Benefits of Whole of Life Insurance
Passing wealth in a tax-efficient manner.
-
Alan Hanway MIIPM QFA PTP
- August 11, 2022
Overview
A Whole of Life Insurance policy is beneficial for those looking to ensure there is something to pass on to the next generation. It can also help deal with any inheritance tax implications.
It is the ultimate level of protection. Whether you die at age 50 or 100, your benefits will pay out to your dependents.
The only caveat attached is that you must continue to pay the premiums.
You pay your premiums monthly and on your death, your next-of-kin will receive a lump sum.
If taking out Whole of Life Cover, we recommend guaranteed whole of life policy.
Benefits of choosing Whole of Life Insurance
Choosing a whole of life policy is an excellent way of passing wealth. This specific type of policy also offers other advantages such as
1 ) Cost is guaranteed to stay the same
As we mentioned above, it is advisable to choose guaranteed whole of life insurance. Choosing this policy means your premiums will remain fixed each month.
Other benefits associated with a guaranteed whole of life policy are:
- No reviews are required at any point. The price is fixed from the outset of your policy.
- The policy does not have an end date.
- Benefits left behind can be used for a multitude of reasons in a tax-efficient manner.
2) Fixed amount for your beneficiaries
A whole of life policy offers you peace of mind knowing your beneficiaries will be left a lump sum.
The ability to choose a fixed sum at the outset is a major advantage. As with any insurance policy, the cost of the premium will be dependent on factors such as:
- Your age
- Health status
- Sum assured
- Smoker status
3) Inheritance tax advantages
Within Whole of Life Insurance, there is something called a Section 72 policy. This is a revenue-approved Life Insurance policy that will allow your beneficiaries to pay off Capital Acquisitions Tax (CAT) liabilities.
It will allow you to pay off any Capital Acquisition Tax (CAT) liabilities.
Inheritance Tax Thresholds
In Ireland, we have specific inheritance tax thresholds depending on your relationship with the person receiving the inheritance.
Group A: €335,000 – Son or daughter of the person giving the inheritance.
Group B: €32,500 – Brother, sister, niece, nephew, or lineal ancestor and descendants.
Group C: €16,250 – All cases not covered by group A or B.
Inheritance Case Study
You have one child who will be your sole beneficiary. Your main asset is a house worth €650,000.
Value of the house | €650,000 |
Son/Daughter threshold | €335,000 |
Balance | €315,000 |
Capital Acquisitions Tax rate | 33% |
Tax Liability | €103,950 |
The above shows how a substantial bill will have to be paid to revenue. However, having a Whole of Life Section 72 policy in place allows you to avoid such a tax bill.
In this example, the €100,000 Section 72 Whole of Life Policy would significantly reduce the tax liability.
Liability without a Section 72 Policy | €103,950 |
Liability with a Section 72 Policy | €3,950 |
Please Note 
A Whole of Life Section 72 policy must be taken out by the person leaving the inheritance.
Why choose emero when considering Whole of Life Insurance
Inheritance planning is a specialised area of advice. There will likely be several aspects to be considered when deciding on what cover is most suitable.
Therefore, you will need an experienced advisor. One who can help assess all potential options
At emero, our team has a proven track record of assisting clients within this field. We treat each case on an individual basis.
Our team of fully qualified advisors has over 50+ years of combined industry experience. This knowledge is invaluable when advising clients in areas such as inheritance and estate planning.
What are the next steps
The first step is to assess whether whole of life insurance is the most suitable cover for your individual circumstance. Taking time to speak with your advisor will allow you to calculate the appropriate level of cover required.
The major benefit of choosing whole of life cover is that you cannot outlive your policy. Once you pay your premiums, there will be something left behind for your loved ones.
If you are considering a whole of life policy and would like to speak with one of our advisors, you can contact us via phone or email.
We would be glad to assist and answer any questions you may have.
Phone | |
In-Person Meeting | Contact via phone or email |
Video Call | Contact via phone or email |
Alan Hanway MIIPM QFA
Director
Director
Alan has over 30 years’ experience in the Investment and Pension industry having worked with Irish Pensions Trust, Mercer Human Resource Consulting, CIF, L&P Financial Trustees and Invesco.
If you would like to chat with Alan directly, please get in touch with him at [email protected]
About the Author
Alan Hanway MIIPM QFA PTP
Alan has over 30 years’ experience in the Investment and Pension industry having worked with Irish Pensions Trust, Mercer Human Resource Consulting, CIF, L&P Financial Trustees and Invesco.
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