When it comes to ensuring financial security for your family’s future, it’s crucial to consider all available options, seek professional advice and strategically decide the priority of cover needed. An option that deserves particular focus for individuals with substantial assets is the Section 72 Life Assurance Policy.

This policy is a specialised type of life insurance crafted to address inheritance tax obligations. When you pass away, inheritance taxes can significantly burden those left behind, especially if they inherit substantial assets like property or large sums of money. A Section 72 policy helps cover these taxes, ensuring your beneficiaries can inherit without the stress of finding funds to pay these duties.

Applicants for a Section 72 policy undergo a thorough evaluation based on age, health, and lifestyle factors, including smoking habits. This process helps insurers determine eligibility and pricing. The setup process is fairly simple and it is important to note that Section 72 policies are rigidly managed and serve a unique category.

The main appeal of the Section 72 policy is its potential to protect significant family assets, such as homes, from being liquidated to settle inheritance taxes. For instance, if you intend to leave a house valued at €500,000 to your child, the resulting tax liability could be substantial. Specifically, there would be a tax due of €54,450 on the €165,000 that is exceeding the current €335,000 tax-free threshold on inheritances from a parent to a child. This substantial tax obligation might even require selling the home to cover the tax debt. With a Section 72 policy, the insurance payout covers this liability, allowing family properties to be passed down intact.

The cost of these policies can be considerable due to their lifelong coverage and is influenced by the insured’s health status and age at the time of application. For policies covering couples, premiums continue until the death of the second partner, requiring a long-term financial commitment.

Opting for a Section 72 policy requires careful consideration of these costs and how it integrates into your broader financial plan. Although the advantages are considerable for individuals with large estates, it’s important to evaluate whether the ongoing investment matches your financial objectives.

In summary, Section 72 Life Assurance Policies provides a strong framework for protecting your family’s financial future and maintaining wealth for generations to come. Consulting with a financial advisor is advisable to assess the appropriateness of this policy in your specific situation and explore other bespoke financial strategies. Such proactive financial planning ensures the legacy you leave is both secure and beneficial for your loved ones.

Here to help you navigate your way to financial security

The Milestone Advisory team are qualified financial services consultants. We specialise in helping professionals in the construction sector and related industries. Our team will work with you to review your finances, explaining your options in clear English. No jargon – just the facts. For more information, contact Darragh Hogan.

Darragh Hogan, QFA, APA, Financial Services Consultant, Milestone Advisory

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