Charitable Giving
If you have ever given to charity you understand the feelings of good citizenship that can result. The most common way of giving to charity is through cash donations. These cash donations are tax-free and result in a tax receipt to put towards income tax. These receipts can result in almost half of the donation in tax savings and can be carried forward for years.
What if you have the desire to give but not the resources? There is a less common way to go about charitable donations that we can help you with. This is giving charitable donations through life insurance. There are a few different ways to do this:
- Make the charity the owner and beneficiary – If an existing policy is transferred to the charity then the donor will receive a tax receipt for the cash surrender value. All premiums paid by the insured after the transfer are tax deductible. Any future premiums are also income tax deductible as the charity issues a tax receipt to the insured after premiums are paid.
- Make the charity as the beneficiary – If you are concerned that your family's circumstances may change in the future, you may name the charity as "revocable" or "contingent" beneficiary and still retain flexibility and control. The charity would receive the death benefit proceeds. You still have the freedom to change the beneficiary if your situation changes. Your estate would receive a tax receipt for the full amount of the insurance proceeds.
- Use policy dividends - Life insurance policy dividends received in cash can be donated to charity. This is an economical way to make charitable donations and at the same time provide tax savings.
For more information on how to make charitable donations through life insurance get in touch with us a Svab Insurance and we can help you.
