If a corporation which is the owner and beneficiary of a life insurance policy changes the beneficiary to its subsidiary, does this change result in the disposition of the policy? CRA responded:
The definition of "disposition" in paragraph 148(9)(d) specifies that there may be a disposition of an interest in a life insurance policy solely by operation of law. In our view, a disposition by operation of law alone can occur if a change to the existing contract results in the creation of a new contract under the Civil Code of Québec. … According to paragraph 148(10)(d), a policyholder is deemed not to have disposed of or acquired an interest in a life insurance policy as a result only of the exercise of any provision of the policy. Generally, the … CRA … considers that the change of beneficiary, in and of itself, does not constitute an amendment that results in a disposition of the life insurance policy.