Section 72 Policy Ireland — Using Life Insurance to Pay Inheritance Tax

A Section 72 policy is a specially structured life insurance policy that is specifically exempt from Capital Acquisitions Tax (CAT) in Ireland, provided the proceeds are used to pay a CAT liability. For Cork families facing significant inheritance tax on large estates, a Section 72 policy is one of the most cost-effective planning solutions available.

What Is a Section 72 Policy?

Section 72 of the Capital Acquisitions Tax Consolidation Act 2003 exempts from CAT any money received under a life insurance policy that is specifically taken out to pay a CAT liability, where the policy meets Revenue's requirements.

In plain terms: if your estate will generate a large CAT bill for your children, you can take out a life insurance policy now to fund that bill. When you die, your children receive the insurance payout and use it to pay their CAT — the payout itself is CAT-free.

How a Section 72 Policy Works

1. You (and typically your spouse) take out a whole-of-life insurance policy that meets Revenue's Section 72 requirements
2. The policy is written in a trust structured to comply with Section 72
3. On the second death (usually both lives must be insured under a joint policy), the policy pays out to the trustees
4. The trustees use the payout to pay the beneficiaries' CAT liability — the payout is exempt from CAT

Revenue Requirements for a Section 72 Policy

To qualify, the policy must:

• Be a whole-of-life or term insurance policy (not an investment product)
• Be held in a specific Section 72 trust
• Be expressed to be for the purpose of paying CAT or the costs of an administration of an estate
• The proceeds must actually be used to pay CAT within a specified timeframe

Cost vs. Benefit of a Section 72 Policy

The policy costs monthly premiums throughout your lifetime. The benefit is that the full payout (regardless of how much you paid in premiums) funds your estate's CAT liability tax-free. For older Cork clients with large estates, the premium cost is typically far less than the alternative: your children having to sell the family home or business to pay the CAT bill.

The earlier you take out the policy, the lower the premiums. Delay significantly increases cost.

Is a Section 72 Policy Right for Your Cork Estate?

A Section 72 policy is particularly valuable for Cork families where:

• The estate significantly exceeds CAT thresholds
• The estate contains illiquid assets (family home, farm, business) that cannot easily be sold to pay a tax bill
• You are in reasonable health and insurable
• You want to ensure your children inherit the full value of your estate rather than selling assets to pay tax

Get Advice in Cork

Section 72 policies require coordination between your solicitor (for trust structuring) and a financial adviser (for policy selection). A Cork estate planning solicitor can refer you to appropriate financial advisers. See: Estate Planning Cork.