The 702 J Retirement Plan


Buyer Beware When It Comes To Using Palm Beach Letters Recommended 702 Experts

702 j retirement plan explained

They tell you if you pay them money, theyll give you the contact info for the financial representatives they recommend you use to set up your 702 plan.

But one of their highly touted experts wrote a book which advises clients to take retirement income from the policy in a way that can cause the policy to lapse, creating a big tax liability. It also results in less cash value over time.

That should give anyone pause. The Bank On Yourself Professionals receive vigorous training on this and would never recommend such a risky strategy.

How Do 702 Retirement Plans Save For Retirement

When policyholders pay life insurance premiums on their 702 plan, the premiums are divided between paying toward the cash value in the policy and toward the defined death benefit. Essentially, policyholders are overpaying for the cost of the coverage that they need- like that which they would get with a term policy- and the overages go into a cash account that is invested on their behalf. The policyholders do not participate in the market returns, but rather are guaranteed those interest rates within the range.

The insurance company banks on being able to make more money than they promised and thats just one way they make their money. Policyholders can borrow against their cash value at any time. True retirement accounts that are under IRS jurisdiction cannot withdraw money before the age of 59 ½, so 702 Retirement Plans could be very attractive to people hoping to provide for themselves in retirement before the IRS says that they can.

Another reason why the 702 account is marketed as an attractive retirement vehicle is because of how the policies allow policyholders to take out a loan against their cash value. The keyword is loan. These loans are typically assessed at a relatively low-interest rate and because they are considered loans the income provided to the policyholder is not taxed. In fact, the loans do not ever actually have to be repaid and the loan can just be deducted from the death benefit at the policyholders passing.

Retirement Plan: What Is It And How Does It Work

You may have heard or seen advertised something called a 702 retirement plan. Can you set one up with your bank or your brokerage account, or through your employer?

Is it because, as some of the advertisers claim, the government doesnt want you to know about it, as it is some sort of elite investment to which only celebrities and wealthy people have access?

Again, no.

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Are 702 Plans Considered Scams

A 702 plan is also known by other names, depending on who you talk to such as a 770 account, a 7702 , or a LIRP since all of these reference wealth accumulation using life insurance. The scam term typically pops up when insurance or financial professionals do not disclose the true nature of the product. A 702, 770 account, 7702, and a LIRP are all legitimate life insurance products that have tremendous value and shouldnt be described as traditional retirement plans.

The 702 is not in the same IRS category as an IRA or 401 and is best suited for high-net-worth individuals who have maxed out traditional retirement products and want to accumulate wealth tax-free so that the retirement lifestyle they are investing for can be realized.

Use The Internet To Shop For Level Term Coverage

702(j) Retirement Plan

You can comparison shop for quotes at any of a number of sites like,,,,, or By shopping online, you avoid an insurance salesperson trying to up-sell you from level term coverage to another insurance product that may be unsuitable for you.

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What Is The 702 Retirement Plan

May 9, 2021 by admin

What is the 702 retirement plan? Planning for retirement is an important step in everyones working life, but with so many options available, it is hard to know where to start. There are individual plans, employer-sponsored plans, and annuities just to name a few. While the most important aspect of retirement savings is actually setting money aside, some products are better suited for each individual investor than others.

Most people will find that investing in employer-sponsored plans and individual plans will meet their needs, some people might need a more tax-advantaged approach to retirement savings and there are products out there like the 702 Retirement Plan to help them hit those goals.

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Research And Decide For Yourself

As always, it makes sense to get all of the information and compare the options for yourself. It could be that your situation is one of the cases where a 702 life insurance policy makes sense.

If you need help making a decision, consult a fiduciary financial advisor. Remember to seek out one that gets paid on an hourly basis, not one that is compensated by commissions.

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What Is The Goal Of Retirement

Your goal for after you retire should be to make surethat you have maximized your savings in the most tax-advantaged way. When youfollow a retirement checklist, this can be easier. This can help you to makecertain that you will have enough to live on even if you live to be acentenarian.

Your goal should take into account your own needs, theneeds of your family members, whether you want to live in retirementcommunities, and the likelihood that you might need long-term care. You shouldtake time to understand how these different needs can have an impact on theamount of savings that you require.

How Does A 702 Plan Differ From Retirement Plan

702 J Retirement Plan Scam

The first obvious difference is mentioned above: A 702 isnt a retirement plan at all.

It is a whole life, or cash value insurance policy. Unlike a term life insurance policy, a cash value policy covers the insured for their entire life, as long as they pay the premiums. It also adds the option of paying additional premiums that are held as cash in the policy.

Another difference from many traditional retirement plans is that a 702 cannot be purchased through an employer. Because it is a life insurance plan, you can only set it up with an insurance representative or financial services agent.

The benefit to this is that a 702 requires a relationship with an advisor who will keep a close watch on the policy to make sure no premiums are missed and that cash withdrawals are staying within certain thresholds. The drawback is that unlike retirement plans, you might pay high commissions and transaction fees.

A third, and pretty significant difference, is the timing of the potential tax benefits. With most traditional retirement plans, the money put into the plan is tax deferred. However, retirement funds are taxed when withdrawn.

With a 702, you pay the premiums and cash deposits with post-tax dollars. Tax burdens are not realized until later. So, a 702 plan is sometimes beneficial for someone expecting to be in a higher tax bracket in retirement.

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Retirement Statistics And What They Tell Us

Investors Business Daily reportsthat experts recommend that people should have at least seven times theirannual salaries saved by the time that they are 55. If a person makes themedian salary in the U.S. of $57,617, this means that he or she should have atleast $403,319 saved by age 55. As was previously noted, however, the mediansavings of the 55 to 64 age group in the U.S. is only $120,000.

Many people have far less in savings. If people donot do more to save,plan for when they will retire, or follow a checklist for retirement, they riskbeing financially uncertain during their golden years. Some people will beunable to leave the workforce and be forced to continue working long past thetime that they would have wanted to retire.

The Benefits Of A 702 Plan

How your 702 will benefit you depends on the challenges you are attempting to overcome with your traditional retirement products. Typically the complaints from most individuals trying to accumulate the wealth needed for the retirement lifestyle they are shooting for are eliminated when you deploy a 702 built with indexed universal life insurance.

  • Your wealth is accumulated on a tax-deferred basis
  • You can withdraw cash anytime without being subject to taxes and penalties
  • No annual cap on premium payments
  • Provides a tax-free death benefit to your beneficiary
  • No minimum distribution requirement at 72
  • Retirement income is not taxable
  • Since the insurance policy will have a floor rate that is not less than zero, the policys cash account will not lose money as a result of a down market.
  • The 702 allows you to invest in the market without actually being in the market

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Are 702 Programs A Scam

A 702 can potentially be a scam if an insurance advisor markets the policy as a retirement account. As youve learned, 702s arent retirement accounts like IRAs are theyre basically life insurance policies. Leveraging a 702 using the Infinite Banking Concept has its advantages, although it shouldnt be the primary retirement investment vehicle.

Money When You Need It

Explaining The 702(j) Retirement Plan: How to Fund Your Own Worry

A typical insurance contract allows you to borrow from the cash value of the account. In a 7702 scheme, the plan includes borrowing. Just be aware there an unknowable interest cost involved: insurance company interest rates . For comparison with an IRA you can take your own contributions back out with no fees whatsoever, and you have access to money for education expenses and home buying, in addition to unrestricted access at retirement age.

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A 702 Plan As A Permanent Life Insurance

As mentioned above, a 702 retirement plan isn’t a retirement plan. It’s actually a permanent life insurance policy. And it may be marketed under different names like the 7702 plan, 7702 private plan, Infinite Banking Concept®, Bank on Yourself®, Become Your Own Bank, or even as high cash value life insurance.

Insurance agents have used this term and topic a great deal over the past few years to convince people to buy permanent life insurance, says independent broker Samuel R. Price, who works with Assurance Financial Solutions.

The plan works the same way a whole life or universal life insurance does, which means you purchase a contract through an insurance company or financial planner. You cant open one up through your employer, your bank, or your brokerage. Once you sign up, you pay premiums to the company in exchange for coverage. These payments go toward the death benefit that is paid out to your beneficiary and the total cash value of the policy.

Like some other policies, the 702 plan comes with a savings component built into it. This means that you can overfund your policy. Any excess cash you pay in addition to your premiums goes to the cash value, which is invested on your behalf. Any earnings on this portion of the policy are tax-deferred, which allows you to make withdrawals against this portion of the policy if you need it during retirement or in emergencies.

Your Retirement Checklist: What Should Be On It

Planning for retirement isimportant for people of all ages. It becomes increasingly important as you growolder. While most people generally understand that they should save money forafter they retire, most do not save enough. Following a retirement checklistcan help you to reach your goals.

CNBC reportsthat people who are between the ages of 55 and 64 have a median savings of$120,000. That is only 12 percent of the amount that experts say that peoplewill need when they retire. At the same time, people are living longer, whichmeans that their savings will have to stretch for more years. Creating a formal retirement checklist and following itcan help you to ensure that you have enough savings so that you can retire morecomfortably. You should start long before you plan to retire by creating a pre-retirementchecklist.

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Why It Isnt As Good As It Sounds

All of these benefits including tax-deferred growth, the ability to take out a tax-free loan and tax-free money to your beneficiary when you die sound amazing.

Unfortunately, marketers focus on these good parts of the policy. What they fail to mention are the not so good parts of the policy.

First, unlike investing in a legitimate tax vehicle like a 401, you dont get a tax deduction for your life insurance premiums. That means the money put toward extra premiums to increase the cash value doesnt impact which of the tax brackets youll fall into.

Next, permanent life insurance policies are normally very expensive. Life insurance companies want to turn a profit. Permanent life insurance means that the life insurance company is guaranteed to pay out the death benefit as long as you keep paying the premiums.

This means insurance companies have to make sure they can invest the money you pay in premiums to more than cover the death benefit they have to pay out and still make a profit. If they dont, they could run out of money and go out of business.

They also have to pay for all of the marketing and the commissions to the agents that sell these policies.

These policies often pay the agents very high commissions. The high commissions may convince some agents to sell this product when it isnt the best fit so they can get paid.

Is The 702 Retirement Plan A Scam

702 J Retirement Plan – 702 J Retirement Plan Review

From Marvin Schulz, staff writer, Palm Beach Research Group:

Im skeptical by nature. When it comes to marketingespecially onlineIm always on guard. I imagine you are, too. Its better to be safe than sorry.

The fact that youre reading this tells me two things about you. First, youve just heard about the 702 Retirement Plan, probably through one of our special video reports. Second, youre on the fence about signing up. You want reassurance this isnt a scam.

I do this all the time. I gather as much information as possible before buying a product.

So lets get straight to the point here

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What Is A 702 Retirement Plan Its Another Way To Say Life Insurance Contract

Whether you had an insurance salesman aggressively pitch you a 702 retirement plan or you read information about it online, the question still remains what is it?

First, a 702 plan is not a retirement plan at all its a life insurance contract. Thats right, a 702 is not a retirement plan, even though that is how it is marketed.

The name comes from Section 7702 in the Internal Revenue Code, which regulates life insurance contracts. Most people are familiar with at least one of these retirement plans 401s, 457, IRA 403, TSP and the companies that market 702 plans want you to view it in the same light. It is important to understand the distinction. I encourage you to visit the IRS website to view all the retirement plan options if want more information about what is included.

Understanding life insurance

A permanent life insurance policy combines a death benefit with a savings portion. As you pay your premiums, over time you begin to accumulate a cash value component that you can borrow against. The growth of the cash value is tax-deferred, meaning you do not pay taxes. You are also able to take money out of your cash value as a tax-free loan.

The thought is that you can overfund your insurance policy pay more than the required premium and then have the ability pull money out of your cash value as a tax-free loan during retirement.

Taking a deeper dive into 702

Lets pause here to ask the question is this too good to be true?


Evaluate the alternatives

Why Would You Use A 702 Plan For Retirement

So, why would someone use a life insurance plan for retirement? Most people probably wouldnt. But, in some cases it might be beneficial.

  • If someone has a high net worth and is expecting to be in a high tax bracket in retirement, it might have its benefits.
  • If the contribution limits on other retirement products have been met, a 702 plan could be beneficial for accessing cash in retirement.
  • You will notice the list of drawbacks is much longer than the benefits, but that does not mean a 702 plan might be the appropriate choice for some individuals. The key is working with a trusted financial advisor or insurance agent who will set up the plan and closely monitor it so that all rules are followed.

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