Many people tend to think a 7702 plan is a retirement plan. This is, however, not really the case since it’s more of a life insurance policy. In fact, all life insurance policies can be viewed at as ‘7702 plans’ since they are covered under section 7702 of the Internal Revenue Code (IRC). But how much do you know about this plan? If you cannot answer this question hassle-free, then you’ve certainly come to the right place. Read on to learn more.
How Do 7702 Plans Work?
Before going any further, you ought to be fully aware of how 7702 plans work. To give you a slight insight into what is destined to come your way, the premium goes to purchase a death benefit just as is the case with life insurance policies. After death, your family is paid the cash benefit.
However, you can still use cash value during your lifetime either by leveraging it to take a policy loan from the insurance company or simply taking a withdrawal. Even though it might not be accurate when referring to a 7702 account as a ‘retirement plan,’ a good life insurance can put you ahead of the game when it comes to retirement.
High Premiums than Tem Insurance Policies
You need to pay as little as possible for your life insurance, right? Of course, there is nothing wrong with doing this but high premiums may not be bad when you are well-off financially. In fact, high premiums go a long way in making sure you build cash value and overcome the cost of insurance within the shortest time possible.
You should, therefore, keep in mind 7702 plans tend to have higher premiums when comparedto term insurance policies. Nevertheless, many benefits are set to come your way thus making sure you do not regret your decision of paying higher premiums. No wonder many people seem to be prioritizing 7702 plans.
Provided you understand what 7702 plan is all about, you can leverage it as the perfect opportunity to change your life for the better.