POSTED July 21, 2021
Life insurance can help you, your family and your favourite charity
Find out how life-insurance policies can translate into inspiring gifts
By Allan Madonik, Blue Swan Financial, founder
Insurance is often seen at face value, but there are other ways to use it to benefit you, your family and the causes dear to you. In fact, the most effective way to provide a generous gift to charity — for a modest investment — is through a gift of life Insurance.
Depending on how your life unfolds, the relatively small, annual or monthly premium payments can create a meaningful gift to your favourite cause. And, contributing the gift of a life insurance policy provides a powerful way for a charity to plan ahead to fund essential future programs.
Here are five ways to structure the gift of life insurance:
Name the charity as the beneficiary of a current or new life-insurance policy
- easily provide a generous tax-free gift to your favourite charity
- generate a tax credit on your estate to reduce taxes for your beneficiaries
Transfer your existing policy to your favourite charity
- The individual surrendering the policy will be entitled to a donation tax receipt
- A third-party actuary would determine the value of the policy, which could be cashed by the charity
Transfer ownership of an existing policy, of which funds are owing, to your favourite charity
- The donor will get a tax receipt from all premiums paid
- The donor can continue to pay the premiums to the charity and get yearly tax receipts for the amounts, or the charity can find another donor willing to take over ownership of the policy
Transfer ownership of the fully-funded existing policy to your favourite charity
- The donor will receive a charitable receipt for the full market value of the policy
Purchase a new policy in which the charity is the owner and beneficiary
- The insured would get a tax receipt on all premiums paid
And, there’s more ways this gift helps you and the charity: once the funds are ready to be paid out, they don’t pass through the individual’s estate. This means they reach the charity quickly without being subject to probate tax. And, since this all falls outside of the estate, your Will remains private, too.
Allan founded Blue Swan Financial as an insurance broker in 2013, but he has spent 30+ years helping his clients “Sleep Well At Night” (SWAN). At Blue Swan, Allan works with small-business owners and individuals, helping to protect them through insurance. He’s earned his master financial advisor – Philanthropy Designation, so he can help clients maximize their impact with their favourite charity. He enjoys volunteering and serving charitable organizations in his spare time.
ABOUT CHILDREN BELIEVE:
Children Believe works globally to empower children to dream fearlessly, stand up for what they believe in — and be heard. For 60+ years, we’ve brought together brave young dreamers, caring supporters and partners, and unabashed idealists. Together, we’re driven by a common belief: creating access to education — inside and outside of classrooms — is the most powerful tool children can use to change their world.
About ChildFund Alliance:
A member of ChildFund Alliance, Children Believe is part of a global network of child-focused development organizations working to create opportunities for children and youth, their families and communities. ChildFund helps nearly 23-million children and their families in 70 countries overcome poverty and underlying conditions that prevent children from achieving their full potential. We work to end violence against children; provide expertise in emergencies and disasters to ease the harmful impact on children and their communities; and engage children and youth to create lasting change and elevate their voices in decisions that affect their lives.