💡 What is a Life of Another policy?
It’s a life insurance policy taken out by one person on the life of another — often used when there’s a financial connection, such as a shared mortgage, business partnership, or inheritance planning need.
🟢 When is it relevant?
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🏡 Cohabiting couples – To help cover potential inheritance tax if one partner dies and the property is jointly owned.
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🤝 Business partners – To provide funds if a partner passes away, supporting business continuity or a buyout.
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🧾 Inheritance tax planning – Especially for high-value estates or when the Dwelling House Exemption doesn’t apply.
📊 Why it matters
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The inheritance tax threshold for cohabiting partners (Group C) is only €20,000
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Anything above that is taxed at 33%
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Without planning, a surviving partner could owe tens of thousands in tax
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A Life of Another policy — when structured correctly — can help cover this liability tax-free
📘 Example scenario
Mike and Sarah are an unmarried couple who jointly own a €400,000 home. If Mike dies, Sarah inherits his 50% (€200,000). With a CAT threshold of €20,000, she could owe 33% on €180,000 — that’s €59,400 in tax. But if Sarah owns and pays for a Life of Another policy on Mike, the payout is hers — tax-free — and can be used to pay the liability.
🛠 How to structure it properly
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Each person owns and pays for the policy on the other
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Use individual (not joint) accounts for premium payments
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Premiums should come from taxed income
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If one person isn’t earning, they may use the Small Gift Exemption (€3,000/year) to receive funds tax-free to pay premiums
🧩 Other considerations
Already have mortgage protection cover in place? No problem — we can help you review your current setup and explore whether a Life of Another policy could complement your broader protection plan.
Every client’s situation is unique, and the right structure depends on a range of factors — from relationship status to property ownership and inheritance goals.
✅ Talk to us
If you think this might apply to you or someone you love, reach out today. We’ll walk you through it — jargon-free — and make sure your cover is doing exactly what it should.
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