{"id":6183,"date":"2022-08-23T13:54:09","date_gmt":"2023-08-12T08:04:04","guid":{"rendered":"https:\/\/www.millerthomson.com\/guidance-charitable-donations-life-insurance-alberta\/"},"modified":"2025-12-30T17:32:19","modified_gmt":"2025-12-30T22:32:19","slug":"guidance-charitable-donations-life-insurance-alberta","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/social-impact\/guidance-charitable-donations-life-insurance-alberta\/","title":{"rendered":"Official guidance on charitable donations of life insurance in Alberta"},"content":{"rendered":"\n

On May 27, 2022, Alberta\u2019s Superintendent of Insurance (\u201cASI\u201d) published an Interpretation Bulletin on Charitable Donations of Life Insurance (PDF)<\/a> (the \u201cASI Bulletin\u201d). The purpose of the ASI Bulletin is to outline how a life insurance policy can be donated in Alberta to a Canadian charity without contravening the anti-trafficking provisions of the Insurance Act <\/em>(Alberta).<\/p>\n\n\n\n

This article outlines the details of ASI\u2019s position, provides some commentary on the context in which the ASI Bulletin was released and discusses its possible implications.<\/p>\n\n\n\n

ASI Bulletin<\/h2>\n\n\n\n

\u201cTrafficking\u201d within the context of the Insurance Act<\/em> refers to a situation in which a  policyholder sells or transfers a life insurance policy in exchange for consideration. Typically, the consideration exchanged is discounted below the face value of the policy.<\/p>\n\n\n\n

The ASI Bulletin indicates that the prohibition against trafficking or trading life insurance policies (s. 784 of the Insurance Act<\/em>) has been in place for many years to protect vulnerable individuals from being taken advantage of by third parties.<\/p>\n\n\n\n

The ASI Bulletin outlines three acceptable methods for donating life insurance to a charity that will not constitute trafficking under the Act. These are:<\/p>\n\n\n\n

    \n
  1. Where a life insured takes out a new policy in the name of a bona fide charity and receives a tax receipt for premiums paid;<\/li>\n\n\n\n
  2. Where a life insured names a bona fide charity as the beneficiary of an existing policy, the charity receives the benefits at the time of death, and the estate receives a tax receipt; and<\/li>\n\n\n\n
  3. Where a life insured transfers ownership of an existing policy to a bona fide charity and receives a tax receipt for the cash value of the property.<\/li>\n<\/ol>\n\n\n\n

    Context<\/h2>\n\n\n\n

    The BC Financial Services Authority (\u201cBCFSA\u201d) issued a substantively similar information bulletin to this ASI Bulletin in May 2020 (the \u201cBCFSA Bulletin (PDF)<\/a>\u201d). BCFSA was the first provincial insurance regulator to take a position on this issue. The BCFSA Bulletin was issued in response to pushback from the charitable sector after it issued a letter to a registered charity in November 2019 indicating that accepting life insurance policies as donations would be  considered trafficking in insurance.<\/p>\n\n\n\n

    While the BCFSA Bulletin clarified that typical gifts of life insurance are acceptable, it resulted in a number of questions, which were discussed in a previous newsletter article<\/a>, including:<\/p>\n\n\n\n