Inheritance Tax Life Insurance Ireland

Inheritance tax in Ireland is charged at 33% on gifts or inheritances above certain thresholds. A properly structured Section 72 life insurance policy can provide a tax-free payout to help cover that bill, but it must be set up correctly and coordinated with your tax advisor.

Inheritance tax, formally known as Capital Acquisitions Tax, is currently charged at 33% on amounts received above the relevant tax-free threshold.

If you intend to leave property, land, shares or other assets to your children, that tax bill can be substantial.

Many families only discover the scale of it when it is too late to plan properly.

This page explains how Section 72 life insurance works, when it is appropriate, and just as importantly, where its limits are.

How Inheritance Tax Works

When someone receives a gift or inheritance, tax may be payable on the value received above their lifetime threshold.

For children inheriting from a parent, the Group A threshold of €400,000 currently applies.

Any value above that threshold is taxed at 33%.

Spouses are exempt from inheritance tax on transfers between each other.

The issue usually arises on the second death, when assets pass to the next generation.

If the estate is largely made up of property, farmland or business assets, the beneficiary may not have cash readily available to pay the tax bill.

In some cases, assets must be sold to fund the tax.

That is the risk families are trying to manage.

What Is Section 72 Life Insurance?

Section 72 refers to a specific provision in Irish tax legislation that allows the proceeds of a qualifying life insurance policy to be used to pay inheritance tax without the policy payout itself becoming subject to further tax.

In simple terms, if structured correctly:

• The policy is taken out during your lifetime
• It is specifically intended to fund inheritance tax
• The proceeds are used to pay the tax liability

The insurance payout can be treated as tax-free for that purpose.

It is not a loophole.
It is a recognised planning tool within Irish tax law.

However, it only works if the policy and the underlying estate planning are aligned properly.

How Much Cover Do You Need?

The required cover depends on:

• The estimated value of the estate
• The expected tax-free thresholds at the time of transfer
• Any available reliefs such as business or agricultural relief
• The number of beneficiaries

This is where boundaries are important.

We are not tax advisors and we do not calculate full estate liabilities.

Before arranging a Section 72 policy, your solicitor or tax advisor should confirm:

• The likely inheritance tax exposure
• That the intended transfer qualifies
• That a Section 72 structure is appropriate

Our role is to structure the insurance correctly once that tax position is understood.

What Does a Section 72 Policy Cost?

Section 72 policies are whole of life insurance policies.

That simply means the cover is designed to stay in place for life and pay out whenever death occurs, provided the premiums are maintained.

Whole of life is priced differently to term cover because the insurer expects to pay out at some stage. You’re paying for certainty rather than a fixed time window.

To put some numbers around it, a healthy 45-year-old non-smoker looking for €1,000,000 of whole of life cover in 2026 might expect premiums in the region of €1,000 to €1,150 per month, depending on the insurer and structure chosen.

Most Section 72 policies are for much lower amounts than €1m. Many are arranged to cover projected inheritance tax liabilities in the €100,000 to €400,000 range, which means the premiums are proportionately lower.

What affects the price?

• Your age
• Your health
• Smoking status
• The amount of cover required
• The type of premium structure selected

Some policies offer guaranteed premiums that stay level for life. Others are reviewable, which means premiums can increase in the future. Reviewable options often start cheaper but can rise significantly at later review dates.

Certain structures also offer partial premium refund features after a set period. These tend to cost more each month and need to be weighed up carefully.

There is no minimum cover requirement written into Section 72 legislation. The policy simply needs to reflect the estimated inheritance tax exposure.

We do not provide an online Section 72 cost calculator. The starting point should be confirming the likely tax liability with your solicitor or tax advisor. Once that number is clear, we structure the insurance to match it.

The Risk of Getting It Wrong

Section 72 planning is not something to set up casually.

If the policy is not structured correctly, the tax treatment may not apply as intended.

If underwriting is delayed and health changes, securing cover later may be difficult or more expensive.

If estate planning assumptions are wrong, the level of cover may be insufficient.

This is why sequencing matters.

The tax position should be clarified first.
Then the insurance is arranged to match it.

Being accepted by an insurer does not automatically mean the structure is correct from a tax perspective.

Who Section 72 Planning Is For

Section 72 policies are typically relevant for:

• Families with valuable property portfolios
• Business owners planning succession
• Farmers transferring land to the next generation
• Estates likely to exceed inheritance tax thresholds

They are not usually relevant for smaller estates that fall comfortably within available thresholds.

What Happens Next?

If you believe your estate may face an inheritance tax liability, the first step is to confirm the likely exposure with your solicitor or tax advisor.

Once that is clear, we can:

• Assess insurability
• Structure an appropriate whole of life policy
• Ensure it is aligned with Section 72 requirements

If you would like to explore the insurance side of this, complete the form below and we can begin that process.

Complete the Section 72 enquiry form

Or, if you would prefer an initial discussion:

Schedule a call here