Life Insurance
To make a gift of life insurance, you can purchase a new policy or donate an existing policy. Gifts of life insurance do not reduce the value of your estate for your heirs, and can make giving a larger gift more feasible.
To give a gift of an existing insurance policy, transfer the policy by naming HSC as the owner and beneficiary. A tax receipt will be issued for the fair market value of the policy plus any accumulated dividends and interest at the time of the transfer.
If you have a fully paid up policy, you can make HSC the beneficiary and you need not pay any additional premiums. When the policy is realized, the gift to HSC will fall outside your estate and avoid probate fees. Your estate will also receive a tax receipt for the full value of the gift which can be used to offset others taxes owing. If you continue to fund future premiums, these amounts will also be eligible for the donation credit.
Some donors choose to take out a new policy naming HSC as owner and beneficiary. It is important that HSC is both the owner and the beneficiary because this allows all premiums paid to be treated as charitable donations. If the charity is not made the owner, Canada Revenue Agency states that no gift will have been made, and no tax receipt can be issued. Under this type of arrangement, each year you pay the premiums and HSC issues an annual tax receipt for these premiums. The insurance proceeds will be paid directly to HSC when you pass on.