Recently had a stock clerk at the local grocery store try to pitch me a "7702 plan"....
Told me I would lose over 60 percent of my 401k to taxes if I did not take advantage of this little known way to avoid taxes! Yep, I get my tax advice from grocery store shelf stockers, don't you?
What is a "7702 plan"? Another way to sell you overpriced, fee ridden, low performing life insurance! Life insurance is NOT an investment. Buy the death benefit through term life and invest the difference.
That should be a 770 plan (no "2"). As in section 770 of the IRS Code. Permanent life insurance is tax free due to this quirk of the code. It can be handy for people who need lots of insurance and want a very low risk, yet reliable, income investment. The key is that you MUST choose a "mutual" insurance company. The for profit permanent/whole insurance companies will not pay you a dividend while mutual will.
The 770 fan boys minimize the insurance component of their policy and maximize the cash value portion. Which sounds insane but it has its perks. You earn 5-6% a year tax free on the cash value portion, can take a loan against it at any time without even needing your credit run (you are borrowing your own money) and the yield is paid on the gross not net balance when you take a policy loan. Handy way to finance a car, or vacation, or real estate, or kids college or whatever. It is NEVER income even though it earns a cash on cash return.
Downsides are you may purchase more life insurance than you need this way and it doesn't pay unless you do it for at least a decade, otherwise the upfront load wipes out all gains.
Upsides are you can build up enough cash value to pay the annual premium and maintain both a cash hoard you can borrow against and permanent life insurance coverage without additional cash out of pocket, tax treatment, and privacy as the government gets no statement from the insurer.
It seems crazy but 770 plans are popular with the superwealthy and with mega-corporations. The major banks almost all have millions in 770 insurance (on their key employees) on the balance sheet. Wells Fargo is very aggressive in this regard.
For my money? I need zero life insurance and prefer municipal bonds for my tax-free income portion of investing. YMMV.