Life Insurance

A gift of insurance can allow a Donor to make a much larger gift to the Canadian Medical Foundation than they might otherwise be able to consider. Tax savings today are real.

There are a number of very common methods to utilize life insurance in your charitable giving and tax saving plans. Proceeds of life insurance policies provide your beneficiary, in this case the Canadian Medical Foundation, with a lump sum that can really have an impact on our charitable programs to support Canada’s health care system and the physicians from coast-to-coast-to-coast that are its core. Often, heirs use the proceeds from insurance to help off-set funeral cost, capital gains taxes, or other end of life expenses. However, a gift of life insurance to the Canadian Medical Foundation is not part of someone’s estate and therefore is not subject to capital gains, or other taxes.

If one or more of your life insurance policies no longer fits your financial strategy, consider:

• Transferring your paid-up policy to the Canadian Medical Foundation, and in so doing receive an immediate charitable tax receipt for the full-value of the policy;
• If premiums are still payable, transfer ownership, naming the Canadian Medical Foundation as beneficiary. You continue to pay the premiums but annually get a tax-receipt for the value of the associated costs; or
• Simply name the Canadian Medical Foundation as beneficiary of the policy.

Depending upon which of the options are chosen, the tax advantages could be considerable for you, as follows:

• When the Canadian Medical Foundation is named as the irrevocable beneficiary, we can immediately issue a charitable tax receipt to you for the full cash value of the policy, plus any accumulated dividends;
• If you are still paying premiums, the Canadian Medical Foundation will issue a receipt for the full cash value, but you will also receive a cash receipt for each additional premium paid; but no donation receipt will be issued for the death benefits;
• Simply naming the Canadian Medical Foundation as beneficiary, without gifting the policy, will not reduce your taxes today. However, in the future, when CMF receives the proceeds of the policy and, if the policy is named specifically in your will, the CMF will issue a charitable tax receipt, which will benefit your estate. In this case, you will be entitled to claim a certain donation credit that can off-set estate taxes in the year of your death for proceeds donated to charity to a maximum of 100% of net income in the year of your death. Where the donation exceeds your net income, the excess can be carried back to the year prior to death and up to 100% of net income in that year can be claimed as a donation as well. While probate fees still apply, the donation credit will far outweigh these fees.

If you would like to make a substantial gift in the future, you can contribute small yearly premiums over time and receive tax-deductible receipts for the amount of your payments. You may simply arrange with a life insurance company to transfer ownership and beneficial rights to the Canadian Medical Foundation. You will have the peace of mind knowing that you have made a significant contribution to a national charity focused on supporting physicians and Canada’s health care system.

Additional Alternatives

You may also name the Canadian Medical Foundation as an alternative beneficiary by changing the beneficiary declaration in your policy (whether it be term insurance or otherwise) to read: “To my wife (husband) if she (he) survives me, but if she (he) predeceases me, then to the Canadian Medical Foundation.”

Another option is to make the Canadian Medical Foundation a co-beneficiary of your life insurance policy to the extent of any dividend accumulation. Then, the benefits would be divided, with the primary beneficiary receiving the face value and the Canadian Medical Foundation receiving the accumulated dividends.

Registered Assets

Another valuable advantage exists. If you hold registered assets, such as a Registered Retired Income Fund (RRIF), gifting a life insurance policy to charity can ensure that your heirs receive the full value of your registered assets.

Normally, when a married person passes, their spouse becomes the owner of the RRIF tax-free. However, any other heirs would only get 50% of the funds while the government gets the rest. However, if one takes out a life insurance policy with approximately the same value as your RRIF and designate the Canadian Medical Foundation as your beneficiary, then the charitable tax receipt from your donation will effectively offset the portion of the RRIF owed to the Canada Revenue Agency.

You can name the Canadian Medical Foundation as a beneficiary of your Registered Retirement Savings Plan (RRSP), RRIF or life insurance policy. Doing so will provide you with a significant donation tax credit in the year of your death, which can offset other taxable income.

Charitable Registration Number 11921 9327 RR0001

Copyright by Canadian Medical Foundation, 2022.

The Canadian Medical Foundation acknowledges Toronto is on the traditional territory of many nations including the Anishnabeg, the Chippewa, the Haudenosaunee and the Wendat peoples and is now home to many diverse First Nations, Inuit and Métis peoples. The land at Bathurst Street was once the traditional territory of the Huron-Wendat and Petun First Nations, the Seneca, and most recently, the Mississaugas of the Credit River.

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