If you are considering using life insurance to donate to charity but aren’t quite ready to irrevocably assign the policy ownership to charity or irrevocably designate the beneficiary, you have a couple of options:
1. Name the charity as a contingent beneficiary
2. Name the charity as a revocable beneficiary
Both options are not final and can be changed at any time (before death!).
By naming the charity as a contingent beneficiary (which you can do right now), you are basically providing for the possibility that your first intended beneficiary either pre-deceases you or even dies at the same time (i.e. you both die in the same car accident). In this case, if you had no other beneficiaries, then your charity of choice will receive the death benefit.
By naming the charity as a revocable (as opposed to an irrevocable) beneficiary, you can change your mind should something arise in life that would necessitate you leaving money to your heirs, your estate for liquidity purposes, etc. instead of to the charity.
In both cases, there would be no immediate tax benefit and if you never did assign the policy and beneficiary designation to the charity irrevocably, the only tax relief you would receive would be upon death when you could claim the death benefit that was ultimately received by the charity up to 100% of your net income in the year of death, and the year immediately preceding death.
If you like this blog, you might like my book:
RRSPs: The Definitive Book on Registered Retirement Savings Plans