This is a guest blog written by Justin W. Smith, founder of the insurance consulting firm, Balanced Strategies, LLC. Smith is a guest blogger that focuses his research on using life insurance to guard against the biggest threats to wealth preservation.
The confluence of a rising tax environment and life insurance product innovation calls for evaluation of the often avoided Modiﬁed Endowment Contract, or MEC.
As a quick refresher, the passage of The Technical and Miscellaneous Reform Act of 1988 (TAMRA) caused life insurance policies that were overfunded too quickly to be classified as Modified Endowment Contracts. Congress intended to eliminate the use of these policies as short-term savings alternatives by imposing penalties upon contracts of this type.