SBLI policy becomes a MEC

[scagnt83]

A client of mine received this letter last week. The policy is barely 9 months old. SBLI can't/won't give me any more info on this .

see the attached letter.


Any thoughts?

My last post reminded me of the 60day window to refund premium to withdraw MEC status.

I think every state has this law. The carrier has to provide a 60day window to refund premiums if a policy becomes a MEC.

It is very odd that this letter does not inform the client of this.

Is this a Single Premium WL?

 

[Allen Trent]

My last post reminded me of the 60day window to refund premium to withdraw MEC status.

I think every state has this law. The carrier has to provide a 60day window to refund premiums if a policy becomes a MEC.

It is very odd that this letter does not inform the client of this.

Is this a Single Premium WL?

Many small face WL policies base premiums can be MEC by just paying the required premium, especially those paid quarterly (added mode fees), table rated, etc. But, those I have seen will never, ever have a gain as the persons cash value will always be less than premiums in these such cases I have seen.......so, as you guys have said before, being a MEC is a non-issue as the death benefit is still tax free & without any gains in cash value, no taxable 1099 will issue.

Seen some juvenile policies do this also with some carriers.

WL policies didnt get any of the MEC premium room benefits of the Covid 7702 bill like UL/IUL/VUL did where MEC premium limits were updated to more current interest rate environment & not stuck in 1987