Gift of Life Insurance
The gift of life insurance can turn a modest current investment into a much larger gift.
Life insurance needs to change over the years. Many of us have policies that are no longer needed for their original purpose such as family protection, education, or retirement security. Rather than simply canceling the insurance and losing the payments made into the policy, it is possible to make a significant gift in the future by naming the Health Care Foundation of St. John’s as beneficiary. New life insurance premiums can also be purchased for the future benefit of health care.
There are several ways to make a gift of life insurance:
Transfer of ownership of a paid-up policy – A gift of a paid-up life insurance policy is the equivalent of an outright gift of cash because the charity could choose to immediately surrender the policy for cash. Most likely, the policy would be retained until the death benefit can be collected. This type of donation provides you with a tax receipt for the total cash surrender value at the time of the gift.
Transfer of ownership of an existing policy on which premiums are still owing - This enables you to make a substantial gift without dipping into other assets. This type of gift is most suitable for a donor who has the cash flow to continue to make premium payments. You would be entitled to a tax receipt for the cash surrender value when the policy is transferred to the Health Care Foundation of St. John’s and a tax receipt for subsequent premium payments.
Purchase of a new policy, naming the Health Care Foundation as owner and beneficiary- The premiums could be paid directly to the insurance company or donations could be made to the Health Care Foundation so that we could pay the premiums for either payment option. The premiums are eligible for a tax receipt, making this an inexpensive way to leave a substantial legacy.
Name the Health Care Foundation of St. John’s as beneficiary – A donor can name the Health Care Foundation of St. John’s as the beneficiary to receive all or part of the insurance proceeds arising from death. Under existing law, a donor cannot claim tax credits during his/her lifetime if the charity is named as a beneficiary but does not own the policy. However, the estate will benefit from the tax credit.
The Health Care Foundation suggests that donors consult with an insurance agent prior to making a gift to determine the specific tax advantages and considerations. We would also be pleased to work with you to ensure your gift is used in a way that is most meaningful to you.
