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Q&A: What Are 770 Accounts?

A deceptive sales pitch to help insurance agents sell certain kinds of life insurance products

Question: A friend at work asked whether I’d heard of 770 accounts. I haven’t read anything about them in your books or heard you talk about them. Is it something only for the ultrarich? Can you elaborate?

Ric: The “770 account” is nothing but a deceptive sales pitch to help insurance agents sell certain kinds of life insurance products.

One of our most basic concerns as financial planners is making sure that our clients have sufficient life insurance coverage. We help them get the right kind and amount at a cost that you might find surprising.

Unfortunately, there are still a lot of insurance agents around who make their living selling high-commission policies known as whole life, variable life and universal life. But these agents have a problem: People are better informed today about insurance than they were, so they’re better able to resist sales pitches that are not in their best interest. This forces those agents to devise ever more creative ways to sell a very old product.

The 770 account is just the latest example. There’s no validity or legitimacy to it. The only people touting it are the insurance agents and their employers, who are trying to make a living selling it. The notion is absurd. Stay away from anyone who pitches it to you.

By the way, the name was borrowed from the Internal Revenue Code. Section 7702 deals with taxation of life insurance. I’m not sure why it’s called a 770 account and not a 7702 account. Maybe those insurance agents can remember only up to three digits.

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