A gift of life insurance can be an affordable way of making a significant donation for a relatively small cash outlay.
Three ways to make a gift of life insurance:
- Purchase a new policy and name the University of Alberta as owner and beneficiary. The university will issue the donor a charitable tax receipt for the annual premium payments, until the policy is fully paid.
- Transfer ownership of an existing policy to the University of Alberta. The donor receives a charitable tax receipt for the fair market value of the policy and for any subsequent premium payments, until the policy is fully paid.
- Name the University of Alberta as beneficiary of a policy. The University will issue a donation receipt to the estate for the value of the death benefits.
Example (for illustrative purposes representing donor residing in Alberta)
Michael, ’90 MA, and Helen, ’88 LLB, Cullen have three children. They are looking to make a significant donation in support of their alma mater that would not impact their family’s present financial situation. They decide to each purchase a life insurance policy with a face value of $50,000, for a total of $100,000. They transfer ownership of both policies to the University of Alberta. They decide to pay the policy over five years.
The Cullens will
- Receive charitable tax receipts for their annual premium payments, which combined are $2,000 per year
- Receive a tax credit for $1,000 each year
- Make a future $100,000 gift for an out of pocket cost of $10,000 ($2,000 x 5 years)