MEC questions are tax-sensitive.
Use this worksheet to collect the facts a qualified professional will need before discussing modified endowment contract status or seven-pay limits. It does not decide whether a policy is or will become a MEC.
If the MEC question is attached to a policy you already own, route the service conversation through review coverage. If it is attached to a new design, start with new coverage.
What To Collect
| Field | Where to look | Notes |
|---|---|---|
| Policy issue date | Policy contract or annual statement. | MEC rules depend on policy timing and changes. |
| Insured age at issue | Policy contract. | Age can affect premium testing. |
| Premiums paid by year | Carrier premium history. | Do not rely on memory or bank statements alone. |
| Planned future premium | Illustration or proposal. | Include catch-up or lump-sum premium under discussion. |
| Seven-pay premium or limit | Carrier MEC notice, illustration, or ledger. | Ask the carrier to identify the value. |
| Material change history | Carrier service record or policy amendment. | Changes can restart or alter testing. |
| Death benefit history | Policy statements and ledgers. | Death benefit changes can matter. |
| Loan or withdrawal history | Carrier transaction history. | Loans and withdrawals can affect tax analysis. |
| Current cost basis | Carrier tax information. | Needed before tax discussion. |
Copyable Carrier Request
Please provide the policy's premium history, current cost basis, MEC status, seven-pay premium or applicable limit, and any material changes recorded on the policy. If additional premium is being considered, please provide the carrier's MEC review or premium-limit guidance before any payment is made.
Questions For A Professional
- Has the policy ever been classified as a modified endowment contract?
- What premium amount can be paid without changing that status?
- Would the proposed premium, rider change, death benefit change, or other change create a new test period?
- How would a loan or withdrawal be taxed if the policy is a MEC?
- How would the answer change if the policy is not a MEC?
- What documentation should be kept with the policy file?
Agent Summary
This tool organizes information relevant to MEC and seven-pay discussions. It does not determine MEC status, calculate a legal conclusion, or recommend a premium payment.
Limits
This worksheet is preparation for a tax, legal, or licensed insurance review. If future rendering shows any non-guaranteed policy value, the guaranteed value must sit beside it at equal visual weight.
Source Notes
- The MEC definition and the seven-pay test live in the statute: 26 U.S.C. Section 7702A. This is the durable primary source.
- Rev. Proc. 2001-42 is a correction procedure for inadvertent, non-egregious seven-pay failures, not the source of the test itself: Rev. Proc. 2001-42. It has been modified and superseded by later procedures, so confirm the current procedure before relying on it.