Charity and Life Insurance - how to use life insurance for charitable giving

Sep 5

19:28

2007

Lorne S. Marr

When we're succesfull and satisfied financially in life, we start to think about ways to help others in need. Not many people know, hovewer, that life insurance can be a great tool to use for charitable giving.

It's completely natural that when we become succesfull and satisfied financially in life, we start to think about ways to help others in need. Not many people know, hovewer, that life insurance can be a great tool to use for charitable giving. Consider the following tips:

Choose the charity as beneficiary on a new or existing policy.The estate of the insured will receive a charitable tax receipt for the face amount of the policy. The charity receives a generous donation and the tax deduction can be applied by the estate in the year of death, and carried back to the year before.

Transfer a new or existing policy to the charity with a pledge to pay the premiums each year. You receive a charitable tax receipt for the amount of the premiums paid each year. A receipt is not issued for the proceeds of the life insurance on the death of the insured.

Invest in a life insurance policy equivalent to the value of your RRIF or RRSP, and designate the charity as beneficiary of the RRIF or RRSP. In the event of your death, the charity issues a charitable tax receipt which offsets the tax impact; your estate receives the life insurance proceeds..

Wealth Replacement Insurance. This is the most creative option, which lets you to donate a large sum of money to charity. In return, you receive a charitable credit for the donation which results in tax savings for the year the donation is made. You can then invest these tax savings in an insurance policy that likely results in enough proceeds to replace the value of the gifted property.For the rest of the article, visit our Toronto Life Insurance tips section!

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