A 770 investment account is another name for whole-life insurance, according to Chicago Tribune. Calling this type of insurance an investment account is a common technique used by insurance salespersons to encourage potential customers to buy a policy.
The name of a 770 account comes from IRS code 7702, which refers to whether or not a life insurance policy qualifies for certain tax-exemptions. The code requires policies to meet a cash value accumulation test, according to Fox Business. This means that the amount that can be surrendered in cash to the borrower is less than the total cash payout value of the policy on the death of the policy owner.
A whole-life insurance policy requires monthly policy premium payments and gradually accrues a cash value. The insurance company also invests the cash value of the policy, which helps earn interest and dividends. Policy owners can borrow against the cash value of their insurance policy and use the money for other purchases. Since this is considered a loan it is also not taxed by the IRS. However, the borrower must pay back the loan in payments. Later, when the policy is cashed out, any excess interest earned over the cash surrender value is taxed by the IRS.