When it comes to making donations to charity most donors across the country are still making contributions through cash, cheques and credit cards. Most people still don’t realize that you can use Life Insurance for philanthropy — that, in fact, Life Insurance is one of the most cost-effective and tax-effective ways to support a charity you care about.
Called My Par Gift™, Canada Life’s first-of-its-kind, single premium payment (that’s right, just one) participating life insurance has been designed just for charitable giving and allows generous donors to make a bigger impact with the charitable donation they make during their lifetime.
As with any life insurance product, a death benefit is attached to the life of the insured person, except with My Par Gift™, the insured chooses a registered charity to become both owner and beneficiary of the policy.
The charity immediately issues a donation tax receipt for the entire premium amount, which the donor can use to offset up 75 percent of their annual net taxable income. Since this is a life insurance policy that grows in value over time it also gives donors the ability to create a legacy gift of 5-20 times the net value of their one time premium! The charity receives something of much greater value than what’s written on that donation tax receipt: the promise of a significantly larger payment on the donor’s death and the ability to create a cash flow for the charity during their lifetime.
The designated charity has a lot of flexibility. It can elect to withdraw from the cash value of the policy, receive potential dividends as cash or additional insurance growth, or use the policy as collateral for a loan against the cash value. When the insured person dies, the charity receives the death benefit, which is determined using a similar approach for the pricing of other life insurance products. This typically takes into consideration individual factors such as gender, age, and smoking status. It’s a single premium product, so it’s easier for donors to give back to a cause they care about without having to worry about future payments or commitments.
My Par Gift™ has been designed with simplicity in mind – simplicity for the donor and for the charity. It was also designed to be accessible to many Canadian households, with premiums starting at $10,000. That’s not an annual premium … Remember, it’s a one-time premium.
If you’d like to explore this further, please reach out to our office at your earliest convenience.
As a professional Financial Planner, Del guides successful business owners, professionals, and affluent families through the complex process of ensuring the people and organizations they care about are taken care of. If you are like many of his clients, you are looking to reduce your tax obligations, preserve your wealth, and leave a legacy.
