| Making gifts of life insurance easy to understand
Multiplying your generosity by buying an new policy and naming your favourite charity as its owner and beneficiary
Mary Scott is a 50-year-old Ontarian, and a respected director in her company. She wants to use the multiplying power of life insurance to make a substantial gift to one of her favourite charities.
Mary buys a $50,000 universal life insurance policy, chosen specifically because it can be paid up in any time frame she wishes. Since Mary is in her peak earning years, she decides to pay up the entire policy in five years. She names her charity as the policy's owner and beneficiary. She then arranges a meeting with her charity, and instructs them to direct her policy's death benefit into their endowment fund, so she can help their good works to benefit people - in perpetuity.
Her monthly premiums are $350 a month (or $4,200 a year). Mary is delighted that the charitable tax receipts she gets for her premiums let her deduct about 41%** of their value from her annual income taxes.
Over five years, Mary pays $21,000 in premiums, but with thanks to the tax credits they generate, her real cost to purchase the $50,000 policy benefiting her charity is only $12,600.
After her policy is paid up, Mary is so thrilled by her ability to make a significant continuing impact on her charity's work that she purchases another policy benefiting one of her other favourite charities!
*Note: The value of the premiums a donor pays are based on his or her age, health, the type and size of insurance policy chosen, and the time frame in which he or she wishes to pay its premiums. The amount of the premium reflected in this example will not reflect everyone's personal circumstances. A trusted insurance advisor at Bequest Insurance can help donors determine their best options to meet their charitable goals.
**Canadian charitable tax credits can vary from province to province. For example in Ontario, the credit is approximately 41%.
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