Planning for retirement is essential. The retirement savings keep the retirees going through their old age and sometimes meeting the unforeseen expenses. Nonetheless, it is very important to select an appropriate retirement product

Unfortunately, most people are not able to differentiate between insurance and retirement invest, yet the two are not independent of each other. What is more worrying is that those marketing the two products will make you believe that they both offer the same returns.

But not all financial products deserve consideration

You may have already come across various ways of funding a retirement, which you want to explore. Some of them include a 7702 private plan, 7702 plan, and 702(j) plan, among others. However, it is important to note that not all financial products deserve your attention, one of them being the 702(j) plan.

The plan comes with so many other enticing things pitched on it, such as “Bank on Yourself.” This is the only way insurance companies would win over the market and also gain quick credibility. The truth is this 702(j) plan, not a retirement savings plan; it stems from its origins of a tax code with a higher inclination towards insurance policies. The true definition of a 702(j) plan is that of a permanent life insurance policy.

How does 702(j) plan work? 

Usually, a full-term life insurance policy is eligible for just a specific period. Take, for example, a 401(k) plan, which is a retirement plan under an employer’s sponsorship. But in as the 702(j) plan is legal, which could blind high-net-worth investors, it has a premium payable monthly. The payment advances the cash value of the policy. Additionally, you will not be subjected to taxes if you take the money saved through premiums as a loan.

“Consumers need to be very careful in selecting their insurance company for permanent insurance… some insurance companies do not forewarn the policyholder when their policy is about to self-destruct,” says Samuel R. Price, a self-regulating broker. A good insurance company will not expose its policyholders to unnecessary fees and commissions. Also, a good policy will not be conditional; instead, it will offer higher opportunities of benefiting.