal to the policy’s face amount
Premiums do not produce tax credit
Payout bypasses the estate and, consequently, avoids probate fees
You, the policy owner, maintain control of the policy
NAMING YOUR ESTATE THE BENEFICIARY
Upon your death, a tax credit for your estate is available equal to the policy’s face amount
Premiums do not produce tax credit
Probate fees are present
You, the policy owner, maintain control of the policy
NAMING A CHARITY THE OWNER
Premiums qualify for tax credit
Death benefit does not produce tax credit
The chosen charity maintains control of the policy
After reviewing your unique situation, our advisers will guide you to the best option.
THE COST
Below are a few price estimates which assume non-smoker status and standard health:
Male Age 50
$100K – $130/month
$250K – $330/month
$500K – $570/month
$1M – $1100/month
Female Age 50
$100K – $110/month
$250K – $260/month
$500K – $500/month
$1M – $970/month
A review of these options shows how you can exponentially enhance your giving ability while capitalizing on strategic tax benefits. The dynamic nature of this process is what makes charitable life insurance so effective. Both premiums and death benefits are highly flexible, which allows the strategy to fit within a wide array of financial situations.
Obtaining a policy for charitable giving is the same as obtaining life insurance for any other purpose. You can find a detailed description of that process here. The only difference is who you name as the owner and the beneficiary. Often, an applicant will discuss this structure with their personal accountant, their insurance advisor, and the benefiting charitable organization.
WHO BENEFITS FROM CHARITABLE GIVING?
The chosen charitable organization benefits greatly from a life insurance policy designed for charitable giving. The amount you can leave to a charity through life insurance often significantly exceeds what you could donate directly. Additionally, either you or your estate receives a major benefit in the form of a tax credit. You also benefit from the peace of mind in knowing that your chosen cause will receive a substantial gift as long as the monthly payments are maintained.
WHO CAN APPLY?
Anyone eligible for standard life insurance can use this strategy for charitable giving. Specifically, those who meet the following criteria are uniquely well-suited to implement this type of policy:
- Maintain a strong desire to support a particular charitable cause
- Can afford to cover the monthly premium payments for the required duration
- Can benefit from the resulting tax credit
To get a free quote, or if you have questions on charitable giving please fill out the form below and we will get back to you as soon as possible.
