One of CrossPoint Financials’ core values is generosity. We hope to live that value out corporately, personally and to encourage our clients to consider the same. How we use our resources (time and money) expresses this value, and today we want to share one way that people can do this.
At the end of 2022, we shared a series of blogs about insurance, including the basics of how insurance works and the common types of insurance such as life, critical illness, and disability. Within the life insurance category, a lesser-known strategy involves taking a policy out on yourself to leave a legacy. Giving back is in the heart of many Canadians and there is now a specific product created by a Canadian insurer to help facilitate this legacy charitable giving.
Canada Life launched a new life insurance product called “My Par Gift,” designed to be donated to a registered charity. This policy differs from previous versions of this strategy because the client purchases and fully funds the policy upfront by depositing a single lump-sum premium — the minimum lump-sum premium/donation is $10,000.
The donor receives a charitable tax receipt from the charity for the amount of the single premium payment. The charity becomes the policy’s owner and beneficiary, retains the policy at no cost to them until it pays the death benefit. This type of policy gives the charity a lot of flexibility — no cash flow requirements and the potential for dividends to be paid from the policy.
The key benefit to this strategy is that for someone looking to make a sizeable donation, you can leverage and multiply the gift to the eventual death benefit amount as long as the donor and the charity are willing to be patient. While this concept isn’t new, this policy design solves quite a few of the compliance and regulatory concerns with the strategy in the past.
My Par Gift was designed to help solve concerns around insurance trafficking which occurs when a policyholder sells or transfers a life insurance policy in exchange for consideration, usually at a discount below the face value of the policy. This practice can cause harm in some circumstances to those who sold the policy.
If you currently have a term policy with Canada Life, you may still be able to convert it to My Par Gift. The new product is priced similarly to comparable ones within the company, meaning the underlying cost of insurance is competitive and consistent with other types of policies they offer.
If you have questions about charitable giving, My Par Gift or other insurance types, call us; we would be happy to discuss any of your charitable giving strategies and opportunities with you.
