Section 72 Insurance – Everything you need to know.

Everything You Need to Know About Section 72 Insurance.
What is Section 72 Insurance?
Section 72 insurance is a specialised type of life insurance policy in Ireland designed to cover inheritance tax, also known as Capital Acquisitions Tax (CAT). It ensures that your loved ones can pay tax liabilities on inherited assets without financial strain, allowing them to retain their full inheritance. Here is your definitive, but not exhaustive, guide to Section 72 Insurance in Ireland.
Understanding Inheritance Tax (CAT)
When you pass away, any assets you leave behind—such as property, savings, or investments—could be subject to inheritance tax (CAT). The tax applies if the value of the inheritance exceeds certain thresholds, which are determined by the relationship between you and the beneficiary.
Tax-Free Thresholds for Inheritance in Ireland (H3):
- Group A: Parent to child – €400,000
- Group B: Siblings, nieces, nephews, grandchildren – €40,000
- Group C: All other relationships – €20,000
Any inheritance above these thresholds is taxed at 33%.
For example, if a child inherits a property worth €500,000, they would owe €33,000 in tax (€100,000 above the threshold, taxed at 33%).
How Does Section 72 Insurance Work?
Section 72 insurance is a Revenue-approved whole-of-life policy that allows the proceeds to be used tax-free to pay inheritance tax bills. Upon your passing, the payout goes directly toward settling CAT liabilities, ensuring your beneficiaries can retain the assets you’ve left them.
This policy is especially valuable for families with properties or significant assets that may not be easily liquidated.
Key Features of Section 72 Insurance:
- Whole-of-Life Coverage: The policy guarantees a payout no matter when you pass away.
- Tax-Free Proceeds: Proceeds are exempt from CAT if used specifically to pay inheritance tax.
- Estate Preservation: Prevents the forced sale of assets to cover tax bills.
Eligibility and Important Details
Section 72 insurance has specific eligibility criteria:
- Age Limit: Policies must be taken out before the age of 75.
- Policy Ownership: The person leaving the inheritance must own the policy.
- Beneficiary Payments: In some cases, beneficiaries can pay premiums, provided ownership remains with the policyholder.
Additionally, the policy must remain active through regular premium payments. If payments stop, the cover lapses, leaving your estate without this tax-planning benefit.
Why Do People Take Out Section 72 Insurance?
Without proper planning, inheritance tax bills can place a significant financial burden on your beneficiaries. By taking out Section 72 insurance:
- You ensure your loved ones can pay inheritance tax without selling family assets.
- You minimise stress for your beneficiaries during an already difficult time.
- You create a tax-efficient solution to protect the full value of your estate.
Example Comparison: Estate Without Section 72 Cover vs. With Cover
To illustrate the importance of Section 72 insurance, consider the following example:
Scenario:
- Estate Value: €1,500,000
- Beneficiaries: 2 children (equal beneficiaries)
- Inheritance Tax Threshold for Each Child (Group A): €400,000
- Tax Rate Above Threshold: 33%
Without Section 72 Cover:
- Total estate value: €1,500,000
- Each child’s share: €750,000
- Taxable portion per child: €750,000 – €400,000 = €350,000
- Tax per child: €350,000 × 33% = €115,500
- Total tax liability: €115,500 × 2 = €231,000
The beneficiaries would need to pay €231,000 in inheritance tax. If they don’t have the liquid funds available, they might need to sell assets, such as property, to cover the tax bill.
With Section 72 Cover:
- A Section 72 insurance policy is taken out for €231,000.
- Upon the policyholder’s passing, the tax liability is fully covered by the policy payout.
- Each child receives their full inheritance of €750,000 without financial strain.

Key Takeaway:
With Section 72 cover, your loved ones inherit the full value of your estate without the burden of finding funds to pay the inheritance tax.
Common Questions and Misconceptions About Section 72 Policies
1. Is Section 72 insurance mandatory for everyone with an estate?
No, it’s not mandatory. However, it’s a highly recommended option for those with estates that may exceed inheritance tax thresholds, particularly if assets like property might be difficult to liquidate quickly.
2. Can I take out a Section 72 policy at any age?
No, you must take out the policy before your 75th birthday. The younger and healthier you are when you take it out, the lower your premiums will be. Early to mid 50’s is the perfect time & you would ideally be non smokers!
3. What happens if I stop paying premiums?
If you stop paying premiums, the policy lapses, and your beneficiaries will not receive the payout. It’s important to commit to maintaining the policy.
4. Are there limits to the amount of cover I can take out?
The cover should align with your estate’s potential tax liability. Your QFA qualified Family Cover adviser can help calculate the appropriate amount based on your estate’s value. One life assurance company in Ireland limits the cover to €2m, but others are open to much higher amounts.
5. Can beneficiaries pay the premiums for a Section 72 policy?
Yes, beneficiaries can pay premiums, but the policy must remain in the name of the person whose estate is being insured to qualify for the tax exemption.
6. Can the policy be used for any other purpose besides inheritance tax?
No, the proceeds of a Section 72 policy can only be used to pay inheritance tax. If used for other purposes, they may be subject to CAT.
7. What if my estate value changes over time?
If your estate increases significantly, you may need to review your policy to ensure the cover is still sufficient. Similarly, if your estate decreases, you may reduce your cover.
8. How does Revenue know the proceeds are for inheritance tax?
The policy is specifically approved by Revenue and is tied to the purpose of paying inheritance tax. Beneficiaries must provide documentation to show the proceeds were used for this purpose.
9. Is Section 72 insurance only for high-value estates?
While it’s particularly beneficial for high-value estates, anyone whose assets exceed the tax-free thresholds could benefit from it.
10. What if I already have a life insurance policy? Can it count as Section 72 cover?
Not all life insurance policies qualify. A Section 72 policy must meet specific Revenue requirements to be eligible. If you have a policy that you believe to be suitable, feel free to contact us and we can review your policy for you & let you know.
Contact Us for Expert Advice
At Family Cover, we specialise in Section 72 insurance and are proud to be a leading source of information and guidance in this area. See our sister website, section72.ie. As experienced financial advisers and insurance specialists, we can:
- Assess your estate’s value and estimate potential inheritance tax liabilities.
- Advise on the right level of Section 72 cover to suit your needs.
- Help you set up a policy that ensures your loved ones are financially protected.
Call us today on [01 668 6136] or complete the contact form here to arrange your free consultation.
Planning for inheritance tax doesn’t have to be overwhelming—we’re here to help every step of the way.

Brian Whelan (QFA)
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