Section 72 Policy: Your Secret Weapon To Grow Wealth and Minimize Tax Burden

Section 72 Policy

Section 72 Policy: Your Secret Weapon To Grow Wealth and Minimize Tax Burden

Are you worried about securing your future? Do you dream of early retirement and a comfortable lifestyle but are concerned about unforeseen healthcare costs that might derail your plans?

If you relate to this feeling – this blog is for you! We will unveil a powerful tool – Section 72 Policy – your secret weapon to achieving financial security and reducing your tax burden.

Understanding Section 72 Policies in Ireland

Section 72 Life Insurance Ireland is a special provision in Irish Law that allows individuals to take out a life insurance policy specifically to cover inheritance tax. It allows you to build wealth for early retirement or leave a legacy while minimizing your tax burden. 

Irish parents often buy Section 72 inheritance tax Ireland to pay their children’s inheritance tax bill. The payout from this insurance is generally tax-free.

Conditions For Enjoying Tax-Free Exemptions 

To take advantage of the exemption under Section 72 Life Insurance policy, you must meet these criteria:

  • Approval By Revenue: The policy must be in a form that the Revenue Commissioner approves and must be adhering to the required regulatory standards.
  • Lifetime Premium Payments: Premiums must be paid annually all through your lifetime. This indicates your commitment to your family’s financial stability and safety.
  • Aimed at “Relevant Tax”: The purpose of the policy must be to cover “relevant tax”, including any inheritance tax arising from your estate. 

How Much Section 72 Life Insurance Ireland Do You Need?

This depends on how much inheritance tax will be owed. 

For example: if your assets result in an inheritance tax of €300,000 for your kids – then that is the amount your insurance needs to cover.

How Much Does Section 72 Policies in Ireland Cost?

Again, this varies from person to person. No two people are the same, in the same context no two policies are the same.

That said, the general factors that affect the cost include your age, whether you smoke or not, any prevailing health issues and the amount you need to cover.

Types of Section 72 Policies in Ireland

There are two main types of Section 72 Policies in Ireland:

  1. Single Life Policies: You can take out a policy for a single life and designate the proceeds to be paid to executors or to whoever you choose to pay inheritance tax.
  2. Joint Lives Policies: For married couples and civil partners, the proceeds of the policy can be used to pay inheritance tax if the other partner passes away.

Determining The Suitability of Section 72 Policies In Ireland 

Yes, Section 72 policies offer many benefits but they shouldn’t be your first consideration reducing tax liability. A more effective approach would be structured lifetime planning.

With that said, Section 72 policies in Ireland are suitable under the following conditions:

  • Offering a “clean” solution—parents or benefactors hoping to lessen the tax loads on their recipients or offspring.
  • When (Capital Acquisition Tax) CAT thresholds are fully used, all other opportunities for gifting have been exhausted.
  • Conserving family properties – Estates consist primarily of property which both parents and their children want to keep within the family. It is possible to avoid the necessity of selling property in order to pay tax obligations.
  • Clients with high guaranteed incomes are those who have substantial incomes guaranteed, for example defined pension benefits.
  • Wealth that is contained within a corporation, such as corporate wealth or surplus cash. The company keeps any surplus cash rather than passing it on to the children.

Partnering With MMA Advisors 

At Money Maximising Advisors Limited, we provide comprehensive guidance on Section 72 Policies in Ireland. Whether your goal is early retirement, wealth accumulation or leaving a legacy, we will assist you in identifying suitable strategies tailored to your unique circumstances.  You need someone to be your guide, answer your queries, and empower you to make informed decisions – our advisors are always there for you.  We will evaluate your legal, taxation and financial planning perspective and collaborate closely to ensure our solutions align with your evolving financial needs.

Talk to us at +353 91 393 125

Mail us at

Visit our office at Unit 3, Office 6, Liosban Business Park, Tuam Rd, Galway, Ireland

Related Terms- Section 72 Policies in Ireland: What Does Section 72 of the Act Provide For?

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