What is Unethical About Using the Phrase 7702 Plan?

Have you ever heard of a 7702 plan?  Did you know that some people are tricked into purchasing a life insurance policy believing that it is some special plan?

This has happened for decades.  The case outlined at www.leagle.com, talks about someone being told that they were entering into a "Sign 600 Contract."  Isn't it strange that the company is actually called "United Savings Life Insurance".  Does this imply that the life insurance contract is a savings account?  Is this ethical?

The 7702 comes from a code in the IRS that regulates life insurance policies.  The IRS did not create this code as a loop hold to avoid paying taxes.  On the contrary, the IRS created this code to stop people from being able to use life insurance policies to avoid paying taxes.

Why do you think refering to a life insurance policy as a 7702 plan is unethical?  Do you think your mother or father might be tricked by this terminology?  How do we stop this from continuing to happen?  Have the lawsuits helped?

This post was reposted from http://finlit.biz/life-insurance/what-is-unethical-about-using-the-phrase-7702-plan/, originally written on February 9th, 2013.