“Secret 770 or 702(j) Account — Warren Buffett’s Most Unusual Investment”

Reading into Tom Dyson's Palm Beach Letter pitch for “The Secret Investment Account: How to Fund Your Own Worry-Free, 100% Tax-Free Retirement.” This was originally pitched as the "770 Account" and is now also being touted as a "702(j) Account"

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This was originally published on June 3, 2013, and it continues to be one of the most-discussed topics we’ve covered during those years.

The idea continues to be teased and promoted actively by Tom Dyson and his folks at Palm Beach Letter, sometimes using different names, so we’re re-posting it for those new readers who might be interested… the idea is now sold partly as a secret strategy used by Warren Buffett, Joe Biden, and other notable names… but the basic idea and the type of “bank on yourself” life insurance policy they’re pitching is unchanged (yes, I expect Buffett probably has some whole life insurance, since essentially all wealthy people use life insurance as part of their estate tax planning, and Berkshire Hathaway has engaged in life settlements/secondary life insurance investments in the past).

While you’ll still sometimes see it teased as the 770 Account, or as the “World’s Most Notorious Asset,” it’s also now being teased as the “702(j) Account” (just another mysterious-sounding number, like 770, that refers to the part of the IRS code that deals with cash-value life insurance)…

…the story otherwise hasn’t changed much, here’s our original article…

—-from 6/3/13—-

“Imagine an account that…

“Lets you retire 100% tax-free

“Is NOT reportable to the IRS

“Pays you an average of 5% per year

“Has paid out, on average, for 121 straight years

“And which, unlike traditional retirement plans like IRAs and 401(k)s, lets you withdraw money anytime you like, for whatever reason you like, and with no penalties whatsoever.”

That’s what Tom Dyson and a few other folks who sign their promo letters are promising in the latest pitch for the Palm Beach Letter, which he publishes with Mark Ford. It’s all about an account that’s been used by the uber-wealthy for generations, and by “at least six different U.S. Presidents,” including John F. Kennedy and FDR, whose pictures grace some of the ads to provide gravitas, to generate “IRS-exempt” income for retirement.

So what’s the story? Well, Dyson calls it the “770 account” to make it seem mysterious (why else, of course, would you buy the newsletter?), but, frankly, it’s plenty mysterious on its own even if you don’t give it a sneaky name. More on that in a moment.

In fact, this kind of “Account” is already being touted by lots of skeezy-sounding infommercials and books whose promises make you very suspicious — they come with names like “Bank on Yourself” and “Infinite Banking.”

That’s not to say that any of the heavily marketed versions of these plans are skeezy, just that their promises give me that feeling, and the numbers and specifics for plans like this come usually only when you’re sitting in an office with an agent. “Skeezy”, by the way, is defined by your friendly neighborhood Gumshoe as a combination of “sketchy” and “sleazy.”

But what they’re talking about with those plans, and what Tom Dyson is pitching for his newsletter, is life insurance.

Not just ordinary term life insurance like most people under 60 carry, though — we’ll get to that in a minute. First, a bit more of his tantalizing teasing:

Manhattan’s Secret Vault: Why Wall St. has kept this powerful secret hidden from you

“There’s a very good reason you’ve never heard about the “770” account before:

“That’s because Wall Street doesn’t want you to know about it!

“And neither do the big banks too, for that matter. (More on this in a minute.)

“Now, even though this is the investment account The Wall Street Journal is on record as saying is better than 401(k)s and IRAs… the majority of Americans don’t know it exists.


“Well here’s a clue…

“I just got off the phone with an insider who works in the 770 industry. This person has worked first-hand with one of America’s biggest financial gurus (a name you’d instantly recognize), as well as several employees from Goldman Sachs and other big investment banks.

“And this is what this person said to me: NO ONE in Wall Street has their money in stocks—many of them are invested instead in ‘770’ accounts!

“Now, consider what this means…

“Here are the same investment professionals who’ve been telling us for years to “buy stocks”… and meanwhile… they’re all putting their money somewhere else!


“Can you imagine the outrage this would create if most people found out about this?

“That’s why you’ll never hear your broker mention this investment to you, no matter how much money he (or she) has parked into it.”

We get a lot more in Dyson’s ad about the safety of these plans, and about how the big banks have tons of their own capital tied up in these plans (that’s true, by the way — banks have massive life insurance assets called “bank owned life insurance” or BOLI, they take it out on their top employees and it’s a large portion of their core capital), and Dyson’s reiteration that he has been putting increasing amounts of his own family’s money (20% of his net worth) into these accounts and getting a safe 5.5% yield … and it’s money that he can take out whenever he wants to by borrowing against it without penalties.

So what he’s talking about is not just life insurance, but probably a specific class of permanent life insurance that’s called “whole life.”

And it’s not really life insurance, not in the way those of us with term life insurance policies think of it (making sure your family’s not destitute if you die when your kids are young, or your mortgage has 20 years to go), it’s more of a wealth protection and tax-avoidance savings policy.

Whole life insurance is an agreement between you and an insurance company that they will pay out a certain amount of money when you die, and the agreement never expires as long as you keep paying the premium. That obviously means the premium is far larger than with a term life insurance policy, since a term policy expires at some point — term life insurance almost never pays out, so it’s cheap. You can pay $25 a month for $500,000 of 20-year term life insurance if you’re 35 years old, which is obviously cheap, but that’s because you’re young and healthy and the insurance expires when you’re 55, well before you reach the highest mortality risk years.

Whole life insurance does have that insurance portion, in that if you die in the early years of the policy there’s a death benefit that probably exceeds the money you’ve put in. But it’s not really for that — it’s set up to accumulate your death benefit over time. So if you want a $500,000 policy and the actuaries think you’ll die in 35 years, your premiums plus whatever returns the insurance company can earn on those premiums will have to add up to $500,000 in that length of time, plus whatever the insurance company wants to make as a profit. Life insurance companies do not generally do crazy investing or earn great returns in times of low interest rates, and they know pretty precisely when their insured people will die (for a large group, on average) so your premiums would likely be pretty stiff.

But that’s if you’re thinking about it as insurance — much of your premium goes into building a cash value for the insurance policy, and if you buy your policy through a mutual insurance company (like State Farm, or many others) that’s owned by the policyholders, and you get a “participating” or dividend-paying policy (meaning you get a dividend from the insurance company when they make money), then your cash balance can compound nicely and provide what are effectively decent investment returns that are indeed tax-advantaged. I don’t know whether the 5.5% gain that Dyson is expecting is typical or not.

Life insurance is often used by families who have some wealth to pass some of that wealth down to the next generation without taxes, and it doesn’t have accumulation limits that I’m aware of, like tax-advantaged retirement plans that restrict the amount you can put in every year — for most people contribution limits are a theoretical concept, but for the upper middle class and the wealthy the cap of 25-50 thousand a year across various retirement accounts is a bother.

So the key aspects of this, from what I can tell, are that you would want to buy whole life insurance, that you would want to have a participating or dividend-paying policy, and maybe even, if Dyson is following the same track as folks like the “Bank on Yourself” people, that you want to maximize the amount of savings you put into the plan (these are often called “paid up additions”) to increase your potential dividends from the mutual company and the growth of the account over time. The maximizing and “be your own bank” stuff is all about putting so much of your net worth into these policies that you do all of your big purchases (like buying cars, etc.) by borrowing from your policy. But of course, to do that you have to be the kind of person who can put a substantial amount of money aside for these large premiums as your “forced savings” plan.

And the reason it’s confusing, even if you don’t call it a “770 Plan”, is that these are complex contracts, they’re not standardized across different insurance companies, and from what I can tell you can only really buy them through an agent, whose commission structure may drive him in a different direction than you want to go. There are many, many variations and riders on these policies that I have only seen briefly mentioned, and I don’t know how most of them work — I suspect that they’re difficult to compare across providers, which is a hallmark of most commission-driven, hidden fee businesses.

Life insurance has a reputation for being riddled with fees, and for permanent life insurance and whole life insurance like this, the articles I’ve read suggest that most of the policies start to make sense after 10-15 years, but they suck up substantial costs and fees that mean you might lose out if you needed to try to pull your money out before that. This is a small segment of the insurance business that’s focused mostly on the wealthy, and the stuff that Dyson seems to be talking about is probably better handled with agents who are specialists in this … preferably those who don’t also happen to market a skeezy “secret plan.”

That is an extremely non-expert view. I don’t have a policy like this and I have not researched them fully, I’m sure there are people with whole life plans and probably agents who sell these plans out there in the great Gumshoe readership who could probably explain it better (feel free to use our friendly little comment box below) — all I can tell you is that Dyson seems to be teasing participating/dividend-paying whole life plans as his “770 plans” (and no, I don’t know what the 770 refers to), and they are real, and I don’t know whether they’re a good idea for you or not.

P.S. As of November 2013 this is now also being teased as “The ‘Underground Wealth’ Account: How to Fund Your Own Worry-Free, 100% Tax-Free Retirement” — these “accounts” were pitched in a different Palm Beach Letter teaser ad that was mostly about silver, I covered that one here on November 7.

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ShowHide Comments (474)
    1. Frank Ferreira
      Apr 25 2014, 02:53:16 pm

      Are 770 plans a scam?

      Thank you for your comments regarding the IRS 7702 tax regulation.
      It has caused me to think about the discussion and write down some remarks to consider.
      First what is the IRS code (like 7702(a) or 401(k))? It dictates how an entity can legally structure a tax return or a tax qualified savings account, etc. So it is the law.
      What is a Whole Life or Permanent life insurance? It is an insurance contract. An insurance contract is protected by the U.S. Constitution because all contracts have the same protection.
      Insurance has been in existence for hundreds of years and a great way to preserve wealth. Most people view insurance as a liability when in reality it is an asset. A properly structured insurance contract can be worth hundreds of thousands of dollars if not worth millions of dollars.
      Laws (IRS code) can change and they do every day, but a contract cannot change unless both parties agree to the changes, so the IRS code can change but the insurance contract must stay intact.
      So when an insurance contract is properly structured, it can be funded so that the funds are immediately liquid, grow risk free (from the stock market), grow tax free and when the individual retires, they can withdraw their retirement tax free.
      So where is the scam? Not all insurance contracts are the same. Not all greedy insurance agents are the same or as knowledgeable. Knowledgeable insurance agents who do right by their customers get paid handsomely and they should because when they can provide a solution that pays their client a 300% increase in spendable income during retirement (when they need it the most) and a steady income that they cannot outlive, then the measly 9% seams minuscule.
      You see cost is only an issue in the absence of value.
      Juxtapose a 401(k) plan to a properly structured insurance contract and eventually the 401(k) will run out of money because the stock market and taxes will take most of it. An insurance contract is not exposed to either.
      The government would love for all their Certified Public Accountants and Certified Financial Planners to direct the public away from 770 plans. The more people who are in government sponsored retirement accounts, the more taxes that they will be able to collect.
      But the wealthy use the 770 plan like a mechanic uses a socket wrench or screw driver. Banks have billions of dollars’ worth of 770 plans.
      Do you think that the wealthy use a 401(k) or even a Roth IRA? Do you think that the 1% use Certified Financial Planners? No!
      If you want to talk about scams?
      Let’s talk about the Federal Reserve, Social Security or the Treasury.
      What is the Federal debt? How much money is the Treasury printing every month? How much is the dollar really worth? Who is paying for our economic inflation? How is the government propping up the stock market? What will happen when the government cannot print money any longer?

      I haven’t even talked about the government planning to take over your 401(k) or IRA.
      Or our US dollar reserve currency status which is in serious jeopardy.
      How long will the US dollar have world reserve currency status?
      In conclusion, the masses (the 99 %) are asleep. They’re busy working harder every day just to keep up with inflation. They watch their TV programs and drink their beer. They believe what the media feeds them. They stopped thinking years ago. They believe that they are entitled and that the government will take care of them and that the government owes them. One day they will be forced to wake up and they will look around and say, “What happened? Where did our country go? Who’s taken it over?”

      • Harris S Levy MAAA MSPAA CLU ChFC EA Ret.
        Sep 24 2014, 10:36:17 am

        If what you lament and grouse about towards the close of your very excellent and understandable message come to pass then, ergo, the earlier points become moot. I am a bit more optomistic and feel that somehow cooler heads will prevail and that the dollar will not shrink into worthlessness and that the Government will continue to allowcmeans for those with forethought to provide themselves and their heis wiith a secure future. Amen.

        • Don
          Oct 2 2015, 11:37:10 am

          You are sooooo wrong…. China is the next (and largest) world currency…
          May God bless your and all of yours during the bad times coming, Don

        • Don
          Oct 2 2015, 11:43:20 am

          Please send me a free copy of the special report “The Secret Investment
          Thank you in advance .

          Did you know Americans can also invest in the Canadian social security program? Our Amerian Social Security program should be doing the same… The program never loses money and the system always pays on time! The American SS program is going bankrupt! what is up with that?

          • Tom
            Nov 12 2015, 03:13:24 pm

            How can an American “invest” in Canadian Social Security (or for that matter in US Social Security.) In the US, you work, your employer pays money into social security based on you salary and you do also. But what if you don’t work, what if you are retired, or what if you work somewhere not subject to social security? Can you send a check to the government to invest in social security? For that matter, if you work and your employer takes out $2,000 of your pay for your social security and pays an additional amount itself, can you say, no I want to invest more and send additional money to the government?

            But on to Canada. Aside from the question of the word “invest”, HOW can you invest in Canadian Social Security if you don’t work in Canada?

          • Clark
            Feb 16 2016, 05:42:59 am

            I have a few of these infinite banking policies. Although not very valuable but certainly the dividends will cover whatever expenses I will have when I retire. As to the Canadian Social Program, I don’t know anything about that but I sure wish I was able to open a Canadian stock brokers account because I would like to get my hands on some mining shares when the whole thing falls apart.

          • Patrick
            Feb 27 2016, 04:35:39 pm

            The Canadian government “social security” investment company told me that the US email campaign is not true. You have to have worked for a Canadian based firm and to have paid into the Canadian retirement program at some time in your life to qualify. US citizens are not eligible to apply without the above qualification.

      • Philip C. Seltzer
        May 29 2015, 12:49:24 pm

        “Thank you for your comments regarding the IRS 7702 tax regulation…what is the IRS
        code (like 7702(a) or 401(k))?”
        There is no such thing as the “IRS code” nor “IRS 7702 tax regulation” There is, however, the Internal Revenue Code and the income tax regulations thereunder.

          • Douglas Cohn
            May 11 2016, 05:46:14 pm

            You should subscribe to Palm Beach Letter then.

            I read about this and it is life insurance sold by a few very old companies that allow you to buy very small amounts if insurance. You borrow your own money and they supposedly charge no more than it earns which I find hard to believe but that is what they claim. They do supply the specific insurance company to invest in as well. I believe I bought a book from them with the subscription which I ended up cancelling as it just seemed like something for wealthier person than I.

      • thomas
        Sep 13 2015, 02:54:11 am

        You can’t simply withdraw your money as that would create a taxable event, you must borrow the money out, and this reduces the cash available to pay the mortality charges in the policy (The death benefit ), and also reduces the death benefit as well, in a participating policy, dividends may be reduced, and the interest on monies used to collateralize a loan may earn a greatly reduced interest rate, plus there’s the actual interest rate on the loan. when all this is added up you may be paying 5% or more to access YOUR OWN MONEY, and that 5% is ongoing, it won’t take very many years to exceed the nominal tax rate you would have paid to Uncle Sam unless your in the ultra rich brackets.

        • thornsbj
          Oct 20 2015, 01:35:37 pm

          The interest is ongoing only until you repay the loan. How is that worse than any other line of credit?

          I don’t know about you, but my signature loan rate at my credit union is 8.99%. 5% seems a bargain!

          • Jimmy O
            Nov 10 2015, 05:22:26 pm

            The difference in your example is your loan from the Credit Union (which are fine organizations) and your loan from the cash value of your life insurance policy (which would be fine if I had sold you that policy) is that the Credit Union amount can exceed YOUR account’s cash balance, while your policy loan cannot exceed YOUR balance.

      • Roy Fultun
        Oct 20 2015, 04:54:16 pm

        Does the insured ever get paid if the insurance company bankrupts?
        And if one or all of the Fed, Treasury and Social Security fails, what’s going to happen
        to the Insurance Company>

        • B.D.
          Oct 30 2015, 11:41:47 am

          Roy: In most states insurance is regulated, if not all, so it is most likely that in the event
          of an insurance company bankruptcy the policy would still be good, though it may
          be purchased and honored by another company or assigned by the state of
          origin to another company to perform it. Most states regularly audit companies and
          have requirements for reserves to avoid insolvency or catch and address it.

          As for the government failures, it’s anyone’s guess, but keep in mind they always have
          the ability to tax their way and cut their way out of a mess, so a company would likely
          fair no better except for one thing. They typically see such things coming and plan for it. Government collapse doesn’t excuse the policy, but whether it pays out is the big
          coin toss.

      • Jerri Alice Reneau Ratcliff
        Nov 7 2015, 02:57:09 am

        I am very frightened & I know we are in Revelation Times. I was adopted by Parents that were much older of whom already had Grandchildren. They taught me never to trust Banks or the Government because they went through the Great Depression. I am not happy with Wells Fargo. I want to invest & make money and I found out about the 770 account. Would you please guide me on what to do? Should I open an account with a Credit Union?

        • arshus
          Nov 9 2015, 04:00:13 pm

          People you went through the Great Depression know who to trust and who not to. At that time, banks were literally going out of business on a daily basis – 40%+ of all banks would shutdown. They were not able to give people their own money back – and forget about the stock market. In October of 1929, the stock market suffered severe losses. It plunged over 22% in just a few days. But this was only the beginning. Over the next several years, the Dow Jones lost nearly 90% of its value, and it took 22 years to recuperate its value. The only financial institution that remained virtually unscathed was Life Insurance Companies – but we forget about it so quickly! Owners of life insurance policies didn’t lose any money in the Great Depression, and they haven’t lost money since.
          I recently created a web page in order to educate people about this account. I am still working on it, but it will probably answer many of the questions you may have.

      • Toni
        Jan 28 2016, 05:14:08 pm

        I’m in absolute agreement with what Frank has stated. One other thing I’d like to point out and reiterate, however, is that there are many Insurance agents who ARE looking out for their clients. Just because you are a Lic. agent does not mean that you are “sleazy,” “skeezy,” or whatever name of your choosing. It is a REQUIREMENT of your state that you MUST be fully licensed, the agent MUST be Licensed, and must pay all the state fees, licensing fees, registrations, and anything else the local, state and federal government dreams up. As for the “BIG, BAD COMMISSIONS” that many people seem to note, I say “so what?” Do you work for free? When you go to work at your job, or as a self-employed person, do YOU expect to be paid? Yes, insurance agents do get paid on commissions. To my knowledge, there is no other way to “hire” an agent or have the agent represent your insurance products. How else would you like them to be paid? So, unless the company actually and truly “hires” them as an employee, yes they are 1099 self-employed agents. In addition, many independent agents won’t “work” for one company simply because they ARE looking out for their clients. If the agent only worked for one company, they can only present that one companies products which may not be in the best interest of the client. If they remain independent, they can pick and choose from many products – it really is that simple. There is nothing nefarious about that. The independent agent pays their own way, they pay their fees, state fees, licensing fees, state taxes… and, as mentioned, anything else the local, state, and federal government dreams up.

        In addition to all that, those “BIG, BAD COMMISSIONS” have absolutely nothing to do with the client’s policy. The commissions are NOT taken from the client as in a mutual fund. The commissions being paid is between the company and the agent, the client gets what they are paying for. Every dime is accounted for – for the client.

        I am a strong believer in the Infinite Banking Concept, and have even attended a few of Nelson Nash’s seminars where the founder of the IBC has spoken. I have read his books, and I became a Licensed Agent in Massachusetts for these very reasons that, yes, the banks don’t want you to know. I also strongly believe that our debt based economy can be totally flipped, and it should be, to a credit based economy. This is stuff “they” never taught us in school. The debt based economy has many people working their asses off while they sit there and reap the rewards. That’s why I became Licensed. More people need to become educated in this concept and begin to use it!
        Although I’m not currently (actively) licensed due to an injury, I do intend to re-apply for my License sometime in the spring. That is the only way I can help spread the word, but it is also true that we are restricted and, in some cases, prohibited from “advertising” certain things. This business is HIGHLY regulated, and we can lose our license if the Federal government deems something we said as “wrong” or “speculative.” Only licensed people can “sell” insurance products. Only licensed people can “help” others build wealth. So before you trash all insurance agents and loosely infer that we’ll do anything just to get the commissions, I do hope you stop to think about it before making an ass out of yourself – at least from a licensed agent’s point of view.

    2. Making Money
      Jun 24 2014, 04:12:01 pm

      It’s discouraging, and almost enough to put you off even trying – almost.

      It took me time to realize that and start ignoring those who would make me a millionaire
      – it doesn’t happen. It’s going to take you a little longer to start making money but you can setup free blogs
      on Word – Press.

    3. Polle
      Jun 29 2014, 11:50:46 pm

      When I lived in England, these were called “With profits policies”
      They were not scams. There was a specified end date and if you were still alive then, you got the full “with profits” payout. I paid in about 6350 pounds over 34 years at 15.5 pounds a month and received 27000 tax free on the specified end date, an average return of 7.2% tax free. . The best thing in England though was that the premiums were also tax deductible. If you died before the end date, your estate got a minimum of the insured sum of 6350 pounds plus accumulated profits, which were declared annually.

    4. gordy
      Jul 17 2014, 11:29:33 am

      those dividens are nothing but a return on the over charge that the company charges you on those types of policies. these investments are for the rich. the little guy can’t afford them.

    5. Dan Murphy, LUTCF, PFS
      Jul 21 2014, 11:40:25 pm

      If you listen closely to the video, the clues are all there as to what these contracts are. They are Whole Life policies sold by MUTUAL Life Insurance companies.
      Clues: Tax Deferred growth, tax free access to money, not advertised, companies not found on NYSE, unique dividends paid to contract holders not stockholders (that’s who Mutual Companies pay their dividends too), 5% safe return, generally guaranteed at 3%, “peace of mind”, worry free, designed for average investor, not a lot of money needed to start, companies around since 1857, etc. All these clues lead to Whole Life sold through Mutual Companies.
      Indexed UL is an excellent plan too if you want to take on more risk but do not pay dividends. Whole Life through Mutual Companies do. They are a worthy alternative and ultimately provide similar results but with lower guarantees on investment. Typically Indexed UL have a 0% guarantee where as Whole Life typically offer 3%. Both of these contracts allow lump sum investments but MEC limitations will limit the amount that can be invested based on age and the amount of Life Insurance purchased. Only downside, poor health can impact the amount you need to invest and poor health can also lead to outright rejection. For those candidates with poor health, an Indexed Annuity may be a suitable alternative.
      I am licensed in all 50 states and DC if you need more info or wish to invest in “770s”, send an email to goshengroup1@gmail.com. I will respond promptly.
      Dan Murphy, LUTCF, PFS

      • Robert
        Sep 25 2015, 10:23:18 am

        However what is confusing is the amount of money one can contribute. For a supposed 702(j) one can contribute as little as $200/month which would suffice if the beneficiary were a child . For a 770 account, I called Paradigm Life in Florida which sells these 770 accounts, $ 200/month might be enough for a child, however for an adult like my wife who is 44 years of age the cost for a 770 account is $900/month. The older you are the greater the cost as one would expect. The younger, vice-versa. The two definitely appear to be one and the same. can these people ever be ethical ? when it comes down to $$, forget it; anything of moral or ethical value immediately disappears.

      • Toni Nicholas
        Jan 28 2016, 05:26:19 pm

        Yes, I agree. When I listened long enough, I too, realized they were talking about, what I know as, the Infinite Banking Concept. It’s also nice to know that you are licensed in all 50 states. I’d love to get to that point. I had a few setbacks with a few injuries, but… I’ll be licensed and active again in MA and NY hopefully soon! I also had no idea we could input our email address. Mine is pretty easy. Toni@ToniNicholas.com! So, if, by chance you read this reply, could you send me a ballpark estimate of the cost and licensing fees for all 50 states – in total? I’d appreciate it!

    6. Harris S Levy
      Aug 12 2014, 12:36:15 pm

      I have been following this thread ever since the posting of the original article. I added a couple of littler comments but never dreamt that this matter would take on a life of its own. I am both amazed and amused by the plethora of comments ranging from some pretty well thought out, well organized and close to the mark comments to blindly phrased gems of total ignorance (sic!). First off, there are many, many ways to save money, to protect the family, to plan for wealth transfer upon death, to lessen taxation duiring life, and on and on. THERE IS NO ONE SIZE FITS ALL AND EVERYONE SHOULD KNOW THIS in each and every act and action or choice. There are Roth IRAs as well as standard IRAs and a few categories in between, there are 401(k) plans which provide one result, matching plans which are different in their valhue and then Roth 401(k)s. There are plans for the self employed or for employers who don’t mind providing for their employees including defined benefit pension plans which rely upon whole life insurance or annuities for funding (IRS Sec, 412) There is term life which provides low cost protection for the young but which is prohibitively priced (by design) for the older until one reaches the age limit beyond which nothing is available. Whole life policies can lose some of their tax advantages if the premiums exceed the level required to become an MEC or Modifiedf Endowment Contract (IRS Sec 7702(c) I could go on for hours and not cover all bases – I would not surrender a whole life policy to the issuing company, I would sell it if possible to a bank which will gladly buy policies of certain age levels, amounts and not on an insured on the brink of death (2 years). I have been talking pensions and investing for over 60 years, I am an actuary by profession, have a lot of initials after my name for actuarial, investing, insurance and some other achievements and lament when I see the low level of information or willingness to acquire knowledge or to be corrected that abounds – I know many things and have accomplished much in my life and can easily acknowledge that everything I have ever learned is through trial and ERROR (read that “mistakes”) I will be glad to discuss individual situations at harlind@optonline.net If you have read this far, surprise, I am not touting a newsletter or service for money.

      • Charlie Hundley
        Sep 6 2015, 02:05:15 am

        This person is telling it the way it is. I picked up on the Beach Boys advertisement , that this plan can only be funded by an insurance company. I have spent my life in the insurance business and have seen agents do some strange things. There is most definitely a place for permanent life insurance such as whole life non-par and par, as there is a place for term insurance. However, in the last 25 years there has been way to much belief in term only(and invest the difference of premium) which 99% of people never do. And if they did, it would be a small investment, but , however, an investment. Death is a permanent problem and should require a permanent solution for finances. Some of the saddest experiencies I have encountered is when a policyholder drops a permanent life policy because he has been sold by another agent to by term. Only to out live the term (which, by the way, comes from the word Temporary.) And his term policy is no longer renewable and he is in such bad health that a company will rate his premiums to the point he cannot afford or he is of the age where his premiums are unaffordable. I have been with many of my clients where I recomended a combination of permanent and term coverage. Also, if you take the time to check out the stability of life insurance over the long haul, you will find that during the great depression less than 3% of policyholders lost their coverage other than not paying their premiums.

        • David Allenson
          Sep 6 2015, 12:56:59 pm

          The solution is to BUY TERM and Invest the difference that you will save from
          buying whole life into an IRA. Thus, you have created the BEST OF BOTH
          words. As you age, the reality is that “if” you have done your investmets right,
          you do not need a lot of life insurance! The kids are out of school, the house
          is paid off, and so forth! The challenge is that Life Insurance is GREAT, but someone
          has to die to get it. As you age, you better darn sure have some money to live on.
          The irony is that I sold BOTH term and whole life for years! The #1 reason an
          insurance salesman sales whole life is he/she makes more commissions off the
          client! Term pays a lot less! But it takes integrity to share with a client the
          difference and why TERM is ALWAYS the best route and establishing an IRA to
          retire on, with the savings is the BEST way!

          • Greg Tabor
            Sep 25 2015, 01:29:27 pm

            For a guy who’s supposedly such an expert, you sound like an AL Williams salesman from the late 70’s or early 80’s… I’m a former insurance salesman who was in the business during those years and has owned Term and Universal Life policies and who is presently in Term Insurance. I’m in Term because when it runs out, I’ll have saved up as much as the policy was designed to protect me for until I’ve met my savings goals and am closer to my retirement age. The UL policy my wife and I had jointly was a great vehicle for accumulating wealth and getting our older two kids through college. It offered a wide range of Institutional Mutual Funds and performed well for us until we needed the money. However, the actuarial tables were outdated and the underlying cost of insurance and fee structures were no longer competitive with available insurance contracts when we canceled our policies and went with 20 year level term. Contributing to an IRA or 401K will improve the amount you can contribute, but will be subject to taxation on the withdrawal of your accumulated wealth, and is subject to a formula which will require higher and higher amounts to be withdrawn. If you had advised contributing to a ROTH IRA, that will not be subject to taxation on withdrawal and does not involve a forced withdrawal schedule as you age, I’d be on board with your argument. However, if you’re able to accumulate significant wealth, say $1MM or more in your IRA(s) and 401K(s), the tax consequences can be significant. For those who can contribute more than a ROTH IRA allows on a post tax basis and are in their 40’s, I think such a policy could make great sense, especially if it’s part of a broader diversified investment strategy.

            If you receive a proposal on an Indexed Universal Life policy, it will generally represent only one set of assumptions on expected return. There are guide posts provided on what the account looks like at certain milestones using other average return assumptions, but the options are limited. The policy fees are typically front end loaded over the first 10 years of the policy and are substantial. If you’re in your early 50’s as I am, the program only works if you can sustain the nearly 8% compound average growth rate (CAGR) they project. If the markets go through a period of low performance as we’re seeing this year, the potential for zero returns over multiple years, especially early in the policy’s life, will dramatically shorten the longevity of the projected payouts. At 53, and with the stock markets near record highs and at risk of a major correction over the next few years, I’m not banking on the Insurance Companies projections. I ran my own spreadsheet on the assumptions and have determined the tolerance for a lower level of performance is too thin to change direction at this point in my life. On paper, the projection provided would actually last longer than my projections for 401K/IRA withdrawals net of taxes, assuming the same level of investments and withdrawals net of taxes. By the time I could discover the strategy was a mistake, I’ll be too close to retirement to recover. The key is to understand the tax implications of your retirement plan, and structure your investments to minimize taxes. If you expect to accumulate anything close to $1MM or more, I’d highly recommend finding competent retirement and tax professionals to help you ensure your portfolio and plans will give you the best outcome in retirement. There is no clear answer as each individual or couple will have their own unique circumstances to account for in your planning.

    7. 19
      Ronald Ferrill
      Aug 21 2014, 11:08:32 am

      At 19, I bought my first whole life insurance policy. It included riders at my desire to add to it in the future. Of course the rate was good, and it was protection that I understood and wanted for my future family and cash value build-up that many scoff at but don’t fully understand. It took very little discipline to keep the moderate monthly payments. It was also through a large American mutual insurance company (owners are the policy holders). Bottom Line: the $25K policy had premiums through 2010 of less than $24K. That sounds large? Well, I opted to have dividends invested yearly into paid up additional insurance. The paid up insurance is now a $101K policy with no premiums for the rest of my life, and cash value of approximately $30K. Plus and more importantly, the mutual company went public and I received stock that today is worth $28K. Maybe not the very best return, but for having the insurance in place over all of that time, and now a policy that will return over 4X the cash tax free to my estate, as well as an investment in a company that is a leader worldwide, is not too bad.
      Recommendation: Do it while you’re young and hold on.

      • Billy Ma
        Aug 29 2014, 08:19:03 am

        I did the name thing at age 22. Over the years the returns range from 4% to 17%. I have $500k of life insurance that in 3 years will be paid for for the rest of my life and cash value is $60k now. I used it twice to pay cash for a vehicle. nothing new here but the high commissions thee guys charge. Get one of these form a fraternal organization like AAL the way I did. Would I have been better off buying term and investing. Maybe. but the word is diversification. I also invested 10% of my income every year. Stocks and real estate as well as whole life.

      • Dan Murphy
        Jun 16 2015, 09:08:37 pm

        The correct answer is, how much do you want to invest from disposable funds consistently for 7 straight years? That amount determines the amount of insurance you need to purchase along with the investment in order to make this a viable 770 Plan. The purpose of the 770 Plan is really for future tax breaks and a solid yield. It is not a get rich quick style investment. The 770 plan should be viewed as an alternative method of retirement planning. Without knowing your personal situation there is no way for me to determine what you would need to invest. Shoot me an email if you want to drill down further to get to that amount. Have a great day!

        • Marlon Jackson
          Oct 2 2015, 08:13:19 am

          Hey Dan I’m Marlon I’m new at learning about these accounts. I would love to learn more. I have some questions shoot me an email and let’s talk. Thanks Marlon

    8. Ted Moss
      Oct 27 2014, 12:55:44 pm

      Unbelievable, the amount of misinformation here, particularly from some of those who profess to be experts. Very hard , I would think, for someone unfamiliar with the subject to draw any useful conclusion from this collection of uninformed part truths, cliches and downright untruths. In addition there is no” one size fits all” as is true for most financial advice, which needs to be tailored to individual circumstances. Best advice is to consult in person with an actual practitioner representative who can hopefully allay some of the fog contained in this blog and present clarity on the issues.

    9. tes1900
      Jan 26 2015, 04:12:52 pm

      My mother had one of those “Long term care” policies…What a joke!
      The policy was through Met-Life. She had been paying $285.00 per month for 26 years that’s $88920.00; I paid over 7K for her care and Met-life paid back only $236.00. They said that the rest went towards processing – 6800 bucks for processing?
      Be careful if you have Met-Life they are crooks. 3 times they (lost) my papers/recites and then they sent me a bill for over 700 bucks…for her rear payments…she was dead!

      • lee
        Jun 16 2015, 12:58:03 am

        You need to contact the insurance commission and see what is going on. Also contact consumer affairs and check for other people who have been taken and maybe file a class action suit. This is just wrong and why was her payments so high? There is no statues of limitations on fraud. Hope to hear you got justice.

      • The Joke-sters
        Aug 30 2015, 02:59:08 pm

        Trap, Same exact thing happened w/my Mom recently regarding “long-term care policy”. She paid that Policy every month for over 20years. When it came time to use it, “Sorry Old Lady, call Medicare”! They Are WorthLess ScumBaggers, Preying on Old Widow Women. Man was I Pissed to say the least. She ended up with a debilitating ailment. I had her moved in with me and took care of her situation, all the while trying to get money outta these Jokesters. What did they pay out? Zero! Nada. What did she pay them? $325/mth for over 20yrs (out of her pension funds) It’s
        SHAMEFUL. she could have gone on several trips and been a wealthy woman by purchasing a whole life policy instead.

      • Carol
        Dec 20 2015, 07:09:40 pm

        My mother also bought a whole/universal life policy from MetLife. She had paid in over $80,000 on a $100,000 policy. I went to an attorney. He found a flaw in their contract, filed a class-action lawsuit. The class action wasn’t accepted by the courts but my mother got back every cent she had put in the policy.

    10. Mark Crable
      Feb 21 2015, 07:48:55 am

      Some of the comments in this forum seem to be “plants” to support this 770 plan touted in the video I just viewed. There are far too many claims of benefit with no downside in what is presented. There is no free lunch, and the idea that life insurance as a concept extended back in time to Babylonia is ludicrous.

      Buyer beware! Me smells a rat!

      • marty
        Feb 22 2015, 12:30:04 pm

        Mr. Crable:
        Respectfully, would you please explain “claims of benefit with no downside” and point out
        the referenced blogs?

    11. Tom F.
      Feb 23 2015, 09:57:05 pm

      Just to be clear, “770” refers to IRS code number 7703 (possibly 7702) which states that the gains in the cash value of a whole life insurance policy are not taxable. So the returns on a whole life policy are similar to in state municipal bonds. One major difference, however, is that your municipal bond portfolio is not protected from creditors, whereas funds in your cash value are protected. While I don’t (yet) have such a policy, I am attracted to it for several reasons. First and foremost, it’s a powerful estate planning tool. Consider what happens if you have a $200,000 pension fund. If you die, that money is passed to your heirs and is subject to taxation. On the other hand, if you paid the taxes on that pension money, say, $50,000 (ouch! but taxes must be paid), the proceeds, $150,000, can be applied towards a dividend paying whole life policy. Depending on your age and health such a premium can buy upwards of $250,000 in life insurance. The cash value will grow, tax free (not deferred) and at your death, the $250,000 benefit goes to your heirs tax free. The benefit increases with age and could be considerably higher. This plan is especially appealing to high net worth individuals, like myself, who are sitting on a lot of cash earning a taxable 1% interest; money which is, by the way, not protected from creditors. So, like me, keep an open mind on this strategy.

    12. Edgar Arceo
      Feb 23 2015, 10:39:14 pm

      Thank you for your comment, Tom. I posted this on another feed, and I want to post it again: If you are thinking about doing this, make sure you are getting the best policy for you. It is a big commitment – be wise! Here are some pointers: Make sure you are going through a Mutual Insurance company that is rated – AT LEAST “A or A+”. Check their dividend rate against their loan rate. If they are charging you a loan rate ( in 2015) of 6-7% or more, that is probably too high.
      And finally (VERY IMPORTANT!): You should be able to break even in no more than 8 years. I have seen MANY policies where they break even in 4 years – so it all depends on your age/health and contribution amount. But if it is taking more than 9 years, you are probably not getting the right policy. After breaking even, you should be getting a rate of return of 4-6% tax-free (for current dividend scale – 2015).
      If you have questions, or if you would like me to check an illustration/contract for you, send me an email or contact me via my website. It will just take me a few minutes to determine if you are getting a good policy that will maximize your cash value, or if you are getting a policy that will maximize an agent’s cash value! Free of charge. Why? This is my ministry, and I want everyone to get the best policy they can possibly have. I am tired of bad insurance agents getting rich at other people’s expense. edgar@arceofinancial.com

    13. John
      Mar 18 2015, 01:10:08 pm

      “Secret 770 Account” (or “The President’s Account”) Explained

      An IRS tax-code based 7702 Private Retirement Plan under Internal Revenue Code 7702 is an alternative choice to traditional qualified plans such as….. a 401(k), 403(b), SEP IRA, ROTH IRA, Keogh or other tax qualified plan. All traditional IRS qualified plans have restrictions and limits on how much an individual can contribute to their plan annually, and of the few loan options available there are strict rules and hefty penalties. Traditional qualified plans also have IRS penalties if you need income prior to age 59 1/2, or want to leave your money in your account past age 70 1/2. And finally, when you pass away any funds remaining in your traditional qualified plan may be fully taxed prior to transferring to your heirs.
      Remember…..Internal Revenue Code 7702 is an alternative choice to those traditional qualified plans.

    14. Robert
      Mar 30 2015, 12:09:53 pm

      Has anyone done a cost benefit analysis on the merits of buying term life for your very basic needs and taking the rest of your money up to the most costly WL/UL policy and just buying stock in the best insurance companies? It seems that since the insurance companies are the one’s most profiting from all of this that this would be a viable option. Thanks.

      • Tina
        Jul 19 2015, 04:41:13 am

        I feel you have posted an excellent question (Robert) and would like to know if you ever received an answer regarding “buying stock in the best insurance companies.” As we all know, the stock market is not the “best” place to put your money .. however (due to the Obama”CARE” .. JOKE) .. insurance companies may just be an “exception” to the rule.

        I am very interested in the 770 accounts myself but am becoming somewhat disheartened due to what I have learned from this blog. I will do more reseearch .. and read more. Thank you to all who have posted a comment .. I am learning a lot! 😉

      • Toni Nicholas
        Jan 28 2016, 05:50:37 pm

        But, that’s the difference! The WL policies are with “mutually owned” companies only. Not publicly owned. That is the difference! Those who do not understand this concept sometimes get easily confused with other “experts” touting this or that or muddying up the facts. The only way this “works” is when you own a policy in a mutually owned company which then pays you not only interest, but the dividends. You can then either receive the dividend checks, or choose to reinvest them. That’s the “whole” point! It MUST be with a mutually owned company, and only licensed agents/brokers who are specializing in this concept can address each person individually depending on health, age, and whether he or she jumps out of airplanes just for fun in order to provide the client with the best options.

    15. William Leonardi
      Apr 3 2015, 11:35:37 pm

      As a Financial Adviser, primarily in the Life Insurance industry, you have to look beyond the death benefit for these 770s accounts. No life insurance policy should charge you for taking a loan out against your policy, if they do, you should question the nature of your policy. In many cases however, the first 17 – 22 years is crucial for proper accumulation. Just like your 401k or IRA, borrowing against it decreases the actual effectiveness these retirement accounts actually offer. So when you receive your illustrations for the anticipated performance of your policy it is basically stating that if you do not touch the money here is how it will grow. However, one thing you have to keep in mind, and this is very important, with an iUL or Indexed Universal Life policy, you must make the payments, as this policy is only guaranteed in many cases for only 15 years if you make just the minimum payments on it. In most cases Agents do not disclose this information and rely on the documentation written within the policy after delivery to educate the individual who made this purchase. Now I am not bad mouthing Agents, the fact of the matter is most dont realize that is its biggest downside, so if your agent doesnt completely understand it, or does not know how to articulate it, then you should at least ask questions that will force him/her to research that information on your behalf. It makes them a better agent and it makes you an informed consumer. NOW, for something that you must also understand with whole life and indexed whole life, is that just like an IRA or 401k there is a cap on the amount you can fund the policy.

      For example: IF you buy an iUL policy and your Maximum Annual Premium in $30,000, you can invest that much money into your life insurance each and every year to keep it as a tax free retirement vehicle. If you pay more you are penalized with taxes, as it will now convert your life insurance policy into a Modified Endowment, or MEC, which now labels your life insurance policy as an investment and is taxable upon withdrawal.

      Now a MEC is not a bad thing, however you must understand how to use the MEC to your advantage, in many cases you are putting money in with after tax dollars, but paying taxes on the growth of the money. There are very specific strategies for using your insurance policy this way, so it isn’t a bad thing, it is only bad when you do no know what you are doing, or you do not understand what is being explained to you. In the event you want to over-fund your policy contact your agent and speak to them about the pros and cons of doing such a thing, so they can help you understand what will happen and what you can expect. In many cases people believe buying Life Insurance is a very transaction type of business, but in reality they don’t know the power behind such policies. My next topic will be on Term Life and the pros and cons of it. If you have any questions please let me know ill be happy to answer. Just to be clear I am licensed in New York and California and each state may have different guidelines on how these policies are written. So if you are out side of these two states, then you should verify the information I provide you with your local agent.

      • Toni Nicholas
        Jan 28 2016, 06:02:37 pm

        IBC practitioners are versed in avoiding MEC, and yes, you should advise your client accordingly. There are also other ways to continue to grow your wealth with additional monies that your client wishes to put in such a policy and avoiding MEC altogether. Using the IBC, a practitioner and client can open up other policies with family members that are still controlled by the purchaser. For example, and this is also in Nelson Nash’s book, he opened up many policies for his grandkids – but – he controlled them. So, if he wanted to purchase any assets, and did not wish to use traditional bank loans, he used the policies he controlled. Of course, he paid them all back if and when he used them, but he continued building his wealth in this way. Yes, you would have to get the approval from the parents, but seriously – what parent is going to say “no” to having their wealthy dad build a policy for their kid and eventually hand them a fully paid policy which they can then use to build even more wealth? I’d say no-one. You?

    16. William Leonardi
      Apr 4 2015, 12:13:38 am

      Understanding Term Life, well there are such big debates as Suze Orman and Dave Ramsey have always advocated for Term Life over Whole Life or Indexed Universal Life. The main reason behind their advocacy can be challenged. I have read in some circles that they are paid by companies such as Prime america to advocate for term life. I am not saying that is true, but with everything out there, you would think that these savvy investor type people who give professional advise would understand the nature of the permanent insurance industry.

      Fact: Only 2% of term life policies ever pay out the death benefit.
      Explanation: People outlive these policies, or the policies are rated every 5 years after the age of 65 to price the policies so far out of reach it forces the policy owner to lapse the policy.

      Why would you invest your money in something that you only have a 2% chance of ever using?

      Buying term insurance with a purpose. Buying Term insurance can be a great strategy to help payoff a mortgage or a car, or debts in the event a loved one passes away during that time. It is used for a very specific purpose. 30 year mortgage = 30 year term policy. 5 year car note = 5 year term policy. I think you understand where I am going with this. Term insurance is not there to take care of you or a loved one while you are still kicking and screaming, it provides a very targeted solution in the event your time expires.

      IN addition, term insurance is basically a gamble that says in such a such time I am going to die. Now, if we all had a crystal ball and can calculate the time of our own demise I am sure we would make certain arrangements to take care of our loved ones while we are gone, essentially that is what term insurance is asking you to do, gamble on your death. I guess the best way to hedge that bet is to find a term policy that carriees a return of premium rider in the event you do not die when the policy expires. That is the best you can ask for when buying term insurance.

      In most cases Term Insurance is very inexpensive prior to age 55. If you try and purchase this insurance after age 55 you can kiss your level premium payments goodbye at age 65. (Are there term policies that offer level premiums? Yes of course, make sure you are buying the right policy for you or you may lose coverage because you cannot afford it.)

      Conversely, Whole Life and IUL is very expensive when purchased around the age of 50 and above. So make sure if you are planning this as a retirement strategy you are on the younger side of 50, it will be less of a blow to your pocket.

      The so called experts claim that whole life or IUL is a waste of money as you are dumping large amounts of cash for a policy that pays out when you die. Well, that is being short sited to say the least. Permanent insurance is used as a tax free retirement vehicle, which can pay out tremendously during your retirement years. For example, I have a client that purchased a 4 million indexed universal life policy. Her monthly premium is crazy high of 3900 per month. If she continues to accumulate that kind of money into her account for the next 22 years her cash value on her policy will be close to 7 million dollars. That is almost double the face value of her policy, and she only contributed 1.02 million into that policy. So the question is, how would you like to damn near triple your investment in 22 years. So she can take lifetime withdrawals from this policy to any amount she is comfortable with starting at the age of 60. Looking further beyond that, she can earn more than 1.02 million in withdrawals, making her policy free. So, looking at it from a different perspective you actually wrote yourself a life insurance with a 4 million dollar face value, that is now worth 7 million, and it was actually free. Talk about your tax free retirement. For those who do not know what the rule of 72 is, it is known as doubling your money every 6 years or 72 months using insurance products to help with retirement. In some cases it takes longer to maximize the growth but in essence you want your money to double every 6 years and that is your path to financial freedom.

      I hope some of my vision was insightful.

    17. anon
      May 4 2015, 10:53:34 am

      Permanent policies work like this.
      the cost for 1000 of term insurance at age 21 costs $0.09
      the cost for 1000 of term insurance at age 85 costs $950.00
      In a permanent policy At age 21 they say pay us 15.00 per 1000
      The first year they take all the money for commissions.
      If you die in the first year your heirs get 1000. A nice return on your 15 dollars.
      The second year you pay 15Dollars again. This time they take out the $0.10 for the insurance. they take out 1$ for a contract fee another $2 for other fees.
      So you have $11.90 in cash value. In a “whole life” policy they give you some money back in the form of a dividend if they overcharged you. So maybe you have $12.49 thats the 5% they are talking about in the article. Its not 5% on the 30$ you paid. The next year you pay $15 again. So you have $27.49, But its a little different. They are no longer insuring a full $1000, because if you die with cash value you don;t get to keep it, so they are only insuring $972.51. they take out the contract and other fees, and charge you $0.10 again. Even though you are older, and insurance should cost more, you are actually insuring less money. They then pay the dividend, or not, and your value inside keeps growing. The way these pays get “paid up” Is that when you are 85 instead of paying 950, you are paying 50 because the cash value is close enough to 1000 that the insurnace company will pay almost nothing if you pass. (you are paying yourself the insurance amount through cash value.) and the dividend can potentially pay for the $50 the life insurance now costs. The other permanent products typically have lower internal costs, because their return isn’t based on overcharging you. Instead, they invest the money in a fixed account (AKA we promise to pay 3% every year – which they accomplish by buying government bonds), an IUL which gives you the S&P 500 return with a cap (aka they say you can;t lose money which they guarantee with options, but can;t make more than 8-12% which they lock in with more options the cost of the options is paid for by the over performance), or a VUL policy where they basically just invest the cash value in mutual funds.

      Whats often not discussed is how the account performs when you pull money out. Every product works differently in this regard. Lets say you are 85, have $950 in cash value on 1000 worth of insurance. You take out $200.00. 2 things happen – 1. if you die without paying it back, your heirs only get $800. 2. The amount you pay for insurance increases. Because now instead of insuring 50.00 you are technically insuring $250.00, so what would have cost you 50.00 costs you $225.00. Some Universal life policies allow you to lower the death benefit. So you have 750 of cash value but only 800 in life insurance, so the charges remain the same.

      So why do it?
      1. If you die early on you get an amazing return, usually several 1000 times what you put in.
      2. If you want permanent insurance for your heirs you can put it outside of your estate in an ILIT. (but then you can;t take cash out. easily) and it won’t be counted as an asset in your estate. (say you are worth 14 million – the governments going to take a huge chunk. if you buy insurance outside your estate you can move the overage out and avoid estate taxes.)
      3. If the cost of insruance is lower than your tax rate it can be a good savings vehicle. Because of the tax benefits. but really consider a UL instead of a whole life plan.

      Hopefully that all made sense.

      • Steve
        Oct 13 2015, 04:02:37 pm

        You should have mentioned that a UL policy is a term policy. In most cases during a low interest environment, the company will take money from your cash value to make up for the shortage of your premium and if you do not have enough cash value, you would have to increase your premiums if you want to keep your policy!

    18. Rick M
      May 11 2015, 05:52:40 pm

      My dad was 96 when I bought one of these contracts for him to own. In our case, grandpa is insuring the youngest grandchild who was 22 at the time, so the actual premium for insurance was very low. It is a paid-up policy, where all the premium was paid up-front, and the policy break even was less than two years (we passed that point 7 months ago). It guarantees a return of 2.6+% plus an added dividend of about 2%, a rate not guaranteed, but varies with performance. So far, the insurance company has met the mark for the first two + years. Since dad is living on his Social Security check in a nice one bedroom condo (he still drives his car), he pays no tax on the dividend. This is an AAA company, who also has given us the right to surrender at any time without penalty which was important when I pay out his estate. Yes, there were risks because of dad’s age, but we are past that now given the measly return in treasuries and bank CDs or savings accounts. Dad calls every August and says, “You’re not going to want to hear this, but I got my driver’s license extended on more time.” Go dad.

    19. Ronald E. Baker
      Jun 15 2015, 11:20:05 pm

      Tom Dyson via Doug Casey’s organization most recently describes this “secret” as: “The Babylonian Money Code” also hinting at “Title 26 of the US IRS code” being used to exempt the owner from taxes. It is now being presented as some “discovered” secret wealth builder of the Rockefellers, Roosevelts and Clintons fortunes. As I know it, it is Whole Life Mutual Insurance, purchased at as young an age as possible, (even 2 years); but normally 18 to 25, held for life with all annual dividends reinvested in purchasing paid up additions. A very solid Mutual Company, like Mass Mutual is an excellent choice. I have done this since I was in the 18 to 28 age bracket and now at age 79 it has really built up, while still growing for my estate. It is annoying how “Totally Incorrect” Doug Casey and Skeezy purveyors of such hocus pocus double-talk keep on trying to sell their super-hyped “services” with slick pitches of this type. They may call it “The Babylonian Money Code” this month, June 2015; perhaps they’ll rename it the “Casey Money Code” in July?? Same sour well of “secret knowledge” made to look like the source of eternal living water and life-long wealth, all for $49/year on special offer!
      Call it what they will, it isn’t worth $0.10 in my view.

        • Dan Murphy
          Jun 16 2015, 09:17:53 pm

          There really is no mystery. These plans have been around for 100 years. With the roaring 80s and 90s emphasis on stock and real estate investing, these plans lost some luster. the returns were solid but not on the same level as stock and real estate. But after the bubbles burst, these plans have made their way back into vogue. They produce a solid yield with guarantees and have enormous tax advantages because they are in fact, Life Insurance. If not crafted properly by someone who truly knows how these plans work, they can have less of an impact. One thing is for certain, they are not fraudulent but a legitimate alternative for retirement planning.

          • arshus
            Nov 30 2015, 11:33:15 am

            I am sorry you had to pay for free information.
            I recently created a webpage where I explain how exactly this account works. I also examined (“Scam or Reality” section) Palm Beach’s new teaser of the 702j account.
            Everybody is welcoming to check it out:
            Let me know if you have any questions.

          • mkeeler
            Dec 22 2015, 09:38:08 pm

            go back to their page and find out how to cancel. They claim to refund you for the newsletter at any time during the first year.

            • Toni Nicholas
              Jan 28 2016, 06:23:40 pm

              Just making a point here – the whole life insurance policy and method is legitimate only from a mutually owned company. Even many agents don’t realize that fact, unfortunately. The marketing methods I’m reading about and watched, however, is what’s questionable. Don’t forget, the government HIGHLY regulates what Licensed people can say, advertise, and/or convey how this legitimate method works. So, yes, you sometimes see some extremely creative ways to get people interested. I’m not saying I agree with their marketing methods, but if it helps spread the word, hey, more power to them!

    20. Dan Murphy, LUTCF, PFS
      Jun 16 2015, 09:00:27 pm

      770 Plans are not for everyone. In fact, if you are 70 and above or in poor health, other investments like annuities, CDs or index Funds are probably a better option. Be mindful, 770 Plans are not a replacement for IRA, 401K or 403B but rather a means that enables you to fund well above the IRS set limits for those tax qualified plans. If you’ve maxed out your retirement plans or want to diversify your retirement plan, then 770 Plans are a good fit. 770 Plans are Life insurance policies plain and simple. And Life Insurance requires underwriting. Poor health issues will make these investments much less attractive. All that said, 770 Plans are an excellent investment because the return on investment is guaranteed and the cash returns can be accessed legally tax free down the road. If set up properly, a 770 plan offered by Mutual Life companies using traditional Whole Life plans that pay dividends (PUAs) back to policy holders are the best way to go. Both the dividend pool of money and traditional cash value pool of money created within these plans can be accessed tax free. But if over-funding the policy, paying into the plan a greater amount than the scheduled premium, is not an option, than the concept loses impact and becomes far less suitable to the investor. Despite what the doubters say, the plans work beautifully when crafted properly. Beware of scams and plans that are not offered through Mutual Life companies like Mass Mutual, Northwestern or NY Life. Beware of agents who just want to sell you Life Insurance. The Life Insurance portion of the contract is critical to determine the investment threshold. Without it, there are no tax breaks under the IRS codes. You cannot have tax breaks without the Life piece. That being said, the 770 investment over-funding is what makes these plans work. Without that, you might as well look into Term Life and invest the difference elsewhere.
      Again, if interested , shoot me an email at goshengroup1@gmail.com. With 32 plus years of experience in this field, I can assure you i will not steer you wrong.

    21. Eric O'Connor
      Jun 29 2015, 05:27:33 pm

      I’m not a big fan of creating trendy names for things. We’re talking about Dividend Paying Whole Life Insurance. Creating trendy names creates confusion and quite possibly suspicion that ultimately devalues the product. It could also be misconstrued as a sign of desperation. The reality is that there is a war against Dividend Paying Whole Life Insurance. It’s really good stuff that not only puts you in control of your money but also creates an atmosphere for real wealth generation. This conservative strategy is unmatched by any other conservative strategy, and it also matches and/or outperforms some of the more aggressive strategies over time.
      I am an Authorized Practitioner of the Nelson Nash Institute. I had to complete a very thorough training program and have entered into a trust agreement with the Institute to properly educate people on how to utilize these policies. Also in the trust agreement, I agree to properly structure a policy to it’s maximum efficiency. Being an Authorized Practitioner of the Institute is a great way for me to say, Yes, I know how this stuff works and how can I help you understand it. If you want to learn more about Dividend Paying Whole Life Insurance, please visit our website http://www.infinitebanking.org.

    22. PETRA
      Aug 10 2015, 11:13:47 pm

      I can’t make heads or tails of this discussion. I paid for years on a whole life policy for my daughter. It was not expensive since she was in her teens and in perfect health when I bought it. It was from one of the top 5 mutual companies. Rather than receive the dividend or have it go toward purchasing additional insurance, the dividend was applied toward the premium each year. (The dividend almost always covered one of the quarterly payments with a few dollars left over.)
      My daughter became legal owner of the policy when she reached 21. None of the “projections” for earnings were ever reached and what was supposed to be a “disappearing” premium never disappeared after over 25 years! I did borrow on it once but paid back the loan with interest. I wanted her and her husband to take over the payments but they declined, so I suggested that she cash in the policy since it was intended as an investment for her and I did not want to see the money go down the drain. She was told she would owe tax on a small portion of the cash value. Apparently the policy’s cash value was only a little more than the premiums I paid.
      In my case, it appears that my investment failed miserably. I have no faith in these whole life policies, other than to insure that a child will have coverage and CAN later, at prescribed intervals and amounts, increase their coverage despite health or occupational issues.

      • Nirmala Devaprasad
        Sep 6 2015, 06:06:05 pm

        Hello Petra,
        Wish you had kept it or let the premium pay for itself..until she was much older.. or if you had paid the premium in early years you would have accumulated the cash value and the dividends. I am sorry for your loss.. that is why they say knowledge is powerful
        I pay for a whole insurance only $8/month and the face value was $5k. have paid for about 40 yrs that is 96/yrx40=3840 and now including the dividend it is worth about 30k.and still growing.


    23. realist
      Sep 1 2015, 04:48:37 pm

      Looks like they’re changing the number. they’re now calling them “702 accounts”

      Saw this ad on Google:
      Are “702 Accounts” Safe? – PalmBeachGroup.com‎
      Read the truth about “702” & “770” accounts before you move your money
      Palm Beach Research Group has 168 followers on Google+

    24. American Spirit
      Sep 12 2015, 05:47:23 pm

      We all know there are “secret” savings and other bank accounts which are available to anyone who walks in and ask for the account by name. However, if you are without the name, you most likely will not get the account unless, that is, you are a depositor of large amounts and then the info freely flows thus helping to build a world inside America for the ELITISTS only. While we are happy for these people that lady luck always shined her happy smile upon them, many of us through no fault of our own and not because of bad decisions, did not have lady luck by our side and thus missed the funding for large deposits but should have the same benefits as everyone else has. IT is simple wrong to exclude some when these accounts were originally established by the lawmakers to be of benefit to all and then the bankers saw the accounts as ways of getting to the big depositors and attracting them. We are waiting for and it will happen, a good soul who had lady luck by their side and who has the large deposits and gained the information to publish it some where for all of us to find and then be able to use. Imagine an account that pays not 1.5% but 11% or 12% or more just because you knew the name of the account you were able to walk into the bank, ask to open by name one of these accounts and thus were granted the privilege designed for not just a few ELITE but for all Americans!

      • Steve
        Oct 13 2015, 03:57:13 pm

        What are some of the names of these accounts that you can ask for at the bank that will give you larger returns, without buying life ins.?

    25. Kevin
      Oct 12 2015, 11:16:27 pm

      I have recently retired from the federal govt….I have a sizable 401K balance that I want to invest and generate 4% to 5%, to supplement my Gov retirement. I have met with a dozen financial planners in the San Diego area and have not found one yet that can meet my goal. My current plan is to slowly migrate the money in $50K annul increments into an existing ROTH IRA., which would eventually leave me with a tax free income stream that I will be able to leave to family members tax free. I realize I will be paying tax on the annual transfers, but the eventual payout of the ROTH, at a guaranteed 3.5% interest rate will eliminate all risk, and meet my goal of a supplemental tax free income stream and a tax free benefit to my survivors. What’s wrong with this plan.

      • arshus
        Oct 15 2015, 09:26:54 pm

        Kevin, there is nothing wrong with your plan – that is assuming you can transfer $50k a year into a ROTH IRA. Could you do better in a non-risk environment using the – so called – 770 account? Maybe. Here is what I propose: Send me some more basic information about your plans, your age and health, and I will run some scenarios using a “participant whole life insurance” the way banks use it, and I will be straightforward with you. What is the worst thing that can happen? That you will lose 3 minutes of your time sending me an email. I will be as clear and honest as possible, and let you know if you could maybe do better than your current plan; if so, I will even send you an illustration from a mutual life insurance company showing guarantees, results with the current (2015) dividend scale (which has been one of the lowest dividends in a very long time), the income you could receive per year, and the amount your family will receive upon your death. I would like a chance to prove this concept to you. If after receiving my email, you don’t think this is something you would like to do, you don’t have to reply, and you won’t receive any more emails from me. This is my email address: edgar@arceofinancial.com

    26. Arthur Stevenson
      Oct 31 2015, 09:00:56 pm

      Checking on the internet I find that this is an insurance policy in reality. I am well covered in this area. I t should be mentioned in your promotion. I am not interested. If I am signed up for a letter or something please cancel.

      Thanking you in advance
      Arthur Stevenson

    27. John Carpenter
      Nov 1 2015, 08:32:24 pm

      After careful perusal, I have come to the conclusion that this thing is exactly like the investment in AT&T stock. This stock has a 5.5% rate of return if bought regularly over a period of time. It is extremely safe as it would take all the banks to fail before this company might fail.

    28. amdeist1
      Dec 6 2015, 05:11:30 pm

      Life insurance with a cash value is a way of saving so long as you live to enjoy those savings. The problem with any type of cash value life insurance is that if you die, the company keeps the savings and pays out the policy value. If you have $100,000 in insurance and $20,000 in cash value, if you die, the company pays your beneficiary $100,000 and keeps the $20,000 in cash value. That is why term is a much better deal. I sold a term policy to a couple and took the difference from their $50,000 Universal Premium life policy and had them put some in Walmart stock. The couple both worked for Walmart, and the company matched $180 for $1800 invested. I also sold them two mutual funds for $25 a month each. When the husband died, the spouse got $100,000 and had more than $20,000 in the Walmart stock and mutual funds. Life insurance should be purchased for protection of the family in the event of the breadwinners death. Smart people try to save so that within the 20 or 30 years of a term policy, they will increase their savings to the value of the policy. A better investment would be a return of premium term policy, where if you live to the end of the policy term, the company returns all your premiums paid. There is an age limit in the 60’s where this isn’t available, however, there are reasonably priced term policies that you can buy when you get older. At 70, I purchased a $50,000 ten year policy from AAA Life that costs me $1009.50 a year. However, I will concede to those agents who sell whole life that if a person is unable to save for their future, then cash value policies aren’t such a bad idea.

      • Harold Kinney
        Dec 6 2015, 08:58:10 pm

        $20,000 is the portion of the $100,000 death benefit that has vested before death. The insurance company doesn’t “keep” anything when paying a death claim. A world-class investor can often beat index investing; for the rest of us, DALBAR has shown that a whole life policy historically has matched or exceeded the return from investing in a index, but without the volatility and risk. Whole life is a core holding; surplus funds that you can afford to lose should be used for prudent investing.

        • marty
          Dec 25 2015, 11:29:38 am

          H. Kinney, this argument has gone on for years. A.L. Williams made a fortune advocating just what amdiest1 is talking about. It seems to me that when you sell the whole life policy your insurance company is taking the money and “investing”, just as you would do as an individual. THAT is the term life argument in my humble opinion. It makes perfect sense to me. Of course, most whole life advocates sell on the presumption that people do not have the discipline to invest. Maybe they are right. It seems to me that neither is wrong.

        • amdeist1
          Dec 25 2015, 03:23:58 pm

          I beg to disagree with you Harold, but if you buy a 20 year term policy and end up saving $20,000 in a bank or credit union, and you die in the fifteenth year then your beneficiaries get the $100,000 and still have $20,000 in the bank or credit union. By my math, that is $120,000 of spendable cash. On the other hand if you buy a $100,000 whole life, universal life or variable life policy and have $20,000 in cash value and die in the fifteenth year of the policy, your beneficiaries will have $100,000 of spendable cash. A fifth grade math student knows the difference between $120,000 and $100,000.

          • Harold Kinney
            Dec 25 2015, 03:42:44 pm

            Term insurance is temporary insurance; whole life is permanent. In your example, the beneficiaries have about a 96% chance of receiving only $20,000, because only 4% of term policies are still in effect when the insured person dies. Trying to achieve the $120,000 figure is a gamble with very bad odds. That does not sound like a financial plan to me.

          • Toni Nicholas
            Jan 28 2016, 06:44:15 pm

            ahh.. but what if you don’t die before your term policy expires? What then, oh wise one? Let’s see if a fourth grade student can figure that one out.

          • arshus
            Jul 28 2016, 10:17:28 pm

            With a properly structured life insurance, the death benefit portion will grow every year. So in your example, if you already accumulated $20,000 in cash value, then the death benefit will grow by more than $20,000, so at the end of the day, you will receive more than $120,000 – tax-free.

    29. frank m lawrence
      Dec 29 2015, 02:25:51 pm

      hi folks , i’m in the 95.00 dollar camp . how ever , i got a credit from “psalm beach ” and for a laugh , the gal i spoke with acted suprised when i asked for the refund as though i was the only person who had asked for a refund . HO HO HO !!

    30. diva1
      Feb 26 2016, 04:04:48 pm

      I have a dear friend who cannot manage money. She trusts every scam artist and has lost millions of inherited money. She’s down to her last million, half of that liquid, at age 52. She has IRS problems and legal problems from some of the complicated financial transactions that she invested in and didn’t understand. I am strongly urging her to buy a whole life dividend policy for reasons that haven’t been discussed here. The IRS can’t touch a life insurance policy, and it also almost always has immunity in bankruptcy or legal settlements. No one can put a lien on it. It’s simple enough for her to understand, and if she chooses a reputable company she can’t have the money scammed or stolen from her. It’s a way of protecting her from herself so that she has a secure old age. She’s still working now and she doesn’t need this money immediately. She’s a naturalized citizen and has a very short social security record. She owns her own home and she has two small rentals on that same property. My hope is that if she pays off her home loan and puts some money into the whole life policy and some into stable dividend stocks in an IRA (which she has never had before) that she’ll have a secure old age despite herself.

      • Larry Williams
        Feb 27 2016, 11:00:36 am

        The Internal Revenue Service can indeed “touch” a life insurance policy under certain circumstances, as a general rule. The cash surrender value of a whole life insurance policy is “property” of the taxpayer for purposes of the Internal Revenue Code. If a Federal tax lien has come into effect, the tax lien will indeed cover the cash surrender value. Indeed, the lien will generally apply to the cash surrender value even if the policy was purchased after the lien came into effect. Further, an IRS levy on (i.e., actual seizure of) the cash surrender value is covered under Internal Revenue Code section 6332(b). You are correct, however, that various federal and state statutes can make certain aspects of life insurance “exempt” from the definition of “property of the estate” in bankruptcy. That exemption does not necessarily affect the legal power of the IRS to go against the cash surrender value, though, once the automatic stay in the bankruptcy is lifted.

      • mongoose0614
        May 30 2016, 10:32:29 am


        You are misguiding her in a large way. Number one….you are not a professional and are providing legal and investment advice. You will be sued to high heaven with your advice. Number 2…. The state precedents determine what type of investments are protected from creditors and predators. In my home state Life CV%DB, annuity, pensions, IRA and primary residents are protected.
        Number 3… The IRS is neither a creditor or a predator and any movement of money with a known liability will be looked at as possible intent to defraud. The surrender charge alone will force a loss of principal. The only way to deal with the IRS is directly with an attorney and not the IRS advertisers on the radio…………or flee the country after liquidating assets before leins are filed.

        • Larry Williams
          May 30 2016, 08:30:57 pm

          Dear mongoose:
          You don’t know what you are talking about. First, am both an attorney and a certified public accountant. No, state precedents do NOT determine what type of investments are protected from Federal tax liens — and the word is “lien”, not “lein.” In your home state, a “levy on an organization with respect to a life insurance or endowment contract issued by such organization [life insurance company] shall, without necessity for the surrender of the contract document, constitute a demand by the Secretary [of the Treasury or his delegate, i.e., the IRS] for payment of the amount described in paragraph (2) and the exercise of the right of the person against whom the tax is assessed to the advance of such amount.” –from Internal Revenue Code section 6332(b). Yes, the IRS is a CREDITOR when it comes to Federal taxes. The only part you were correct on is that yes, the BEST way to deal with the IRS is with an attorney, and not with advertisers on the radio. No, I am not misguiding her. I know whereof I speak, and you most certainly do not.

          • Larry Williams
            May 30 2016, 08:52:11 pm

            I find it amusing that “mongoose” impliedly claimed to understand something as mind-numbingly complex as the scope of the U.S. Federal tax lien and the power of the IRS to levy on the cash value of a whole life insurance policy — and yet was obviously unaware that state law exemption statutes and state law precedents do not restrict the legal power of the IRS to levy on a cash value, which is instead governed by section 6332. Life insurance companies are certainly well aware of section 6332. See, e.g., United States v. Prudential Ins. Co. of America, 461 F.2d 208 (5th Cir. 1972). I hope mongoose is not in the business of selling insurance. If he/she is, then some continuing education is in order.

            • Larry Williams
              May 30 2016, 09:07:04 pm

              Oh, another thing, mongoose: You are actually correct when you say that a movement of money (in an attempt to defeat the IRS or another creditor) could be viewed as evidence of intent to defraud, and that the surrender charge alone would force a loss of principal of the cash value. However, YOU are the one who brought up those issues, not me. I have been representing taxpayers (and advising other attorneys) in dealings with the Internal Revenue Service — particularly with respect to bankruptcy — for over 25 years. I’ve been licensed as an attorney for 27 years, and I’ve been licensed as a CPA for 37 years. I’ve also been designated as an expert on taxation in U.S. bankruptcy court. So, when it comes to U.S. federal tax, yes, I am a professional.

            • mongoose0614
              May 31 2016, 07:52:43 am

              You misunderstood me. Creditor and predator laws vary by state.
              IRS trumps all. It cannot be “set aside” for protection. http://www.assetprotectionsociety.org/wp-content/uploads/2013/07/50-State-Creditor-Exempt-Asset-Chart-2013.pdf
              Inherited IRA’s are where the battle ground is now.
              There are ways to protect assets with certain vehicles but none work for the IRS.
              What I said was completely correct in regards to creditor and predator laws.
              I also love grammar Nazis

            • mongoose0614
              May 31 2016, 07:54:26 am

              You misunderstood me. Creditor and predator laws vary by state. I also wasnt commenting on your post but the one with the friend…….not you.
              IRS trumps all. It cannot be “set aside” for protection. http://www.assetprotectionsociety.org/wp-content/uploads/2013/07/50-State-Creditor-Exempt-Asset-Chart-2013.pdf
              Inherited IRA’s are were the latest battleground on this
              There are ways to protect assets with certain vehicles but none work for the IRS.
              What I said was completely correct in regards to creditor and predator laws.
              I also love grammar Nazis.

            • Larry Williams
              May 31 2016, 10:49:52 am

              Dear Mongoose: I can’t seem to find a “reply” button for your May 31 post, but I’ll try this (so, I’m not sure where this will show up in this sub-thread). First of all, your May 31 responsive post is right under my post, at least on my computer screen. Neither Diva’s “friend” — nor anyone else except you and me — has posted anything in this sub-thread. So, I don’t know what post you were responding to, other than mine. Second, I haven’t commented on your grammar. I commented on your erroneous spelling of the word “lien.” Granted, everyone makes typographical mistakes.

            • investor101
              Jul 3 2016, 05:41:57 pm

              Thank you, Larry you are so very correct! Let’s remember we are dealing with government. Yes, the IRS can take the cash value of the life insurance, we had that happen to my husband in Louisiana. AND they can pretty much do as they please. If we go digital completely, I hate to see what is really going to happen to all of us! Thanks for your professional insights!

    31. Robin
      Apr 14 2016, 09:17:13 am

      It’s a secure discussion forum where you can develop or get involved in support system and also discussions regarding health topics that interest you.

    32. thegreatergood
      Jul 28 2016, 05:54:34 pm

      I have subscribed to the “Palm Beach Letter” for 2 years and am pleased with it. I initially subscribed for this specific teaser (Babylonian Money Code / 770 account) and have opened an BOY / IFL account and it works as advertised. Check out Nelson Nash’s book, “Bank on Yourself”. Its an easy read and spells it out clearly and concisely. Be mindful that this is not an ordinary whole life insurance policy and has to be set up properly and most insurance agents are not familiar with this type of policy, regarding the specific riders needed.
      I don’t consider Palm beach research to be scammers – yes they frequently advertise for additional services, however the paid content I receive is informative and useful, and worth the price paid IMO.

      Good luck and good investing!

      • arshus
        Jul 28 2016, 08:57:49 pm

        I think the book you were referring is “Becoming Your Own Banker”, by R Nelson Nash. “Bank on Yourself” is another book written by Pamela Yellen. It is a great concept for sure, but many life insurance agents take advantage of this great strategy to sell *not so good* policies in order to earn a bigger commission.

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