11 Jun Donation of Life Insurance
In 2019, the BC Financial Services Authority (BCFSA, formerly FICOM) published a position that accepting life insurance policies as a donation was not permitted under the Insurance Act. We had advised at that time that charitable organizations should be aware and consider internal policies as to whether or not donations of insurance policies would be accepted. This left many charities and board members wondering about the status of previously accepted life insurance policies.
In May 2020, BCFSA published this information bulletin. The bulletin acknowledges that a direct donation of life insurance by an insured to a bona fide charity is not generally prohibited. The intention of Section 152 of the Insurance Act is intended to prohibit the trafficking of life insurance policies to protect vulnerable British Columbians.
We recommend that any charitable organizations engaging in solicitation activities involving life insurance policies seek legal counsel to ensure these activities are structured appropriately. We are happy to provide referrals to our colleagues in the legal profession who specialize in servicing the charitable sector. Please contact us for more information.