Navigating the intricacies of financial planning, especially when it comes to safeguarding your family’s future, requires careful consideration and expert guidance. One avenue that merits attention, particularly for individuals with sizable estates, is the Section 72 Life Assurance Policy. In the latest Construction Magazine, Milestone Advisory’s Darragh Hogan explains.
Construction Magazine April 2024
In essence, a Section 72 policy serves as a strategic tool to mitigate potential inheritance tax liabilities, providing a lifeline for your loved ones when you’re no longer around. By securing this form of life insurance, you ensure that your beneficiaries have the means to settle any inheritance tax bills that may arise upon your passing.
Section 72 policies undergo medical underwriting, taking into account factors such as age, health status, and lifestyle choices like smoking habits. While the setup process is relatively straightforward, it’s essential to recognise that these policies are tightly regulated and cater to a specific demographic.
The primary advantage of a Section 72 policy lies in its ability to shield valuable family assets, such as the family home, from the necessity of being sold to cover inheritance tax obligations. Consider a scenario where parents wish to pass on a property worth €500,000 to their child. Given the current inheritance tax thresholds, the potential tax liability (€54,450 tax due on the €165,000 in excess of the current €335,000 tax-free limit on inheritances from a parent to a child) could pose a significant financial burden for the inheritor, possibly necessitating the sale of the property to meet the tax bill. Here, a Section 72 policy steps in to bridge the gap, ensuring that cherished assets remain within the family’s possession.
It is essential to weigh the costs against the benefits. Section 72 policies tend to be expensive due to their guaranteed whole-of-life nature and considerations such as age, health, and coverage amount. Furthermore, for couples, premiums are often based on a second-life basis, necessitating continued payments even after the first policyholder’s passing.
Ultimately, the decision to invest in a Section 72 policy hinges on affordability and long-term financial planning. While the benefits can be substantial, especially for those with significant estates, it’s crucial to assess the ongoing financial commitment and potential impact on your overall financial strategy.
In conclusion, Section 72 Life Assurance Policies offer a valuable avenue for safeguarding your family’s financial future and preserving generational wealth. However, it’s imperative to consult with a financial advisor to determine suitability and explore alternative strategies tailored to your specific circumstances. By making informed decisions today, you can ensure a legacy of financial stability and security for generations to come.
Here to help you navigate your way to financial security.
The Milestone Advisory team are qualified financial services consultants. We specialise in helping professionals in the construction sector and related industries. Our team will work with you to review your finances, explaining your options in clear English.
No jargon – just the facts.
For more information, contact Darragh Hogan (darragh@milestoneadvisory.ie).
