Gifts of Life Insurance
Life insurance may be used to make a planned gift to the Church. A small annual contribution in the form of insurance premiums yields a major gift. For many people, this is an ideal way of expressing their Christian financial stewardship.
Life insurance can be crucial in providing the security a growing family requires or for support in times of need. However, as family needs change and children grow, many of us find ourselves with policies which are really no longer essential to our future family financial plans. These policies are an idle asset that can be used to create a win/win situation for your financial and tax planning and for the Anglican Church.
Gifts of life insurance truly make an impact on ministry, often for a very small payment. Donors tell us that they want to really make a difference to the lives of people in their faith community. Gifts of life insurance create that opportunity because donors are able to give significantly larger gifts than they might otherwise be able to make. Unlike a will that can be challenged, a gift of life insurance ensures that your wishes will be met.
Life insurance, rather than a cash donation, may be the answer if your health is good; otherwise, the cost may be prohibitive. If you are unsure, see your financial advisor.
Make a gift of life insurance by donating a policy you own but no longer need, or by establishing a new one. You can also contribute other assets to the Church and use life insurance to protect the value of those assets for your heirs.
Make The Church The Beneficiary
Many years ago, Russell Connor took out a $50,000 life insurance policy, with his spouse as beneficiary, to provide security for his young family. Now he is a widower with other assets to leave to his children. He has decided to give the proceeds of the life insurance policy, payable at death, to the Diocese of New Westminster.
The best way to do this is by simply designating the Church as the replacement beneficiary. At Russell's death, his estate will be entitled to a donation receipt for the $50,000, yielding a sizeable credit to be applied to his final estate tax return. In that way, his gift to the Anglican Church of Canada actually increases the amount of his other assets he will leave his children.
Transferring A Paid-Up Policy
Nancy MacDonald, 70, gives a $50,000 paid-up life insurance policy to a related group she wants to support. The cash value is the equivalent of an outright gift for which she receives a donation receipt. The group can immediately, if it chooses, surrender the policy for cash. It is more likely that it will hold the policy until Nancy is deceased and then receive the benefit of the policy’s face value.
Transferring A Premium-Owing Policy
In this case the ownership of a $100,000 policy is also passed to the Church. Gloria Santos, 65, receives a donation receipt for the current cash value and for premiums she continues to pay until the policy is paid-up. Alternatively Gloria could make a donation annually to the parish for the cost of the premiums which it then pays. On the donor’s death, the Church receives the policy’s death benefit to fund ministry in the parish.
Create A New Policy
Gerald Koenig, 45, has some discretionary income but cannot afford to contribute any of his capital. He buys a life insurance policy with a face value of $50,000, names The Anglican Church of Canada as owner, and pays annual premiums of $2,400 for five years. He gets a donation receipt and a tax credit of $1,049 (43.7 %) for each premium paid. His out-of-pocket cost to assure a future gift of $50,000 is only $1,351 a year.
Replace A Donated Asset with Insurance
Gladys Ho, 60, uses life insurance to enable a contribution of $100,000 cash to the Anglican Church of Canada. In the four years she takes to report her contribution (since she is limited to 75 per cent of net income per year), her tax savings total $43,700 (assuming a 43.7% tax rate and other taxable income of $100,000). She uses $29,000 of the tax savings to buy a paid-up life insurance policy which names her children as beneficiaries. She retains the balance. As a result, the Anglican Church of Canada receives $100,000 now, the children will get $100,000 at her death, and she keeps $14,700 for her immediate use.