105 Universal Life Insurance Guarantees: There’s More to this Story

105 Universal Life Insurance Guarantees

Since the inception of universal life insurance in the late 1970’s, the whole life world has felt threatened and rightfully so. Universal life insurance boasted a myriad of benefits that improved upon many of the drawbacks that long plagued whole life insurance.

And the one argument the whole life insurance champions have long leaned on is the guaranteed aspect of whole life insurance vs. universal life insurance.

But does this angle really work for whole life insurance? Conceptually it makes sense. And the guaranteed column is guaranteed. But practically speaking does this argument matter? And if it doesn’t, does this spell trouble for whole life insurance?

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When does a Modified Endowment Contract make sense?

When does a Modified Endowment Contract make sense

Lots of agents learn very early in their career that a Modified Endowment Contract is a bad thing. Perhaps it's because they hold the first-in-first-out and tax free via loan distribution privileges in such high regard that losing those benefits seems to kill the whole thing. I'll admit that these benefits are certainly coveted and optimal, but there are times when intentionally owning a modified endowment contract might makes sense, in fact a lot of sense.

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Invest in Real Estate? Why not Modified Endowment Contracts?

Why not Modified Endowment Contracts

Sometimes I just feel like being edgy, and throwing the words invest and Modified Endowment Contract about seems like a good way to be edgy. Of course this so called “edginess” is more a testament of my dork-dom–analogous to my saying, “I know my AGI is >$33,750 but screw form 6251.”

If you got that joke, I think I love you.

But in all seriousness a few recent events played out that gave way to this post. You see, It's been a long time since I thought real estate was a good place to invest. When I was in college I had a professor point out that the 30 year CAGR on real-estate in the United States was under 4%. Yikes! That was before the bubble popped, and let's not forget that real-estate can be super volatile.

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Modified Endowment Contract: Pro Blog Style

Modified Endowment Contract: Pro Blog Style

Modified Endowment Contract is frequently known as a condition where an insurance contract becomes “paid up” within 7 years. That's an okay understanding of a basic principle (it served me well for about 6 months and insured I didn't do anything really stupid when I was armed and dangerous as a new agent), but there's more to MEC's than just not making it paid up within 7 years.

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Modified Endowment Contract: MEC Should You Be Worried?

Modified Endowment Contract

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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