2 Strategies For Canadians To Increase Your Philanthropic Impact

Like many Canadians, you may have identified philanthropic giving as a key priority as you develop your estate plan, but find yourself uncertain how to maximize the impact of every dollar contributed.

Similarly, you may have found yourself supporting the causes that you most care about but are also on the lookout for additional opportunities to increase your impact and create an enduring philanthropic legacy.

This article is for you—here, we discuss two strategies utilizing a life insurance policy that can help you increase your philanthropic impact.

1. Transferring The Ownership Of Your Life Insurance Policy To A Charity

The first strategy involves transferring the ownership of a life insurance policy with yourself as the insured to the charity in question, while also naming this charity as the beneficiary.

With this approach, you would continue to pay the premiums, while being entitled to a donation tax credit for each payment much like when you make a regular charitable donation.

If your policy has a cash surrender value, you may also be able to realize an additional and significant benefit from this approach. At the time of transferring the policy to the charity, an actuarial valuation is completed which results in a charitable donation of the full value of the policy. This charitable donation qualifies as a donation tax credit when filing your annual tax return.

Ultimately, this approach allows you to direct a significant lump sum to a cause that is important to you, funded by much smaller regular payments, while delivering tax savings along the way.

2. Naming The Charity As The Beneficiary Of Your Life Insurance Policy

The second strategy involves naming the charity as the beneficiary of your life insurance policy.

In this case, while you would continue to own the policy and pay the premiums, you would not be entitled to the donation tax credit for each payment. However, at the time of your passing, the life insurance policy would pay out the death benefit to the charity, effectively turning your premium payments into a sizeable gift.

This lump sum payout would be eligible for the donation tax credit to be applied to your terminal tax return, allowing you to claim it against up to 100% of your taxable income, which may be particularly helpful to reduce tax liabilities from income inclusions as a result of any deemed disposition that may have occurred.

The beneficiary designation would also allow the payout to bypass your estate, avoiding any probate fees, creditor claims on the estate, or any potential litigation that may arise.

In brief, this approach increases your philanthropic impact by converting smaller premium payments into a much larger legacy in a manner that also presents significant tax savings to help preserve your overall estate.

Both of these strategies demonstrate the power of combining life insurance and philanthropy.


Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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