Donating to charity
2 ways to donate to charity
1. Name the charity as your beneficiary
Simply name your chosen charity as the beneficiaryBeneficiary The person(s), institution, trustee or estate you choose to give money, property or other benefits when you die. You may name beneficiaries in your will, insurance policy, retirement plan, annuity, trust or other contracts.+ read full definition of a life insurance policyInsurance policy A written contract for insurance. It describes how long you are covered, what you are covered for, any part that you have to pay (the deductible) and what you will pay for the insurance (your premium).+ read full definition. Your estateEstate The total sum of money and property you leave behind when you die.+ read full definition will be able to claim a donation tax creditTax credit The amount you can deduct from your income when you file your taxes. This lowers the tax that you owe.+ read full definition for the death benefitDeath benefit Money that your life insurance or savings and pension plan(s) pays to your estate or beneficiary after your death. Example: If you contributed to the Canada Pension Plan, money may go to your estate, spouse or common-law partner and children.+ read full definition paid.
2. Donate your policy
Donate a permanent life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.+ read full definition policy to charity – and get ongoing charitable receipts for your premium payments. Here’s how it works:
- Apply for a permanent life insurance policy.
- When the policy is approved, transfer the policy ownership to the charity of your choice and name the same charity as beneficiary.
- Pay the annual premium and get a taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition receipt for that amount.
The charity is guaranteed the amount of the death benefitBenefit Money, goods, or services that you get from your workplace or from a government program such as the Canada Pension Plan.+ read full definition as long as you continue to make premium payments. The death benefit is paid outside your estate, so the charity receives the proceeds quickly and your estate won’t pay probateProbate Fees to settle your estate after your death. The probate process includes reviewing your will to ensure it’s valid. Also includes paying any debts and giving your money and property to the beneficiaries you have named in your will.+ read full definition fees on the amount.
Consider all of your charitable giving optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition
Using insurance is just one option for charitable giving. Learn more about insurance and other options for donating to charity.
2 key points
Use life insurance to donate by:
- Naming the charity as beneficiary of your policy
- Transferring policy ownership to a charity