Most people assume that when they die, everything they leave goes to their family. In Ireland, that is not quite right. If the total value of what you leave, your home, savings, investments, or land, exceeds the relevant tax-free threshold, your children will face a Capital Acquisitions Tax (CAT) bill from Revenue within months of your death. That bill must be paid in cash. And if the main asset is the family home, the cash often is not there, which means a forced sale of the house you spent your life paying for.
A Section 72 life insurance policy is specifically designed to prevent this. It is one of the most underused planning tools in Ireland, and one of the most effective. At Money Sense Financial Services in Killarney, our inheritance tax advice service regularly sets up Section 72 policies as part of a wider estate plan. This guide explains how it works in plain language.
| Worried about the inheritance tax your family might face? Get expert advice on Section 72 planning. |
Capital Acquisitions Tax in Ireland: The Basics
Capital Acquisitions Tax (CAT) is Ireland’s inheritance and gift tax. It applies at a flat rate of 33% on any inheritance or gift above the relevant tax-free threshold. As of 2026, the thresholds are:
| Group | Relationship to Person Giving | Lifetime Threshold | CAT Rate Above Threshold |
| Group A | Child inheriting from a parent | €400,000 | 33% |
| Group B | Sibling, niece, nephew, grandchild | €40,000 | 33% |
| Group C | Any other person (friend, more distant relative) | €20,000 | 33% |
These thresholds are lifetime cumulative limits. Every gift or inheritance received from a person in the same group counts towards the threshold, including amounts received years or decades earlier. A child who received a gift of €100,000 from a parent 10 years ago has only €300,000 remaining of their Group A threshold today.
Why CAT is now hitting ordinary Irish families
When CAT thresholds were last significantly adjusted, property prices were dramatically lower. Today, with median house prices in Dublin exceeding €450,000 and Killarney median prices at €371,250, a parent leaving a property to a child, even at or just above the €400,000 Group A threshold, can create a real tax liability.
Consider: a family home in South Dublin worth €600,000 left to one child. The child’s Group A threshold: €400,000. Taxable excess: €200,000. CAT at 33%: €66,000 owed to Revenue within months of the parent’s death.
If the child does not have €66,000 in liquid cash, and most people do not, they must borrow it or sell the house to pay the bill. This is not a theoretical concern. It happens to Irish families regularly, and it is preventable with the right planning.
What Is a Section 72 Life Insurance Policy?
Section 72 refers to a specific provision under the Capital Acquisitions Tax Consolidation Act 2003. It allows a life insurance policy, specifically approved under this section, to pay out entirely free of CAT, provided the payout is used to settle an inheritance tax bill.
In practice: the parent (or other person leaving the estate) takes out a whole-of-life insurance policy, approved under Section 72 by Revenue. The policy is written in trust for the beneficiaries. When the parent dies, the policy pays out a tax-free lump sum. The child uses that lump sum to pay the CAT bill. The family home is safe.
The critical rules for Section 72 to work
- The policy must be a whole-of-life policy, it cannot be a term policy that expires before death
- Section 72 status must be applied for at Revenue at the time of purchase, not retrospectively
- The payout must be used specifically to pay a CAT bill, proceeds used for anything else lose their tax-free status
- The policy must be maintained until the policyholder’s death, if premiums lapse, the Revenue approval may be lost
- The person who takes out the policy must be the person who would otherwise leave the estate (not the beneficiary)
- Policies must generally be taken out before age 75
How Section 72 Works in Practice: Three Real Irish Scenarios
Scenario 1: The Family Home in Kerry
A couple in Killarney own a family home worth €450,000. They plan to leave it to their only child. The child’s Group A threshold is €400,000. The taxable excess is €50,000. CAT bill: €16,500.
The couple take out a joint-life second-death Section 72 policy with a sum assured of €16,500. This policy pays out only when the second parent dies, which is when the inheritance actually occurs. The premium for this level of cover for a couple in their late 50s is typically modest, perhaps €50–€80 per month. The child receives the house and the insurance payout, uses the payout to settle the Revenue bill, and keeps the family home.
Scenario 2: A Farm or Business in Kerry or Munster
A farmer in Co. Kerry owns land and farm buildings with a current market value of €900,000. After 90% Agricultural Relief, the taxable value is €90,000. After the Group A threshold of €400,000, which already applies to the entire estate, there is no taxable amount in this case. But if the child has already received other gifts above their threshold, or if the farm value rises, the position changes.
This is why estate planning should be reviewed every few years, not just set up once and forgotten. Property and land values change, thresholds change, and family circumstances change. Our inheritance tax advice service includes ongoing review.
Scenario 3: A Portfolio of Assets
An individual in Kerry has a home (€350,000), savings (€80,000), and an investment property (€250,000). Total estate: €680,000. Left to one child. Taxable excess above €400,000 threshold: €280,000. CAT at 33%: €92,400.
A Section 72 whole-of-life policy for €92,400 ensures the child does not have to sell either property to pay the tax bill. Premiums depend on the parent’s age and health, typically reviewable or guaranteed options are available through Irish Life, Royal London, and Zurich.
Section 72 vs Section 73: What Is the Difference?
| Feature | Section 72 Policy | Section 73 Savings Plan |
| What it does | Whole-of-life policy, payout on death to pay CAT | 8-year savings plan, builds a fund to pay gift tax on lifetime transfers |
| When it pays | On the policyholder’s death | At end of savings term; used for gift tax on transfers from the plan |
| Best for | Inheritance tax on estate at death | Planned lifetime gifts above CAT thresholds (e.g. to grandchildren) |
| Premium structure | Monthly premiums for life | Regular monthly savings over 8 years |
| Providers | Irish Life, Royal London, Zurich | Limited providers, check with advisor |
Most families use Section 72 as the primary tool. Section 73 is useful for planned gifting strategies, particularly grandparents who wish to transfer wealth to grandchildren above the Group B threshold (€40,000) during their lifetime.
How Much Does a Section 72 Policy Cost?
Premiums depend on the amount of cover needed, the policyholder’s age, health, and smoking status, and whether the policy has guaranteed or reviewable premiums.
- For smaller CAT liabilities (€20,000–€50,000 of cover): premiums can be as low as €30–€80 per month for a healthy person in their 50s
- For larger liabilities (€100,000–€300,000 of cover): premiums increase proportionally, a healthy 55-year-old might pay €200–€500 per month
- For very large liabilities (€500,000+ of cover): premiums become significant, but they are still typically far lower than the alternative of leaving children to fund the CAT bill themselves
Important: only three life assurance companies in Ireland currently offer true Section 72-approved policies, Irish Life, Royal London (formerly Caledonian Life), and Zurich. An independent broker should compare all three for your specific age, health, and cover requirement before recommending one. Money Sense works with all three providers.
Guaranteed vs reviewable premiums: guaranteed premiums stay fixed for life, you know exactly what you will pay. Reviewable premiums may be lower initially but can increase significantly at review dates (typically every 5–10 years). For estate planning, guaranteed premiums are generally preferable, they give certainty over the lifetime of the plan.
The Small Gift Exemption: A Free Planning Tool Most Families Underuse
While a Section 72 policy addresses the CAT bill on your estate, there is also a simple, free way to reduce the size of that estate over time: the Small Gift Exemption. Under Revenue rules, any individual can receive up to €3,000 per year from any single person without it counting towards their CAT threshold.
A couple can therefore give each of their children €6,000 per year entirely outside the CAT system. Over 10 years, that is €60,000 transferred to each child tax-free. Over 20 years, €120,000. Combined with a Section 72 policy, consistent use of the small gift exemption is one of the most effective estate planning strategies available to Irish families.
| Want to know how much CAT your family might face, and the best way to protect them? Get expert advice. |
Frequently Asked Questions
What is a Section 72 life insurance policy in Ireland?
A Section 72 policy is a whole-of-life insurance policy specifically approved by Revenue under Section 72 of the Capital Acquisitions Tax Consolidation Act 2003. When the policyholder dies, the payout is used to pay an inheritance tax (CAT) bill, and provided it is used for this purpose, the payout itself is exempt from CAT. It prevents forced sales of family homes or assets to meet Revenue tax bills.
Who offers Section 72 insurance in Ireland?
Only three life assurance companies in Ireland currently offer Revenue-approved Section 72 policies: Irish Life, Royal London (formerly Caledonian Life), and Zurich. You should compare all three through an independent broker before choosing, as premiums and policy terms vary.
How much does a Section 72 policy cost in Ireland?
Premiums depend on the amount of cover needed, your age, health, and smoking status. For smaller CAT liabilities (€20,000–€50,000 cover), premiums can be as low as €30–€80 per month for a healthy person in their 50s. For larger liabilities, premiums increase proportionally. An independent advisor will calculate your estimated CAT exposure and recommend the appropriate level of cover.
Do I need a Section 72 policy if my house is worth less than €400,000?
If you are leaving your estate to children and the total value is below the Group A threshold of €400,000, no CAT is due and a Section 72 policy may not be necessary. However, if any previous gifts have been given, if property values rise, or if the estate will be split between multiple children who have already used part of their threshold, a liability can arise. An estate planning review will clarify your position.
What is the difference between a Section 72 and a Section 73 policy?
A Section 72 policy is a whole-of-life insurance plan designed to pay CAT on your estate after death. A Section 73 policy is an 8-year savings plan designed to generate funds to pay gift tax on assets transferred during your lifetime. Both work to the same end, reducing the tax burden on beneficiaries, but serve different scenarios. Section 72 is more commonly used for family homes and estates; Section 73 suits planned lifetime gift strategies.
Can Section 72 life insurance cover inheritance tax on a family home in Ireland?
Yes. This is one of the most common uses of Section 72 policies in Ireland. If the family home value exceeds the applicable CAT threshold, the payout from a Section 72 policy can be used to settle the CAT bill, allowing children to inherit the property without having to sell it or take out loans to pay Revenue.
At what age should I take out a Section 72 policy?
The earlier the better, premiums are lower when you are younger and healthier. Section 72 policies must generally be taken out before age 75. Many families set them up in their 50s when estate planning becomes a priority. The key trigger is when the likely estate value starts to approach or exceed the relevant CAT threshold.
Protect Your Family’s Home, Before It’s Too Late
The family home should stay in the family. With proper planning, a Section 72 policy ensures that a Revenue tax bill does not force your children to make an impossible choice, sell the house or go into debt. The cost of the policy is almost always a fraction of the tax bill it prevents.
Money Sense Financial Services provides independent inheritance tax advice and Section 72 planning for families across Kerry and Ireland. Our advisors will calculate your estimated CAT exposure, recommend the right level of cover, and compare all three Irish Section 72 providers to find the best policy for your age and health. Book your free consultation today.
