Donating a life insurance policy is another, through less common option. Depending on how it is structured, you can receive tax savings while you are still alive and making payments. There are two main options when considering making a planned gift of life insurance:
Option A: Assign the policy to the charity as owner and beneficiary. The annual premiums qualify as a tax deductible donation on your annual income tax return. You can also transfer ownership and beneficiary of an already existing policy.
Option B: You retain the policy and name the charity as the beneficiary. While you can’t receive tax deductions for premiums, the charity will issue a tax receipt from the amount it receives from the policy upon death. This could help with capital gains, RRSP and income tax.