The more you know about life insurance, the easier it will be to get the best cover for your situation. Not only can getting the right policy give you financial benefits, but it also provides more peace of mind for customers.
In order to understand life insurance, you may need to enlist the help of an expert. Life insurance policies can have a lot of variables and complications, however, our team at Life Compare is eager to help.
By getting in touch with one of our experts at Life Compare, any concerns or queries you have can be quickly dealt with. As well as this, our professionals will be happy to provide our clients with any advice they require.
Even if you do not require specific advice or guidance, having a good understanding of life insurance can still go a long way.
A section 72 policy is worth familiarising yourself with. This is something that all policyholders should be aware of, no matter the cover you choose to invest in.
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What is a section 72 policy?
Section 72 insurance is a whole of life policy. The proceeds of this policy are tax-free, when they are used while paying an inheritance tax bill.
This policy will allow you to plan in advance for the payment of the inheritance tax. This can help to prevent any surprises or avoid paying significant tax fees during the inheritance process.
In terms of how the policy works, it shares similarities with most life insurance policies. This means that it is subject to medical underwriting.
This means that factors such as age, gender, smoking status and health are all relevant to a section 72 policy.
Benefits of a section 72 policy
There are significant benefits of a section 72 policy. The main benefit is that it allows people to avoid the tax demands of inheritance.
At times, beneficiaries will suffer greatly as a result of unexpected tax fees, which can significantly reduce their financial benefits. However, by investing in a section 72 policy, this can be avoided.
With the costs of an inheritance tax bill covered by this policy, this can significantly improve the situation of the beneficiaries.
Thanks to section 72 policies, you will not have to worry about your beneficiaries not getting the assets they deserve following your passing. It is not uncommon that beneficiaries never get their expected inheritance due to huge tax fees.
For example, the last thing you want is your beneficiaries having to sell a property just to cover a tax bill. However, a section 72 policy means this doesn’t have to be a concern.
Also, a section 72 policy is included in whole of life coverage. This means that no matter the age you die at, your beneficiaries will receive their inheritance.
Section 72 policy case study
Following your passing, your child inherits €25,000 or assets, as well as a €550,000 property. This would mean that your child would face a tax bill of €79,200.
If your child cannot afford to cover that tax bill, they may have to sell the property in order to cover the costs. However, with a section 72 policy, this can be avoided.
With a section 72 policy covering this €79,200, the Revenue would receive your policy proceeds, covering the inheritance tax bills.
Who can take out a section 72?
In order to qualify for this policy, you must fall into the following categories:
If you have any concerns over the above criteria, you can speak to one of our experts for more clarity.
Exemption for dwelling house
Under certain circumstances, beneficiaries will be exempt from paying Capital Acquisitions Tax on a dwelling house. These circumstances include if:
For any further concerns regarding the inheritance of a dwelling house, speak to one of our experts today.
What is the Small Gifts Exemption?
Similarly to the section 72 policy, those investing in life insurance may also want to consider the Small Gifts Exemption.
The Small Gifts Exemption means that you can gift someone assets of up to €3,000 per year without the need to pay Capital Acquisitions Tax.
These gifts are not exclusive between a parent and a child. Anyone can gift anyone up to €3,000 per year, tax free.
What is the rate of tax on inheritance?
In Ireland, the standard rate of inheritance tax is 33%. However, there are variables in this number, including exceptions from paying inheritance tax.
If you have concerns regarding rates of inheritance tax for your situation, make sure you speak to an expert today.
Speak to a life insurance expert today
Proceedings with life insurance can at times be complicated. If you are getting confused or wish to have more clarity, simply get in touch with our team at Life Compare.
From comparing options to finding you the lowest prices, Life Compare is one of Ireland’s leading life insurers. Our team is eager to help you, so get in contact today for advice on section 72 policies, or any other concerns.
You can call, email, or even fill out an online form to request a callback.