We recently received a really good question regarding whole life insurance and modified endowment contracts that seems like it should have already been the subject of an Insurance Pro Blog article, but alas we skipped over this excellent opportunity to discuss a minor—although interesting and potentially important—quirk to modified endowment contract calculations.
The question was pretty simple:
Looking at various over-funded whole life proposals and I’m noticing that some products appear to hit the modified endowment contract limit sooner than the other, why?
It’s an excellent question, and we encourage everyone to reach out to us with questions they have as they can become great motivators for future articles. The answer, though, is somewhat complex but can pretty easily distilled into a really simple answer.