in our free newsletter.

Thousands benefit from our email every week.

Charity becomes the owner of a life insurance policy

If you have a term-life policy - that is, a policy that covers you for a certain number of years - that you’re not going to renew, gifting the benefit can optimize the investment you’ve made over the years.

Making the charity the irrevocable owner of your policy has a lot of advantages.

The main one being that you’ll receive a tax receipt to use in the year of the donation. The amount of this receipt is based on the fair market value of your policy which refers to the current value of your policy, taking into account factors like your age and health. This is generally greater than the cash surrender value (CSV), which is the value after a surrender fee is deducted.

If you make a charity the owner of your life insurance policy, they will be responsible for paying any ongoing premiums. If you choose to continue paying the premiums yourself, you can receive a tax receipt for the payments you make.

If you’re unable to claim the entirety of the tax credit in that year, the good news is you can carry it forward for up to five years.

When the policy matures, your chosen charity will receive the full benefit of your policy.

Good credit is important for your financial health, and Borrowell can help you take a turn for the better. Sign up for Borrowell to get your credit score and credit report for free!

Sign up

Name a charity as beneficiary

If you want your estate to have the benefit of a charitable tax receipt, naming the charity as the beneficiary in your life insurance policy is the optimal way to go.

In this instance, you will retain the ownership of the policy, and are free to name as many beneficiaries as you want. If the charity you name as a beneficiary isn’t irrevocable, that is they are not permanent, you can always remove them at a later date.

Upon your passing, the charity you have named will receive your policy’s benefit, while your estate will receive a tax receipt for the donation amount.

Take out a new policy in the name of the beneficiary

Another way in which to donate a life insurance policy’s death benefit to a charity is by taking out a new policy and naming the charity as the beneficiary from the start.

In this case you will be responsible for paying the premiums on a year-by-year basis. At the same time, each year you will receive a tax receipt from the charity to use against your income.

Get a $25 bonus when you open and fund your first Wealthsimple Investment account* (min. $500 initial deposit). Trade and Cash accounts are not eligible. Sign up now to take advantage of this special offer.

Get started

Charitable insured annuity

Annuities provide steady streams of income for individuals when they retire. You pay into it in advance, then will receive a designated amount as an income when the annuity period starts.

When you purchase a charitable insured annuity, you use part of the annuity’s income stream to purchase a life insurance policy. This life insurance policy will have the charitable organization as the named beneficiary.

Each year, part of your annuity will pay for the premiums on your life insurance policy. But because the policy has a charity named as a beneficiary, you can receive a tax receipt for the amount of your premiums.

This method gives you the benefit of receiving a steady retirement income and making regular and continued charitable donations.

By gifting your life insurance benefit to a charity, you can help an organization you support to continue to grow and thrive even after you’re gone. Speak to your financial advisor or charity of choice to find out what options are available to you.

You're 5 minutes away from the best mortgage

Searching for your perfect mortgage shouldn’t be hard.

Homewise is an online brokerage that will negotiate on your behalf with more than 30 big banks and other lenders, completely free, and it only takes five minutes to apply.

If you're in the market for a new mortgage, or if you're looking to refinance before interest rates rise again, go to Homewise now and answer a few simple questions to get started.

What to Read Next


The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.