7702 Plan Explained: What It Is, How the IRS Defines It, and Why “770 Accounts” Are a Marketing Gimmick
If you have searched for “7702 plan” online, you have probably encountered one of two things: vague marketing that presents it as some kind of secret wealth account, or critics who dismiss it as overpriced life insurance dressed up with a fancy number. Both miss the point entirely.
A 7702 plan is a cash value life insurance policy that meets the requirements of Section 7702 of the Internal Revenue Code. When structured correctly, it provides tax-deferred growth, tax-free access to cash value through policy loans, a tax-free death benefit, and — depending on the policy type — principal protection from market losses. These are not loopholes. They are codified tax advantages written directly into the IRC, and they have been available for over a century.
But here is the part most people get wrong. They think of a 7702 plan as a product. It is not a product. It is a section of tax law that defines which life insurance contracts qualify for favorable tax treatment. The policy types that qualify — whole life, universal life, indexed universal life, and variable universal life — are the actual products. Section 7702 is the legal framework that governs them. Understanding that distinction is the difference between making an informed decision and falling for marketing hype.
This guide breaks down exactly what Section 7702 says, how the IRS tests compliance, what happens if you overfund a policy and trigger Modified Endowment Contract status, and why terms like “770 account” and “702(j) retirement plan” are marketing gimmicks — not financial instruments.
💡 TL;DR: 7702 Plan — What You Actually Need to Know (2025)
A “7702 plan” is not a specific product — it is a section of the Internal Revenue Code that defines which life insurance policies qualify for tax-advantaged treatment. Here are the key facts:
| Feature | What It Means |
|---|---|
| What It Is | IRS code section defining tax-qualified life insurance contracts |
| Policy Types That Qualify | Whole life, universal life, indexed universal life (IUL), variable universal life (VUL) |
| Tax on Growth | Tax-deferred — no annual tax on cash value gains |
| Tax on Access | Tax-free via policy loans (when properly structured) |
| Death Benefit | Income tax-free to beneficiaries |
| IRS Compliance Tests | Must pass either the CVAT or GPCT test (chosen at policy issue) |
| Overfunding Risk | Exceeding the 7-pay test triggers MEC status — loans become taxable |
| “770” and “702(j)” Plans | Marketing gimmicks — not real financial products |
💰 Bottom Line: A 7702 plan is a legitimate, IRS-recognized tax strategy — not a scam and not a secret. But the term has been hijacked by marketers selling newsletters and subscription services. Understanding what Section 7702 actually says — and what disqualifies a policy from its benefits — is the foundation for using cash value life insurance intelligently.
✅ Why Trust This Guide
This guide was written by professionals with over 18 years of experience in life insurance, estate planning, and retirement income strategies. As independent advisors with access to dozens of top-rated carriers, we have helped thousands of clients understand how Section 7702 applies to their specific financial situation. Our explanations are based on actual policy design experience and ongoing legal and tax review — not regurgitated marketing copy.
Table of Contents
What Is a 7702 Plan?
A 7702 plan is a cash value life insurance policy that qualifies for tax-advantaged treatment under Section 7702 of the United States Internal Revenue Code. The term “7702 plan” is not an official IRS designation — it is an industry shorthand that refers to any permanent life insurance policy meeting the requirements laid out in this section of the tax code.
When you pay premiums on a qualifying cash value policy, your money is allocated in two directions. A portion goes toward the cost of insurance — the death benefit coverage. The remaining portion builds cash value inside the policy, which grows on a tax-deferred basis. This means you owe no taxes on the gains unless or until you withdraw them directly. And if you access the cash value through policy loans instead of withdrawals, those funds come to you tax-free.
This is the core mechanism that makes 7702 plans attractive: tax-deferred accumulation combined with tax-free access. It is the same basic structure that wealthy families and institutional investors — including major banks holding over $200 billion in BOLI — have used for generations.
Types of Cash Value Life Insurance That Qualify Under 7702
Four types of permanent life insurance policies can qualify as 7702 plans, each with a different approach to cash value growth:
Whole Life Insurance — Offers guaranteed cash value growth plus potential dividends from mutual insurance companies. Cash value is not tied to market performance. This is the foundation of the infinite banking concept and is considered a non-correlated asset. Learn more about whole life insurance pros and cons.
Universal Life Insurance — Offers flexible premiums and a cash value that earns interest based on a declared rate set by the insurance company. See our guide to universal life insurance.
Indexed Universal Life (IUL) — Cash value growth is linked to a market index (such as the S&P 500) but with a floor — typically 0% to 1% — that protects your principal from market losses. Growth is also subject to a cap. Read our complete IUL guide.
Variable Universal Life (VUL) — Cash value is invested directly in sub-accounts similar to mutual funds. This exposes your cash value to full market risk, including the possibility of loss. Compare VUL vs IUL.
Each of these policy types must meet the compliance tests defined in Section 7702 to retain their tax-advantaged status. If a policy fails these tests, the tax benefits disappear — which is why understanding the next section matters.
How the IRS Defines a 7702 Plan: CVAT vs GPCT
This is where most articles on 7702 plans stop — they tell you it is a life insurance policy with tax advantages and leave it at that. But if you want to understand why these tax benefits exist and what can cause you to lose them, you need to understand what Section 7702 actually says.
The IRS does not hand out tax advantages to life insurance policies automatically. A policy must pass one of two mathematical tests at the time it is issued. These tests exist to ensure the contract is genuinely a life insurance policy — not simply a tax shelter disguised as one. The insurance company chooses which test to apply, and that choice is made at policy issue and cannot be changed.
What the Code Actually Says
26 U.S. Code § 7702 defines a life insurance contract as any contract which is a life insurance contract under applicable law, but only if such contract:
(1) meets the cash value accumulation test of subsection (b), or
(2)(A) meets the guideline premium requirements of subsection (c), and (B) falls within the cash value corridor of subsection (d).
In plain English: every 7702-qualifying policy must pass one of two tests. Here is what each test requires.
The Two Compliance Tests
1. Cash Value Accumulation Test (CVAT)
The CVAT requires that the policy’s cash surrender value can never exceed the net single premium that would be needed to fund the policy’s future benefits at any point during the life of the contract. In practical terms, this test ensures that the death benefit remains large enough relative to the cash value that the contract still functions as insurance — not as a pure investment vehicle.
Policies tested under CVAT generally have higher death benefits relative to their cash value. This test is commonly used for policies where the goal is to maximize the death benefit while still building some cash value.
2. Guideline Premium and Corridor Test (GPCT)
The GPCT is a two-part test. First, the total premiums paid into the policy cannot exceed certain guideline limits — either a guideline single premium or the sum of guideline level premiums. Second, the policy must maintain a minimum corridor between the death benefit and the cash value, meaning the death benefit must always be a certain percentage higher than the cash value. That required percentage varies by the insured’s age.
Policies tested under GPCT are more commonly used when the goal is to maximize cash value accumulation — which is the typical design objective for anyone using a 7702 plan as a life insurance retirement plan (LIRP) or for self-banking strategies.
Why This Matters to You
You do not need to calculate these tests yourself — your insurance company handles compliance. But understanding that these tests exist explains two important realities.
First, there is an upper limit to how much premium you can put into a policy based on its death benefit. You cannot dump unlimited cash into a small policy and keep the tax advantages.
Second, if your policy fails these tests, it loses its status as a life insurance contract under the tax code, and all accumulated gains become immediately taxable.
The good news is that reputable carriers monitor these limits closely and will alert you before you approach the boundary. But this is also why working with an experienced advisor matters — policy design for maximum cash value requires structuring the death benefit and premium payments precisely to stay within these limits while optimizing growth.
KEY INSIGHT
Grandfathering Protects Existing Policyholders
The tax laws governing life insurance have changed over the years — most recently with adjustments to Section 7702 in the Consolidated Appropriations Act of 2021. But when the law changes, policies issued before the effective date are generally grandfathered under the rules that existed when they were issued. This is one reason the life insurance industry considers these tax advantages durable: even if the law tightens in the future, your existing policy typically keeps the benefits it was issued under.
The 7-Pay Test and Modified Endowment Contracts
Even if your policy passes the CVAT or GPCT, there is a second compliance hurdle that can strip away one of the most valuable 7702 benefits: tax-free access through policy loans. This is the 7-pay test, and failing it turns your policy into a Modified Endowment Contract — commonly known as a MEC.
What Is the 7-Pay Test?
The 7-pay test is defined under IRC Section 7702A, which immediately follows Section 7702 in the tax code. The test asks a straightforward question: would the total premiums you have paid into the policy during its first seven years be enough to fully pay up the policy — make it “paid up” with no further premiums required — within that seven-year window?
If the answer is yes — meaning you have put too much money into the policy too quickly — the policy is classified as a Modified Endowment Contract.
What Happens If Your Policy Becomes a MEC?
A MEC still qualifies as life insurance under Section 7702. The death benefit is still income tax-free to your beneficiaries. The cash value still grows tax-deferred. But you lose the ability to access the cash value tax-free through policy loans. Specifically:
Loans and withdrawals are taxed on a LIFO basis — meaning gains come out first and are taxed as ordinary income.
A 10% IRS penalty applies to gains accessed before age 59½ — similar to the early withdrawal penalty on qualified retirement accounts.
This is a significant consequence. Tax-free access through policy loans is the mechanism that makes 7702 plans most valuable as a living-benefits tool. Losing that benefit fundamentally changes the utility of the policy.
How to Avoid MEC Status
The key is proper policy design from the outset. An experienced advisor will structure the death benefit and premium schedule to allow maximum cash value accumulation without triggering the 7-pay limit. This often involves using a paid-up additions rider to direct extra premium toward cash value growth while staying within the MEC boundary.
Your insurance company monitors this boundary and will typically alert you if a premium payment would push the policy into MEC territory. But the design decisions made at policy inception — the death benefit size, the base premium versus PUA allocation, the rider structure — are what create the room to fund aggressively without crossing the line.
For a deeper dive into MEC rules, consequences, and design strategies, see our complete guide: Modified Endowment Contract (MEC): The Good, The Bad, and The Ugly.
7702 Plan Tax Advantages
The reason Section 7702 matters — and the reason cash value life insurance has been a cornerstone of wealth-building strategies for over a century — comes down to a specific set of tax advantages that no other financial vehicle offers in combination. Understanding each one individually is important, but the real power is in how they work together.
Tax-Deferred Growth
The cash value inside a 7702-compliant policy grows tax-deferred. You owe no income tax on the gains as they accumulate year after year. This allows your cash value to compound without annual tax drag — the same principle that makes qualified retirement accounts attractive, but without the contribution limits, withdrawal restrictions, or required minimum distributions that come with those accounts.
For dividend-paying whole life policies, this means both the guaranteed cash value growth and any dividends credited to the policy accumulate without triggering a taxable event.
Tax-Free Access Through Policy Loans
This is the feature that separates 7702 plans from virtually every other financial vehicle. When you take a loan against your policy’s cash value, the insurance company lends you money using your cash value as collateral. Because it is a loan — not a withdrawal — it is not a taxable event.
The practical result: if you have $200,000 of cash value and borrow $100,000, you receive the full $100,000 with no tax liability. And because the insurance company is lending against your cash value rather than distributing it, your full $200,000 continues to earn returns inside the policy. You are accessing money without interrupting the compounding.
This is the mechanism that makes life insurance policy loans so powerful — and it is the benefit most at risk if a policy is improperly funded and becomes a MEC.
Income Tax-Free Death Benefit
Under current tax law, the death benefit paid to your beneficiaries is received income tax-free. This makes life insurance one of the most efficient wealth transfer vehicles available. The full face amount — minus any outstanding policy loans — passes to your beneficiaries without triggering income tax.
For those using life insurance as part of an estate plan, this “self-completing” feature is critical. If the insured dies at any point — even after making only one premium payment — the beneficiary receives the full death benefit, ensuring that the financial plan completes regardless of what happens.
Creditor Protection
In many states, the cash value of a life insurance policy is protected from creditors and bankruptcy proceedings. The specifics vary by state — some offer unlimited protection, others cap it at certain dollar amounts — but this is an additional layer of asset protection that most other savings vehicles do not provide. See our state-by-state creditor protection guide for details.
No Contribution Limits
Unlike qualified retirement accounts, there are no IRS-imposed annual contribution limits on 7702 plans. The practical limit is determined by the policy’s death benefit and the compliance tests discussed earlier (CVAT/GPCT and the 7-pay test). But an experienced advisor can design a policy with a death benefit large enough to accommodate substantial annual premiums while staying within the 7702 guidelines.
This makes 7702 plans particularly attractive for high-income earners who have already maxed out their qualified retirement accounts and want additional tax-advantaged growth.
No Required Minimum Distributions
There is no age at which you are required to start taking money out of a cash value life insurance policy. Unlike qualified retirement accounts that mandate distributions starting at age 73 or 75, your 7702 plan cash value can continue growing tax-deferred for as long as the policy is in force. You access it on your terms, when you need it, in the amounts you choose.
7702B: The Long-Term Care Connection
While we are walking through the relevant sections of the tax code, it is worth noting a related provision that expands what a 7702 plan can do — particularly for those concerned about long-term care costs in retirement.
IRC Section 7702B defines the rules for qualified long-term care insurance. What makes this relevant to 7702 plans is subsection 7702B(e)(1), which allows life insurance policies to include long-term care riders while maintaining the LTC insurance tax benefits.
In practical terms, this means you can purchase a cash value life insurance policy with an integrated long-term care rider — giving you a policy that serves triple duty: tax-advantaged cash accumulation, a tax-free death benefit, and long-term care coverage. This is often referred to as a hybrid or asset-based long-term care strategy.
This option has been available since 2009, and it has opened up the LTC planning market significantly. Rather than purchasing a standalone long-term care insurance policy — which may increase premiums over time or lapse unused — you can build the coverage into the same policy that is already serving your cash accumulation and wealth transfer goals.
What Are “770 Accounts” and “702(j) Plans”?
If you have spent any time searching for information about 7702 plans, you have almost certainly encountered ads or emails promoting “770 accounts,” “702(j) retirement plans,” or “President Reagan’s secret retirement account.” These terms are designed to create mystery and urgency — and to sell newsletter subscriptions.
Let us be direct: these are marketing gimmicks. They are not real financial products, and they are not special accounts. They are cash value life insurance — the same type of policy we have been discussing throughout this article — repackaged with mysterious-sounding names to generate clicks and subscription revenue.
Where These Terms Come From
The “702(j) retirement plan” gained widespread attention through Tom Dyson and the Palm Beach Letter, a subscription-based financial newsletter. The marketing was clever: emails described a “Secret Investment Account” — sometimes called “President Reagan’s Secret 702(j) Retirement Plan” — that could earn significantly more than banks and traditional financial institutions offered. To learn what it was, you had to subscribe.
Those who subscribed discovered that the so-called secret account was cash value life insurance. The same insurance governed by Section 7702 of the IRC, available from any licensed insurance company, and in use for well over a hundred years.
The “770 account” follows the same playbook — a rebranded reference to cash value life insurance designed to sound exclusive and proprietary.
What IRC 7702(j) Actually Says
Here is the part that makes the “702(j) retirement plan” marketing particularly misleading. If you actually look up subsection (j) of IRC Section 7702, it has nothing to do with retirement income accounts.
IRC 7702(j) addresses certain church self-funded death benefit plans treated as life insurance — specifically, plans or arrangements provided by a church for the benefit of its employees and their beneficiaries.
It is a narrow provision about church employee benefits. It has nothing to do with the tax-free retirement income strategy being marketed under the “702(j)” label. The marketers simply pulled the numbers from the IRC section reference and presented them as if they described a specific, secret financial product.
The Bottom Line on 770 and 702(j) Plans
These terms are not scams in the sense that they are selling something fake — the underlying product, cash value life insurance, is entirely legitimate. But the marketing around them is misleading. It creates the impression that there is some hidden or exclusive financial vehicle that only insiders know about, when in reality these newsletters are describing a well-established product available through any licensed life insurance professional.
If someone is trying to sell you a “770 account” or “702(j) plan,” know that what they are describing is cash value life insurance under Section 7702 of the IRC. The product is real. The tax advantages are real. The marketing wrapper is not.
7702 Plan Pros and Cons
No financial strategy is without tradeoffs. Here is an honest breakdown of what 7702 plans do well and where they fall short.
| Pros of 7702 Plans | Cons of 7702 Plans |
|---|---|
|
|
If you are evaluating how a 7702 plan stacks up against a 401(k) or 529 plan on spendable retirement income, tax treatment, and market risk, see our detailed 7702 vs 401(k) comparison guide.
Is a 7702 Plan Worth It?
Whether a 7702 plan is worth it depends entirely on your financial situation, your time horizon, and what you are trying to accomplish. These plans are not for everyone — but for the right person in the right situation, a properly structured cash value life insurance policy can be one of the most powerful financial tools available.
A 7702 plan is likely a strong fit if you:
- Are looking for tax-advantaged growth beyond what qualified retirement accounts allow.
- Want tax-free access to capital without age restrictions, penalties, or forced distributions.
- Value principal protection — you do not want to make up losses before generating gains.
- Need a death benefit that ensures your financial plan completes regardless of what happens.
- Are concerned about future tax rate increases and want to build assets outside the taxable income system.
- Want to build a personal banking system that lets you recapture interest and finance your own purchases.
- Are willing to commit to a long-term strategy — these policies perform best over 15-20+ years.
- Can qualify for life insurance coverage through medical underwriting.
A 7702 plan is probably not the right fit if you:
- Need maximum short-term liquidity — the early years of a policy prioritize long-term cash value growth.
- Cannot commit to ongoing premium payments for at least 7-10 years.
- Are primarily seeking the highest possible investment return and are comfortable with full market risk.
- Do not need or want a death benefit.
🔑 Beyond the Basics: Volume-Based Banking
Most discussions about 7702 plans focus on accumulation and retirement income. But for those who sense that conventional financial advice is designed to keep your money circulating through someone else’s system, the real opportunity goes deeper. A properly structured whole life policy is not just a savings vehicle — it is financial infrastructure that lets you recapture interest, finance major purchases on your own terms, and build generational wealth outside the traditional banking cycle. This is the foundation of what we call Volume-Based Banking — and it represents the next evolution beyond traditional infinite banking for those ready to think and operate like the institutions that have used these strategies for over a century.
Frequently Asked Questions
What is a 7702 plan in simple terms?
A 7702 plan is a cash value life insurance policy that qualifies for tax-advantaged treatment under Section 7702 of the Internal Revenue Code. It is not a specific product — it is a legal framework that governs which life insurance contracts receive tax-deferred growth and tax-free access through policy loans. The four policy types that can qualify are whole life, universal life, indexed universal life, and variable universal life.
Is a 7702 plan a scam?
No. A 7702 plan is not a scam. It is a legitimate financial vehicle governed by the IRS tax code, issued by regulated insurance companies, and used by individuals, families, businesses, and even banks for over a century. The confusion comes from misleading marketing — particularly the “770 account” and “702(j) retirement plan” promotions — that wraps a well-established product in mystery to sell newsletter subscriptions. The product is real. The tax advantages are real. The hype-driven marketing around it is the problem.
What is a 770 account?
A 770 account is not a real financial product. It is a marketing term used by financial newsletter promoters to describe cash value life insurance — the same product governed by IRC Section 7702. The name is designed to sound exclusive and proprietary, but there is nothing about a “770 account” that differs from a standard cash value life insurance policy available through any licensed insurance professional.
What is a 702(j) retirement plan?
The “702(j) retirement plan” is another marketing gimmick. It gained attention through Tom Dyson and the Palm Beach Letter newsletter. The term creates the impression of a secret retirement account, but it describes ordinary cash value life insurance. Notably, IRC Section 7702(j) actually addresses certain church self-funded death benefit plans — it has nothing to do with personal retirement income strategies.
What happens if my 7702 plan becomes a MEC?
If your policy exceeds the 7-pay test limits, it becomes a Modified Endowment Contract (MEC). The death benefit remains income tax-free, and cash value still grows tax-deferred. However, loans and withdrawals are now taxed on a last-in-first-out basis (gains come out first and are taxed as ordinary income), and a 10% penalty applies to gains accessed before age 59½. Proper policy design prevents MEC status.
What is the difference between CVAT and GPCT?
These are the two IRS compliance tests under Section 7702. The Cash Value Accumulation Test (CVAT) requires the cash value to never exceed the net single premium needed to fund future benefits. The Guideline Premium and Corridor Test (GPCT) limits total premiums paid and requires a minimum corridor between death benefit and cash value. The insurance company chooses which test to apply at policy issue. GPCT is more commonly used for policies designed to maximize cash value accumulation.
How do I access money from a 7702 plan?
There are two primary methods. First, through direct withdrawals — but gains withdrawn are taxable as ordinary income. Second, and more commonly, through policy loans. The insurance company lends you money using your cash value as collateral, so the loan is not a taxable event. Your full cash value continues earning returns even while you use the borrowed funds. Most people using 7702 plans for tax-free income use the loan method.
Can I lose money in a 7702 plan?
It depends on the policy type. Whole life insurance offers guaranteed cash value growth — you cannot lose principal. Indexed universal life (IUL) provides a floor, typically 0% to 1%, that protects against market losses. Variable universal life (VUL), however, invests cash value directly in market sub-accounts and does carry the risk of loss. Regardless of policy type, all policies have insurance costs and fees that reduce net returns in the early years.
How much can I contribute to a 7702 plan?
There are no IRS-imposed annual contribution limits like those on retirement accounts. The practical limit is determined by the policy’s death benefit and the compliance tests (CVAT/GPCT and the 7-pay test). An experienced advisor can structure the death benefit to accommodate substantial annual premiums while keeping the policy within 7702 guidelines and avoiding MEC status.
Is a 7702 plan the same as infinite banking?
Not exactly. A 7702 plan refers to any cash value life insurance policy that meets IRS requirements for tax-advantaged treatment. The infinite banking concept is a specific strategy for using a dividend-paying whole life policy as personal financial infrastructure — leveraging the policy loan feature to finance purchases, recapture interest, and build wealth outside the traditional banking system. All infinite banking policies are 7702 plans, but not all 7702 plans are used for infinite banking.
Want to Understand How a 7702 Plan Fits Your Situation?
The concepts in this guide are straightforward, but the application is not one-size-fits-all. Whether you are evaluating cash value life insurance for the first time or looking to understand how your current policy stacks up under the 7702 framework, our team can help you see the full picture.
Explore our educational resources to go deeper into the strategies that matter most for your financial goals:
Or, if you are ready to see how these concepts apply to your specific situation, schedule a strategy session with our team. No pressure, no sales tactics — just clarity on whether a 7702 strategy makes sense for you.
12 comments
Stefany
How so after taking out the policy can you take out a loan?
SJG
It depends on the company, usually there is at least a 30-day minimum.
Best, Steve Gibbs for I&E
Dwayne
My son in law wants to open a 770 life plan for my daughter and himself. He also wants to be an agent and a BYOB. is this ok? Also what amount would be paid to her or him if any of them has died maybe just one year into the 770 plan. No term insurance involved.
Just seeking advice.
Insurance&Estates
Hello Dwayne, the best advice would be to request a personalized consultation to review your son’s scenario and goals, etc. A great first step is to request a call from Barry at barry@insuranceandestates.com.
Best, Steve Gibbs for I&E
Deb
I am 59 and have a whole life policy would I benefit from one of the 7702 plans.
Insurance&Estates
Hello Deb, thanks for your interest. I believe Jason Herring has already reached out to you. If you haven’t yet connected, go ahead and e-mail him at jason@insuranceandestates.com.
Best, Steve Gibbs for I&E
Christina Lynn
You say above the following: When examining the 7702 plan pros and cons vs the 401k, one major pro is that life insurance is a contract between the company and the policy holder. There isn’t a third party involved, i.e. no middle man. Another 7702 plan pro is the tax advantages. The money you pay into your policy grows tax-deferred and experiences true compound growth.
Does that mean that when contributing to a 7702 plan, that it is tax deductible like a 401k?
Insurance&Estates
Hi Christina, great question about tax planning. Actually, there are many misconceptions about the merits of the 401(k). They certainly aren’t tax deductible, but rather tax deferred vehicles. That is unless you’re talking about the company’s contribution. This gets into more complicated tax questions because there are approaches to create tax advantages for businesses paying into life insurance plans such as split dollar plans, etc. However, the more general answer is that life insurance is not generally tax deductible to whomever is paying into the policy so. However, unlike CD’s and other financial accounts, the gains aren’t taxed in the year earned but rather deferred as long as they are left in the policy…in this way, cash value life insurance may be considered similar to a 401(k) but with more flexibility. When thinking about 401(k) contributions, the question becomes whether you think it makes sense for someone to pay taxes under today’s rates vs. tomorrows, and other questions emerge like tax bracket considerations. Certainly, a 401(k) may be beneficial if there is a company match, and yet there is also the looming market risk. Anyhow, you can check out our other post on 401(k) accounts if you’re interested: https://www.insuranceandestates.com/cashing-out-401k/. Please DO NOT consider this legal or financial advice because it is all just general educational discussion. Actual advice can only be given in the context of a comprehensive private consultation involving discussions of assets, goals, concerns etc.
Best to you.
Steve Gibbs
Farida Sultana
I heard that one could take loans against the
death benefit, is it true ?
Insurance&Estates
Farida,
Thank you for visiting Insurance and Estates. I received your question about taking loans from a Life Insurance policy. Permanent life insurance policies like Whole Life and Universal Life will typically build cash value. The owner of the policy is allowed to take a loan from the cash value. The death benefit is reduced dollar for dollar by the amount of the loan. You can select to pay the loan back or allow the loan to continue. If you die with a loan on the policy, your beneficiary will receive the original death benefit amount minus the loan amount.
Please feel free to give us a call and I will be happy to answer any additional questions. Thanks again
Jason
Jason Herring
Wealth Transfer Specialist
Insurance and Estates
737-931-1428
info@insuranceandestates.com
alex
WHIch insurance companies offer a non Modified Endowment Contract,and are also non direct recognition issuer?
Insurance&Estates
Alex,
All life insurance companies offer non Modified Endowment Contracts. We have vetted several non direct recognition companies and we like Foresters, MN Life and MassMutual based on history of dividends and early cash value growth. However, there is no one size fits all company and it really comes down to your specific goals and objectives.
Sincerely,
I&E