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A Reform Party member, working with her life insurance agent, has created a unique way to contribute that reflects her confidence in the permanence of this new political organization. The Calgary-based member, who asks to be identified as "Anne", has taken out a term life insurance policy to benefit the Reform Party upon her death.
Anne believes the arrangement is a positive one for both herself and the party. Bequests made through a will can sometimes be contested or fail because there is not adequate money in the estate due to erosion caused by illness or inflation. Using her life insurance policy allows Anne to bypass her estate so that funds are paid directly and without delay to the Reform Party.
Sheila Barling, a life underwriter in Calgary and also a member of the Reform Party, said in an interview that Anne's gift was a most generous one. "Transferring ownership of a life insurance policy to the Reform Party can be an extremely meaningful gift. It allows the party to borrow against the equity in the insurance policy. At the same time, the donor can use the premium as a tax write-off."
"Transferring ownership of a life insurance policy to the Reform Party can be an extremely meaningful gift."
Barling, who helped Anne set up the policy and is considering organizing workshops on this unique way of contributing, says the arrangement is very flexible. Premiums can be paid in a lump sum or spread over several years. Also, donors can transfer existing life insurance policies or set up a separate one in the name of the Reform Party, she said.
Barling also has a record keeping system she makes available to clients that will keep track of donated policies, advice clients when premiums are due and how much equity has built up in the individual policies. As well, Barling says, donors can specify how they want their donations used before the life insurance policy is transferred to the party. A donor can insist that funds be earmarked for a national election, or to support the party's newspaper, Barling explains.
"This is an act of faith," Barling said. "It's a big vote of confidence in the party."
Anne, a woman in her 60s, followed these steps in setting up her bequest:
* She arranged for a life insurance policy on her own life with Reform Fund Canada as a beneficiary.
* Once the policy was finalized, she arranged for ownership of the policy to be transferred to Reform Fund Canada. (If a Reformer is uninsurable due to age or illness, he or she might consider transferring ownership of an existing policy to the Party.)
* Anne then arranged to make a donation to Reform Fund Canada to cover the policy premium.
* Anne received a tax receipt, and benefited from the resulting tax credit for this donation to cover premiums.
* The policy is already a benefit to the Party. The Party owns the cash value of the policy and could pledge it as an asset if necessary.
* Anne chose a policy that will allow her to pay off the premiums quickly. At the same time, this arrangement creates a high cash value for the Party to access.
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