Transferring ownership of life insurance or naming an organization as the registered beneficiary is an easy means of supporting a cause close to your heart.
There are two types of life insurance gifts:
- Gift of life insurance policy – Ownership of the life insurance policy is irrevocably transferred to the OCH Foundation.
- Gift of life insurance proceeds – The OCH Foundation is named as the registered beneficiary to receive proceeds of the policy, but is not the owner.
Gift of life insurance policy
When full ownership of the life insurance policy is irrevocably transferred to the organization and the organization is also made the designated beneficiary of the policy, you receive an immediate donation receipt for the cash value of the donated policy if the organization is a registered charity. You also receive annual donation receipts for any premiums you pay after the transfer to keep the policy in force.
Benefits to donor
- As a donor making premium payments, you need only make small current outlays which will be leveraged into a much larger future gift.
- If the transferred policy has been fully paid, you make no further capital outlays. In this case, there will be a large future gift.
- As the organization is the owner and beneficiary of the policy, the insurance proceeds at death will be paid directly to the organization. They are not included in your estate and are not subject to estate probate fees.
How to transfer ownership of life insurance
Your insurer provides papers for you to sign to transfer ownership of the policy, as well the status of ‘registered beneficiary’ to the OCH Foundation. In order to qualify for a donation receipt, you must transfer ownership irrevocably to the Foundation. You cannot get the policy back if you suffer a financial reversal in the future. Please seek financial planning/tax advice before finalizing this type of gift.
Gifts of life insurance proceeds
You may retain ownership of your policy and name the organization as beneficiary of personal or group life insurance. Upon death, the insurance company will pay the death proceeds directly to the OCH Foundation. We will issue a tax receipt to your estate for the policy proceeds. Note that you will not receive donation receipts while alive.
Benefits to donor
- As donor you receive the satisfaction of providing for a significant future gift while retaining full ownership of the policy.
- Modest premium payments translate into a much larger future gift.
- Upon death, the insurance proceeds will be paid directly to the OCH Foundation. This occurs outside of your estate. The proceeds are therefore not subject to probate fees.
- Upon receipt of the insurance proceeds, the OCH Foundation will issue a donation receipt for the proceeds to your estate. The donation receipt may be used by your estate to offset taxes payable upon death.
How to gift proceeds of life insurance
An individual can make a donation of life insurance proceeds by naming the OCH as the beneficiary of the policy. Upon death, once the OCH Foundation has received the proceeds of the policy, we will issue a tax receipt to your estate for the policy proceeds. Note that you will not receive donation receipts while alive. If you would like immediate tax benefits, you can transfer ownership of a new or existing policy to the OCH Foundation. You will receive a charitable donation receipt for the cash surrender value and each year you will receive a charitable donation receipt in the amount of the premiums paid. Please contact us to learn more.