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As you approach your 50s, financial planning takes on a new level of importance. Ensuring your family’s financial security and minimising future Capital Acquisitions Tax (CAT) liabilities become paramount concerns. One effective strategy for achieving both these goals is by starting a Section 72 insurance policy. In this blog post, we will explore why individuals in their 50s should consider this often-overlooked financial tool and how it can bring both financial and emotional benefits.  Starting a Section 72 policy in your 50’s is the sweet spot in terms of financial accuracy.  In addition to the emotional security that a Section 72 policy provides, it also makes terrific financial sense where it is more of an investment strategy than an insurance policy.

Key Benefits of Section 72 Insurance Policies in Ireland.

CAT Mitigation: One of the primary advantages of a Section 72 policy is its ability to mitigate CAT liabilities. When you pass away, your estate may be subject to CAT, which can be as high as 33%. By taking out a Section 72 policy, you can create a tax-free lump sum that your loved ones can use to cover these tax liabilities, preserving more of your wealth for your heirs.

Financial Security for Your Loved Ones: Section 72 insurance provides a guaranteed payout to your beneficiaries upon your passing. This lump sum can help your family maintain their standard of living, pay off debts, or cover other financial obligations, ensuring that they are not burdened by financial stress during a difficult time.

Emotional Peace of Mind: Beyond the financial benefits, a Section 72 policy offers emotional peace of mind. Knowing that you have a financial safety net in place can provide comfort and relieve the stress associated with planning for the future. Your loved ones will have the support they need when they need it most.

Flexible Payment Options: You can tailor your premium payments to fit your budget and needs, making it accessible for individuals in their 50s who may have varying financial commitments. This flexibility ensures that you can protect your family without straining your finances.

Safeguarding Your Legacy: By starting a Section 72 policy, you’re safeguarding your legacy. Your wealth can pass on to your heirs in a tax-efficient manner, allowing them to enjoy the fruits of your labor without the burden of excessive taxation.

How Section 72 Insurance Policies Work in Ireland.

Section 72 policies are essentially whole-of-life insurance policies. Here’s a simplified overview of how they work within the Irish context:

– Following a consultation with a Family Cover adviser, you organise a Section 72 policy from a reputable insurance provider.  There are only 3 life assurance companies in Ireland that offer a true Whole of Life Section 72 policy – They are Royal London, Zurich & Irish Life.

– You pay regular premiums, which are used to build up the policy’s cash value.

– Upon your passing, the policy pays out a tax-free lump sum to your chosen beneficiaries.

– This lump sum can be used to cover CAT liabilities, ensuring your assets are preserved for your loved ones.

It’s crucial to work with a financial advisor familiar with Irish tax laws to determine the appropriate coverage amount and premium payments for your specific situation.

Conclusion

Entering your 50s brings forth the importance of securing your family’s financial future and minimising CAT liabilities. A Section 72 insurance policy offers a practical and tax-efficient solution to achieve both of these goals. By starting a Section 72 policy, you can ensure that your loved ones are protected financially, and your wealth is passed on in a tax-efficient manner. The benefits go beyond finances, providing emotional peace of mind and the knowledge that you’re safeguarding your legacy.

For more information and personalised advice, please visit our Section 72 specific website [SECTION72.IE] or contact a certified Family Cover advisor familiar with Irish tax regulations.