This allows you to change the beneficiary, but does not allow you to receive any tax credits for both the premiums paid and for any cash surrender value. Revenue Canada has ruled that only when an irrevocable gift is made to a charity can a tax receipt be issued for the gift. Wealth replacement life insurance Parents may want to make a major contribution to the Canadian Bible Society but hesitate because of their desire to see a child benefit from their estate. One way to accomplish both ends is to have parents make a major contribution, then purchase a life insurance policy that replaces that gift made. The child would be designated as the beneficiary of the policy.
Parents often can pay for the premiums with the tax savings produced by the charitable gift.
The only loss would be the income being produced by the funds donated. This means that the couple purchases a life insurance policy based on both their lives, and the policy contributions are not given to the Canadian Bible Society until both have died. The premiums are lower because they will have a longer longevity period. The funds received by your child through this kind of insurance gift may be more than the original gift, had it been invested. Although the investment would have appreciated in value, it also would have been subject to capital gains tax, reducing the amount available for the children.