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Modified Endowment Contract (MEC) - Explained

A life insurance policy becomes a modified endowment contract (MEC) if the policy does not meet the 7-pay test requirements. The 7-pay test is a tax code limitation designed to discourage life insurance premium schedules that would result in a paid-up policy before the end of a seven-year period. A policy that does not meet the 7-pay test is classified as a modified endowment contract. A life insurance policy that becomes a modified endowment contract, discourages cash value access by the policy owner because policy loans and withdrawals face taxes and penalties very similar to monies from a qualified plan. To schedule an appointment or request a policy review go here: https://calendly.com/michelemcfie/intro 702-660-7000 https://www.life-benefits.com

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