Section 72 policys -Any pitfalls?

A

Andy2016

Registered User
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My parents are in their mid seventies and have a fair few assets/cash.
They are considering a section 72 policy to cover 250000 euro of inheritance tax liabilities.
The premium they have been quoted is such that one of them would need to live to be over 104 before the insurance company will have recouped their money.
I am sceptical that there is not a catch somewhere. While they are in good health it is unlikely they will live another thirty years.
Am I missing something?
Does anyone have experience or knowledge of these policies?
Thanks
 
Make sure the premiums are guaranteed. Zurich Life and Irish Life are the only two providers of them. You have to make sure that you fill out the Section 72 Trust form at the outset notifying the Revenue of the purpose of the cover.

I use them all the time. As long as the cash is there to pay the premiums, it is a great way of covering a inheritance tax bill.


Steven
www.bluewaterfp.ie
 
How do the companies make money on these?
I just don't get it being profitable for them.
 
Andy2016 said:
How do the companies make money on these?
I just don't get it being profitable for them.
Click to expand...

Hi Andy

How about we do the math on this?! Can you provide the following details please?

Ages of your parents, required premiums, whether premiums are guaranteed and confirmation that the benefit is payable upon the second death.
 
Sure, no prob.
Ages 73 and 74.
cover for 250k payable on second death.
cost 720 euro per month.
I don't know what you mean by premiums being guaranteed.
 
Thanks Andy

Regarding premiums being guaranteed - I was just looking for confirmation that the premium being quoted now is not subject to an increase at some future point in time. In other words that the current premium will not be changed during the timeframe of the policy. Can you also confirm for the record that the benefit is payable on the second death please? Finally, is it your dad who is 73?
 
Yes premium guaranteed to stay the same and father a year younger alright.
Guaranteed payable on second death.
 
Hi Andy

I've had a quick look at it and agree with you that it's hard to see where the life assurers are making their money on this. That said, presumably the folk who do the pricing on these things can count well and have well trusted methods for their calculations. I'll try expand on my views during the week. In the meantime, if Gordon Gekko (or anyone else) could explain where the life assurers invest their premiums - that would be great. I had understood that the majority of such assets were invested in bonds with consequent very muted return expectations.
 
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