Section 72

Does Starting a Whole of Life Section 72 Insurance Policy Make Financial Sense?

When it comes to securing the financial future of your loved ones, especially in the face of potential inheritance taxes, the decision to start a Whole of Life Section 72 insurance policy requires careful consideration. Let’s delve into the numbers and factors involved, using the scenario of a married couple, both aged 54, non-smokers, with 3 children, and an estate worth €2 million.

Understanding the Numbers

The combined lifetime threshold for the couple’s three children amounts to €1,005,000. Subtracting this from their estate value leaves €995,000 subject to tax at 33%, resulting in an anticipated tax liability of €328,350.

To cover this tax liability, a Section 72 policy for €328,350 would require monthly payments of €402.88, totaling €4,834.56 annually. Assuming both spouses are 54.5 years old, with a potential payment period until age 100 (45.5 years), the total possible premiums paid would amount to €219,972.48.

Considering the average life expectancy in Ireland is around 83 years, there are approximately 28.5 years remaining for premium payments until reaching this age. Thus, the total premiums paid until the average life expectancy would be approximately €137,784.96, for a guaranteed payout of €328,350, representing 238% of the total premiums paid.

Additional Factors to Consider

  1. Estate Tax Efficiency: By initiating a Section 72 plan, individuals effectively move cash from a taxable portion of their estate into a Capital Acquisitions Tax (CAT) tax-free environment. The premiums themselves reduce the overall value of the estate, potentially leading to a lower CAT bill.

  2. Inflation: While the calculations provide a snapshot, it’s essential to consider the impact of inflation over the years. Inflation can erode the purchasing power of money, affecting both premium payments and the value of assets over time.

  3. Uncertainty in CAT Calculation: It’s crucial to acknowledge the complexity of calculating an actual CAT bill. Asset values fluctuate, thresholds change, and tax rates vary over time. Predicting the precise tax liability can be challenging due to these variables.


In certain circumstances -Absolutely yes!  The numbers above show very clearly that, financially speaking, it makes perfect sense – also emotionally.  However, if one or both of these people were smokers, it would double the premium, in which case, this financial answer would change, but the emotional sense would still exist.  It is so important that you also acknowledge the fact that the payment of premiums themselves from your own resources, is, in itself, further reducing the value of your estate = lower estate value = lower CAT bill.  Is that not the ultimate aim?

Initiating a Whole of Life Section 72 insurance policy for estate planning purposes requires a thorough examination of various factors, including tax implications, inflation considerations, and the inherent uncertainty in calculating inheritance taxes.

While the numbers provide a framework for decision-making, it’s advisable to consult with a qualified Section 72 financial advisor to assess the suitability of such a policy based on individual circumstances and long-term financial goals.

In summary, while a Section 72 policy offers potential tax benefits and estate planning advantages, careful analysis and professional guidance are essential to determine whether it aligns with your overall financial strategy.

Get this exploratory process started by requesting a quote for your own policy here or contacting us here.  We can help you to calculate your CAT liability and suggest some ways to reduce this amount and fund for it in advance in a tax efficient manner.

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