You can make a gift larger than you might think otherwise possible by naming CARF as the owner and beneficiary of a new or existing life insurance policy. Donating a new policy is an easy form of a life insurance gift. You simply need to qualify for and acquire a new life insurance policy. The Canadian Anesthesia Research Foundation (CARF) is named the owner and beneficiary of the policy. This then allows you, the donor, to receive a tax receipt for the premiums paid for this gift.

A donor may also transfer ownership of an existing insurance policy. A tax receipt will be issued for the "Fair Market Value" of the policy and tax receipts will be issued to the donor for any future premiums he or she may pay. This valuation could possibly be more than just the "Cash Surrender Value" of the policy. A taxable disposition may occur upon the transfer of a cash value policy, but the tax receipt may offset any or all of any tax due. The customer service individual at your current insurance company will be able to advise you of any tax implications resulting from a transfer of ownership.

With either of the preceding examples, there is no tax receipt issued to the donor’s estate from the insurance proceeds upon death.

For example, Jack and Jill Donor are both 55 years old and in good health. They have established a planned endowment gift to CARF in their estate by earmarking $75,000 in their will. These earmarked funds are kept in a money market account earning minimal interest each year of about 1.00% which provides them with about $625 per year of after tax income.

To maximize the endowment in their estate while providing tax relief while they are living, Jack and Jill can do the following:
  1. Acquire a “Joint and Last to Die” Universal Life Insurance plan with a death benefit of $450,000 which can be used to establish their own Named Endowment Fund.
  2. They deposit the entire $75,000 directly into the plan. At guaranteed minimum rates, no further deposits are necessary.
  3. Jack and Jill will donate the policy to CARF and CARF will be made owner and beneficiary of the policy.
  4. CARF will issue Jack and Jill a tax receipt for $75,000. If they cannot utilize the total receipt in the first year, they can carry this forward for 5 years.
  5. This tax receipt will result in a tax savings of approximately $34,807.
  6. Jack and Jill must amend their will(s) as the insurance policy does not form any part of their estate.

A gift of life insurance is separate from your estate and has no effect on its assets and is therefore incontestable and confidential. Setting up a gift of life insurance also escapes probate, legal and any other administration costs incurred by the estate.