How to Open a 770 Savings Account…

You can open a 770 savings account, which is actually life insurance, by purchasing a participating or dividend-paying whole or permanent life policy that has “paid up additions,” according to Stock Gum Shoe. You will not purchase a term life insurance policy to create the 770 savings account.

Select a mutual insurance company, such as State Farm and several others, which are owned by the policyholders. As you make your monthly premium payments and build up cash value within the policy, the dividend paid by the insurance company to the balance begins to compound, returning tax-advantaged investment returns.

770 accounts allow investors to act as their own bank, as one of the main benefits of the account is to be able to borrow from it. They also allow customers to withdraw cash without paying the early withdrawal penalties they would pay with a tax-advantaged retirement plan. However, because these accounts function most profitably as wealth protection and tax avoidance policies, you may find that the benefits of the 770 accounts do not become apparent until 10 to 15 years down the road, says Penny Motion. This is because of the costs and fees inherent to life insurance policies, which make them a long-term investment.