Why set up an MEC instead of IUL?

dbab

Super Genius
102
I'm listening to Van Mueller's training and he suggests setting up an MEC. He goes on to talk about several of the benefits, but I am confused on how an MEC would be better than an IUL. Isn't an MEC essentially an IUL without the tax benefits? Does anyone know why he would suggest setting up an MEC instead of an IUL?
 
An IUL is an insurance product.

A MEC is a classification of funding of an insurance product.

Why would someone purposely fund to the point of it being classified as a MEC though?
 
paying 100k 1 time into the policy will look at ton better than paying 10k in over 10years to avoid the MEC. So, if over age 60 & death benefit is the most important, MEC will look tons better as it will both make more interest by having more money in it sooner & it will have way lower charges for cost of insurance on UL based policies with a level death benefit.

MECs are taxed just like NQ annuities for lifetime withdrawals, so it is always odd why no one cares how a NQ is taxed, but they are concerned about a life contract being a MEC. funny part is the NQ annuity has a large tax bill at death on the gains of the policy & the MEC life not only is tax free, but also has a leveraged death benefit with more paid out than just the cash account value.

So, ideal to not be a MEC for young clients & those that for sure want to take retirement supplemental distributions, but really a non-issue for Seniors when compared to Bank CDs & NQ Annuities
 
MEC is EVIL!!!! LOL, that's what many teach.

Can be great if the right fit. Can be bad if the wrong fit. Just like many other products and services.
 
Why would someone purposely fund to the point of it being classified as a MEC though?

A MEC earns money faster than a non MEC policy.. if it were not for the tax advantages... everybody doing this for max cash value will use a MEC.. .the problem is that the tax consequences typically negates this in MOST applications.. However there may be some niche situations why it may be better for the clients to have a MEC..
 
This strategy is usually used for financial planners when an older person has a sum of money that he considers will leave his heirs intact.
The total amount is placed and illustrated according to the age of the policyholder to do MEC and to have sufficient time to be founded once the policy does MEC over time will generate more money than in ordinary form and in shorter time.
Remember that the death benefit will be Tax Free and in many cases it will be equal to or greater than the amount paid to found the policy
The investment will be better than anuity or CD or savings accounts
Van Muller is right
 
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