Q: Does a 7702 Private Plan Make a Cash Value Plan a Better Deal?
There has been an increase in the amount of companies offering 7702 private plans. This is a fairly interesting development since there is nothing legally defined as a 7702 plan. The use of the term 7702 plan really doesn’t exist. It is just another “sales tactic” of agents to sell cash value plans which are inherently flawed. The 7702 plan is a marketing term used to allow an existing set of insurance products, typically Variable Life plans, to borrow some of the reputational credibility of an IRA or 401k plan. There is an IRS code 7702, however this section addresses the tax implications of life insurance contracts and does not bestow any additional benefits by naming a plan under this label. It’s just another sales gimmick and Dave’s criticism related to why Cash Value plans are poorly designed consumer products does not change in any manner due to this new “marketing approach”. The products used still have all of their inherent flaws and should be avoided.