December 8, 2022

It is common to come across individuals who refer to the 7702 plan as a retirement plan. Even though they have their reasons for saying that, this is far from the truth. No wonder you should be wary of insurance agents who market 7700 plans as a type of retirement plan since they might not have your best interest at heart.

A 7702 plan refers to a cash-value life insurance policy, which is a life insurance policy that has a cash value beyond the death benefit. The very moment you pay premiums into these kinds of policies, then some of it goes to the benefit while the rest goes to the policy’s cash value.

So, why you should go ahead buying a cash-value insurance policy for the purpose of investing in these policies? These policies tend to come with expensive management fees, mortality and expense charges. If this is not enough, you get to benefit from administrative expenses that can contain agent commissions.

Things tend to be different with qualified retirement plans, such as 401(k) since they generally don’t require commission fees to enroll yourself in the plan. But that is not to say you will never make do with fees when taking advantage of the 401(K) plan or any other qualified retirement plan.No wonder you need to keep a close eye on the terms of whichever retirement plan you consider to ensure you are fully aware of the total costs of the plan.

The comparison between 7702 plans and other retirement plans depends on the investments made with the funds you contribute to plan. Regardless of the plan you decide to settle on, it is always a perfect idea to have a clear understanding of the investments your money is tied up in.

In Conclusion

As you can see, the 7702 plan is quite different from a retirement plan. Even though some insurance agents market it as one, they do so to win over your business. That’s why you should take the initiative to do a bit of research before leveraging 7702 plans.

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