I am a life insurance agent with 41 years of experience. The Palm Beach Newsletter teaser ”770 accounts” led me to subscribe
For $49 I got the keys to unlocking the secret of the 770 account which, as you might expect was not really a secret to me.
The designation “770 account” was contrived Tom Dyson to give an otherwise pedestrian pitch an aura of mystery.
The Internal Revenue Code provides a statutory definition of life insurance in section 7702. Chop off the 2 add an account and voila!
Dyson’s book runs 33 pages. The first 13 eventually get to the subject of life insurance. The next 7 explain the different policy types from term insurance to policies that maximize cash value. Christened modified endowment contracts (MECs), they were created by Congress on June 21, 1988. The best policies are those that narrowly avoid being classified as a MEC. Buyers must avoid MECs since money removed from MECs is immediately taxable and subject to a 10% penalty as well.
Finally Dyson gets to the point of how to buy such a policy. As you might guess he directs you to a favorite agency.
Dyson continues that all insurance agents must charge the same commissions.
He is correct if he refers only to state laws outlawing commission rebating.
However, the best mutual companies have allowed agents to voluntarily reduce their commissions by designing policies to maximize cash values. We have offered reduced commission policies to all of our customers since 1985. Commission reductions generally are worth two annual premiums.
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