Charitable Insured Annuity custom concept

January 2016

Are you looking for an insurance concept that will provide your clients with the following?

• Increased cash flow while living
• Insurance benefits that will aid their favorite charity when they die
• Guaranteed insurance and annuity benefits
• Potential reduction in the amount of tax they pay each year

If you have clients who are age 65 plus and in good health, maybe it’s time to introduce them to the Charitable Insured Annuity.

The Charitable Insured Annuity is a custom concept presentation that can help you demonstrate the merits of using a prescribed annuity in conjunction with a life insurance policy to increase cash flows during life while ensuring funds are available to benefit a charity at death.

Your client liquidates interest-bearing investments and uses the resulting cash to purchase a life annuity contract. They also purchase a life insurance policy. Your client is the life insured under the policy but their chosen charity is the owner and beneficiary of the policy.

The annuity generates a payment stream that is used to pay the tax on the annuity payment and the life insurance premium. The remaining amount provides cash flow to your client.

The insurance premium paid by your client on behalf of the charity is treated as a gift and the charity issues a donation receipt each year for the amount of premium paid. This provides your client with a valuable tax benefit that can reduce the amount of tax he/she pays each year.

When your client dies, the charity receives the insurance proceeds tax-free.

The Charitable Insured Annuity compares the net cash flows generated from the purchase of a prescribed annuity plus a charity owned life insurance policy to the net cash flows from a taxable investment which is gifted to charity when your client dies. The Charitable Insured Annuity helps your client determine which option will provide the most advantageous outcome based on the assumptions used. The numerical analysis also 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 life insurance policy premiums are considered a gift to the charity and result in a tax benefit to your client each year they pay a premium on behalf of the charity. The gift of a taxable investment would occur 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.

At this time, the Charitable Insured Annuity 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.com.

Please include the following information when requesting an illustration:

1. A PDF of the Manulife insurance product illustration
2. A PDF of the prescribed annuity quote
3. The tax rate you want used to determine the tax benefit from the charitable gift
4. The discount rate
5. The rate of return you want applied to the taxable investment

Current turn-around times for a Charitable Insured Annuity illustration is 24-48 hours.