Make Your Mark With Charitable Giving In A Permanent Life Insurance Policy

You may be asking, is this really for me? It may be. Be it pure altruism, a desire to contribute or to positively impact a cause, charitable giving has its place in the world. In this article we’ll talk about strategic ways to give that benefit your desired cause and make the difference for your bottom line – during your lifetime and beyond. Noteworthy, doing charitable giving this way doesn’t detract from your heartfelt contribution, rather, you create a win, win, win scenario. Yes, that’s 3 wins.

You may have a certain sum of money that you’d like to leave to your favourite charity or cause during your lifetime or at the end of your lifetime. Consider, a permanent life insurance policy purchased with that sum of money will make a greater impact at the end of your lifetime. It’ll be much more money. And your estate, your family and the legacy you leave will benefit in a multitude of ways.

For the purpose of this article, let’s say you have $250,000 earmarked to your favourite charity – or $25,000 a year to give, over time.

Giving the “old-fashioned” way.

The premise here is simple, you give the charity that $250,000 and you get a donation receipt for your gift. You could do it in a lump sum or over time, depending on how you wanted to use the donation receipts. You’ll use that donation receipt to offset some of the taxes you’ll pay – great! But did you get the best bang for your buck? Probably not, here’s why.

Giving with a personally owned permanent life insurance policy.

Let’s say you didn’t donate that $250,000, rather purchased a personally owned permanent life insurance policy that costs $25,000 per year. For arguments sake, we’ll assume that $25,000 buys you a $1,000,000 joint-last-to-die life insurance policy with the charity as the beneficiary.

Well now, at the time of loss of life, your estate will leave a $1,000,000 donation and get a donation receipt for that amount to boot. A much greater tax benefit than the money that you invested providing a substantial tax savings.

Giving with a charity owned permanent life insurance policy.

Or, you use the money to purchase a $1,000,000 permanent whole life insurance policy but this time the charity owns the policy – but you’re paying for it. You’ll benefit from the same donation receipts that you would have, had you given the money directly to the charity. And, the charity will get a much greater gift at the end of your lifetime. It’s not the $25,000 per year that you donated, rather, a $1,000,000 windfall – effectively, you’ve enlisted the insurance company to be your giving partner.

Giving by donating your RRSP or RRIF (and replacing your generational legacy with a joint-last-to-die insurance policy).

This strategy is a highly tax efficient way to give. Let’s say at the time of loss of life, your RRSP is worth $1,000,000. Well, that’ll be taxed as income on death – leaving your heirs with a little under $500,000.

Instead, leave your RRSP or RRIF to your charity of choice and they’ll benefit from the full $1,000,000 since that money won’t be deemed income and as such, it’s not taxable. But, what happened to the money you were leaving to your heirs?

Remember that money you were going to leave the charity? The $25,000 per year? Use that to fund a $1,000,000 joint-last-to-die permanent life insurance policy and leave that to your heirs. They’ll benefit from a $1,000,000 windfall, tax-free, as death benefits via insurance are paid tax-free.

Are we creating money our of thin air? We think not. It is simply an effective tax planning strategy, consequently fulfilling your intention in a multitude of ways.

Which charitable giving strategy is best for me?

That all depends on when you want to benefit from your charitable gift – be it now, in smaller pieces – or in a single large amount when your estate presumably needs it most. It’s a conversation worth having today.

Who’s winning here?

Simply put – your cause, your estate and your heirs. See – win, win, win.

These concepts are just a few of the ways to give and create a strategically positive outcome for multiple parties – there’s many more. To experience a real life case study, click below and read on!


What you need to know:

  • The concepts offered are based on information available at the time of writing, it is subject to change.
  • Coverage is not guaranteed for everyone – this coverage is underwritten and based on an applicants age, sex, smoking status, family history, medical history and a slew of other pertinent information.
  • As always, seek advice from your financial professional, accountant and tax lawyer.
  • For more information regarding the different ways to implement charitable giving strategically, reach out to our office – we are elated at the opportunity to offer a no obligation consultation.

The information in this article is derived from various sources. We do our best to ensure the sources are both accurate and reliable and – information changes. As such, we make no guarantee or warranty to the completeness of the information presented here or it’s application to your personal circumstances. The rates presented in the case study as well as the concepts in this article are for informational purposes only. Before acting on any of the above concepts, reach out and get a personalized look at the applicability of this and other insurance strategies for your unique personal or corporate circumstances.

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