Power charitable giving with life insurance
Based on a true story - For advisors only
Ross Young is a successful advisor, accountant, passionate philanthropist and long-standing member of the Canadian Association of Gift Planners (CAGP). Ross served as CAGP’s national treasurer for six years and six more as the treasurer of their foundation. He was awarded their Friend of CAGP Award in 2021. Ross has developed deep relationships with several charities by educating their staff on strategic charitable giving options as well as reviewing existing and proposed gifts of insurance to ensure the gift is ultimately realized by the charity. Thanks to these deep relationships, Ross had a great outcome with a Canada Life My Par Gift™ participating life insurance policy.
Ross was approached by a charity with a unique situation. A family of four, including older parents and middle-aged children, contacted the charity looking to make a significant donation. The charity had previously worked with Ross and wanted to confirm that the gift would achieve the overall goals of the charity and the donors.
For Ross, this presented an opportunity to be involved with a solution that aligned with the family’s philanthropic vision while maximizing the financial impact for the charity.
Ross recommended that a portion of the donated securities be used for the charity’s current needs and the other portion be used to pay the premium for a My Par Gift policy. The policy would be structured as joint-last-to-die (JLTD) on the lives of the children, with enhanced coverage lifetime guarantee. This immediately guaranteed a large gift of insurance with the JLTD structure on the children increasing the overall size of the gift for the given premium.
This policy ensured future financial benefits for the charity while avoiding ongoing premium payments or concerns about the policy lapsing. Additionally, the policy’s cash value and dividends provided flexibility for the charity to consider growing the policy with the potential to take future dividends as cash (once the enhanced coverage option crosses over) to fund future projects.
The My Par Gift solution was a win-win for both the family and the charity. Here’s how:
For the family (clients/insureds): They made a meaningful donation, saw the immediate impact of their contribution and aligned with their desire to leave a legacy. With the donation of securities, the clients eliminated capital gains and received a charitable tax receipt.
For the charity (policyowner and payor): The charity benefited immediately from the portion of the securities that wasn’t used to pay for the insurance premium. The life insurance policy, using the enhanced coverage option, provided an initial guaranteed gift of nearly three times the single premium amount, with a long-term financial asset of nearly four times the premium amount at the life expectancy of the insureds.
My Par Gift offers a simple, flexible and effective strategy for charitable giving. With a single premium payment, there’s no need for the charity to manage annual premium payments or worry about coverage ending before the insured dies. This blended solution meets the immediate and future financial needs of the charity while aligning with the client’s desire to leave a lasting legacy. Its philanthropy made simpler and more impactful. The success is already leading to future opportunities to work together with this charity.
Ross summed it up best, “Both the charity and the family were ecstatic to know that the charity’s great work could continue to grow in an area that was important to the family.”
This case study illustrates a powerful blended strategy of donated appreciated securities made by the donor, who is the insured on the policy. A portion is used to fund the charity’s current needs and the balance to pay the single premium for a My Par Gift insurance policy paid by the charity, the policyowner. The charity provides the donor with a charitable tax receipt for the fair market value of the donated securities. This strategy meets both the charitable giving goals of the clients and the long-term financial needs of the charity.
- Contact your insurance sales partner.
- Or run a My Par Gift illustration for your philanthropic clients using Canada Life Illustrations
Information is for advisors only. This material is not intended for use with clients.
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