Charitable Insurance | Charitable Annuity | Charitable Insured Annuity

Charitable Insurance

For those with surplus income and a desire to make a significant gift to a charity on their death while receiving tax credits on the annual contributions to a tax sheltered life policy.

How to create the optimum illustration

Most producers do not focus exclusively on the Charitable Giving market. Yet many producers do come across good prospects periodically and unexpectedly. That is why we included as much information as we did in the illustration. The full story is at your fingertips saving you the time of researching the subject when you do run into a potential sale. The illustration compares the approach of most people, which is to defer the gift until after death with giving while living, collecting significant tax credits and leaving a much larger gift at death. The illustration works well with any policy. Maximum funding is not needed. In fact, you'll note that funding in between minimum and maximum creates the optimum illustration.
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Charitable Annuity

The charitable annuity concept involves a donor providing a lump sum amount of money to a charity in exchange for an income for life.

How to create the optimum illustration

The concept has appeal to many who are past retirement age and who have earmarked a portion of their investments to go to a charity when they die. They probably have a need for income and their life support needs have become predictable. The income they receive through the charitable annuity is guaranteed and is for about the same amount that they would receive if they simply lived of the interest on the money instead. By using this approach they end up with an attractive tax credit and even more important, the recognition and satisfaction of having given while still living. A favourite way of illustrating the concept is to match the "Net annual after tax payout" of the long term alternative investment to "Donor's net annual after tax payout" of the life annuity. It may take several attempts to produce the same figures but it will make the presentation easier to evaluate and the approach usually does result in an attractive tax credit for the donor.
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Charitable Insured Annuity

Preserves the initial lump sum investment (for the charity(ies)) in a Non-registered Life-0 prescribed annuity while generating an income for life for the donor. A comparison is made between C.I.A. and an alternate investment.

How to create the optimum illustration

The concept combines the tax effectiveness of an insured annuity with the opportunity to receive tax credits through charitable giving. A 40% plus tax bracket and an age of 65 or over are necessary to make the prescribed annuity work "tax effectively". The same tax bracket will gain appealing relief from the tax credits that the insurance premiums will generate. As with an Insured Annuity the insurance backing it is usually a Term to 100 policy, but it could also be a minimum funded universal life. The annuity is for life without a guaranteed period. The face amount of the insurance can match the single premium of the annuity that is being considered but it does not have to. The face amount should be determined from the premium that can be "spared" from the lifetime annuity income.
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Charitable Insurance | Charitable Annuity | Charitable Insured Annuity