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Insured charitable legacy – a new custom sales concept
March 2015
Your client has surplus income or savings that they don’t need to support their lifestyle and wish to use these funds to benefit their favorite charity when they pass away. Where do you go from here?
The Insured Charitable Legacy is a custom concept presentation that can help you demonstrate the merits of using a life insurance policy to benefit a charity when your client passes away.
How does the insured charitable legacy work?
This financial planning strategy redirects surplus funds to the purchase of a life insurance policy for the benefit of the charity. The charity is the owner and beneficiary of the policy and your client pays the premiums on the charity’s behalf. When your client passes away, the charity will receive the proceeds of the insurance policy.
The life insurance premium payments that are paid by your client on behalf of the charity are treated as a gift and the charity will issue a donation receipt each year for the amount of the premiums paid.
Numerical analysis
The Insured Charitable Legacy compares the gift of a life insurance policy today to a taxable investment when your client dies. The Insured Charitable Legacy helps your client determine which option will provide the largest gift based on the assumptions used. The numerical analysis within the presentation includes a comparison of the tax benefits available under each method of gifting. The timing of the tax benefits associated with each gift is different. The gift of the life insurance policy results in a tax benefit to your client each year they pay a premium on behalf of the charity. The gift of a taxable investment occurs at death and results in a tax benefit to the deceased client’s estate. Present value analysis is included in the presentation as an effective way to compare the timing of the associated tax benefits.
Requesting an insured charitable legacy illustration
At this time, the Insured Charitable Legacy concept illustration is not available on DiamondView. For more information or to request an illustration, please contact your local Manulife representative or send an email to conceptquote@manulife.ca.
Please include the following information when requesting an illustration:
- A PDF of the Manulife insurance product illustration
- The tax rate you want used to determine the tax benefit from the charitable gift
- The discount rate
- Rate of return you want applied to the taxable investment
Current turn-around times for an Insured Charitable Legacy illustration is 24/48 hours.
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