If you never want your money to keep you up at night, take a look at IRS code section 7702. It is the ultimate place for your sleep at night money. What is a 7702 plan? Quite simply IRS code 7702 refers to the section of the internal revenue tax code that holds one of the most powerful tax shelters for burying your money outside of the grasp of income taxes. It’s life insurance. But not just any life insurance, the kind we refer to here is what we call a “financial bunker.” It is specially designed to meet certain IRS rules and requirements. But how safe is life insurance?
7702 – Commercial Banks Closely Held Secret
Life insurance is so safe that the Office of the Comptroller of the Currency, advocates that commercial banks can invest their “Tier 1” safest money in specially designed life insurance. These are policies where the idea is to get as much money inside the policy as possible, with as little death benefit.
This type of properly structured policy then allows the commercial banks to put the death benefit on the officers of the company and return the profits of the policy back to the bank. In essence, banks are insuring their future Freedom with this strategy. These life insurance policies were the best performing assets on the books of commercial banks during the financial crisis. The figures are closely guarded, but it is estimated that there is nearly 200 billion dollars held by commercial banks in life insurance today. That alone is a testament to how safe a 7702 account can be. However there are other considerations as you will see below.
So Why Can’t You Do What The Banks Do?
If you step back and look at what has happened to the financial advice given to Americans over the last 40 years, the creation of IRA and 401k plans has lured people away from the thinking that existed before this period. Back before IRAs and 401k plans were created, Americans saved money inside dividend paying whole life insurance policies. They used these plans to grow their money without income taxes, and also as an alternative source of financing for cars, homes and other capital needs. The 7702 accounts were the basis of American’s savings plans. When the bombs have fallen on Wall Street and the banking system, these plans have truly illustrated themselves to be real Financial Bunkers.
Which 7702 Policies Are The Safest?
There are several considerations for evaluating the safety and risk of insurance companies and their products. Unfortunately, most agents marketing life insurance sell what they are trained to sell, which may not be the best solution or even safe. Right now there are billions of dollars going into life insurance policies that hold risks most agents do not understand. Because of this, policy owners could find a financial disaster, instead of financial security. The most predictable and secure contracts are dividend paying specially designed contracts. Interestingly, these are a variation of the whole life endowment contracts your grandparents may have owned back in the 1940’s, 50’s and 60’s.
What Do You Want?
Are you trying to build a financial bunker for yourself and your family? Do you want an account that will create predictable growth year after year, or do you want a policy where the returns you earn from year to year are like a spinning roulette wheel? The spinning wheel yields unpredictable results.
I look at this from the Freedom perspective. Do you want spiritual Freedom about your money, meaning the ability to hold a mindset that is free from fear and worry about financial matters, especially when it comes your “Bunker” money? If that is you, then we can help.