Modified Endowment Contract - MEC
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Definition of 'Modified Endowment Contract - MEC'
If the cumulative premium payments exceed certain amounts specified under the Internal Revenue Code, the life insurance policy will become a Modified Endowment Contract (MEC). Taxation under a MEC is similar to taxation under an annuity. Under a MEC, the death benefit payable to the beneficiary is not subject to income tax.
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Investopedia explains 'Modified Endowment Contract - MEC'
MEC is usually bought by individuals who are interested in a tax-sheltered, investment-rich policy, who do not intend to make pre-death policy withdrawals.
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Search results for 'Modified Endowment Contract (MEC)'
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http://www.investopedia.com/articles/insurance/10/avoid-modified-endowment-contract-traps.asp
... this test are now classified as modified endowment contracts (MEC ... Any loans or
withdrawals from a MEC are taxed ... gain that comes out of the contract is reported ...
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http://www.investopedia.com/articles/pf/08/life-insurance-cash-in.asp
... cash-value withdrawals is that they are not taxable up to your policy basis, as
long as your policy is not classified as a modified endowment contract (MEC). ...
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http://www.investopedia.com/articles/retirement/06/NewLTCPlan.asp
... As the insured, you can simplify this process in one of two ways: you can structure
the policy as a modified endowment contract (MEC) to reduce the amount of ...
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