Insurance Pro Blog Podcast

 

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Most people think that creating a Modified Endowment Contract (MEC) is a bad thing. We discussed that at some length in last week's episode.

That's mainly because the tax advantages of using life insurance are pretty widely known and discussed my agents…ourselves included. So, why in the world would anyone want to intentionally make the cash value taxable by using a MEC?

Good question. Losing the tax benefits can be a negative thing…especially if creating a MEC was not your intention.

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Note: The podcast is fresh and new but the written post below is a re-post of information that Brandon wrote a few years back on modified endowment contracts:

Anyone who has looked into cash value life insurance has probably come across the term Modified Endowment Contract (MEC). Those with flexible premium policies may have noticed a portion of their statements that stipulate whether or not the contract is a Modified Endowment Contract.

You may have even seen numbers indicating the amount of money that can go into a policy before it turns into an MEC. What does it mean, and why do we care? We’ll explain that and more today as we cover MECs in their entirety.

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We're drawing a line in the sand here.

It's time for insurance agents to get over Dave Ramsey. He has his crowd, his fans, his followers or whatever you want to call them. And that's okay…get over it.

Seriously.

How many articles can you write about one guy who hasn't really said anything different in the last 15 years?

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In exploring what we should talk about in episode 44, we realized that we've somehow gone almost an entire year without dedicating an episode to a discussion of taxes in relation to life insurance. Oops!

Sometimes we get caught up in focusing on finer points and miss the big picture. But we are correcting that today.

We've actually published quite a bit of information on the topic over the last 5 years and for those of you who prefer the written word…carry on. You'll be please with what you find in the proceeding paragraphs.

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With the current wave of companies lowering the caps on indexed universal life contracts, we thought it would be good idea to share our thoughts on that today.

Honestly, we've been “low balling” expectations on IUL contracts since we started offering them to our clients five'ish years ago. And that was back when some policies offered cap rates as high as 14%.

Now, I do hope that you all realize I'm being a bit tongue and cheek with the “low balling” comment above. Actually, we just believed that using a lower projected return was prudent.

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Well the summer's over. Which obviously means that we're not allowed to have anymore fun…right?

You'd certainly think that if you were looking at our episode from last week and what we're discussing today.

In episode 42, we're continuing with the spirit of last week's episode. So, if you that was the greatest thing we've ever released, awesome.

Sadly, if you thought it was awful, you'll likely be disappointed in this week's episode.

Either way, I think you'll find the discussion useful.

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Today we are revisiting something that has popped up a few times over the years of writing and podcasting. But our take is a bit different and the focus of this episode follows suit.

Our discussion revolves around universal life insurance. And no, we're not hopping on board the media frenzy that wants to adopt a scorched Earth policy for every universal life insurance policy ever sold.

Nor are we lampooning every company that's ever issued universal life insurance.

In fact, as those of you who've been hanging around for a while already know, we sell a fair amount of indexed universal life insurance ourselves.

But…

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