Section 72 provides for the exemption of the proceeds of certain qualifying policies in so far as the proceeds are used for the payment of inheritance tax arising on the insured person’s death or within a year of his/her death.

A qualifying insurance policy is a policy of insurance:

• which is in a form approved by the Revenue Commissioners;
• in respect of which annual premiums are paid by the insured during his/her life (note that a single premium policy would not qualify);
• which is expressly effected under this section for the purpose of paying relevant tax.

"Relevant tax" means inheritance tax payable in respect of an inheritance taken under a disposition made by the insured where the date of inheritance is the date of death of the insured or within one year of the death. Relevant tax includes inheritance tax payable on property passing by survivorship or nomination as well as property passing under a will or intestacy.

As well as a single life policy, Section 72 policies can be effected by two spouses, the proceeds of which are payable on the death of the survivor of the spouses or on the simultaneous death of both. A life tenant can also effect a policy to cover the tax arising on his/her death under a disposition made by the original disponer.