Modified Endowment definition

Modified Endowment. Contract Tax Status — Unless and until you have given us a Written Request to accept a Modified Endowment Contract classification for your policy, the provisions of this Modified Endowment Contract Tax Status subsection apply to your policy. Under federal tax law, if the funding of a life insurance contract occurs too rapidly, it becomes a Modified Endowment Contract (“MEC”) and fails to qualify for certain favorable tax treatment as a result. This policy is intended to qualify as a life insurance contract that is not a MEC for federal tax purposes. To achieve these purposes, the provisions of this policy (including any rider or endorsement that does not specifically override this tax qualification provision) shall be interpreted to prevent this policy from being subject to such MEC treatment, despite any other provision to the contrary. At no time shall the amount of death benefit under this policy ever be less than the minimum amount needed to avoid such MEC treatment. We will not accept a payment as premium or otherwise which would cause the policy to become a MEC. The 7-Pay Premium, shown on Page 3.0, is used solely to determine the policy’s premium limits to avoid MEC treatment. Payment of one or more 7-Pay Premium amounts does not guarantee that the policy will never lapse, and additional premiums may be necessary to prevent the policy from lapsing in the future. If at any time the amounts paid under the policy exceed the limit for avoiding such MEC treatment, this excess amount, including any interest as determined under federal tax law, shall be removed from the policy as of the date of its payment, and any appropriate adjustment in the death benefit and/or Accumulated Value shall be made as of such date. This excess amount, including any interest, shall be refunded no later than 60 days after the end of the applicable contract year, as determined under federal tax law. If this excess amount is not refunded by the end of such 60-day period, the Death Benefit shall be increased retroactively and prospectively to the minimum extent necessary so that at no time is the Death Benefit ever less than the minimum amount necessary to avoid Modified Endowment Contract classification. In addition, the Accumulated Value will be reduced to reflect the increased Monthly Deductions resulting from such Death Benefit increase, starting on the date that the increase is effective. Any request that would change the Death Benefit or any other benefit or rider under the...

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Modified Endowment. Contract - A classification of policies determined under the Internal Revenue Code which affects the tax status of distributions from the policy. Monthiversary - The same date of each month as the Policy Date. If the Policy Date is the 29th, 30th or 31st of a calendar month, then for any calendar month that has fewer days, the Monthiversary will be the last day of such calendar month. If a Monthiversary falls on a day which is not a Valuation Date, the processing of the Monthiversary will be the next Valuation Date. Net Accumulated Premiums - The amount of premiums less Partial Surrenders, which is utilized in calculating the Death Benefit under Option 3. Net Amount At Risk - The amount used to determine Cost of Insurance charge. Refer to the Policy Charges section of your policy. Net Premium - The total premium paid reduced by the Premium Expense Charges shown on the Policy Data Page. Owner(s) - The Owner(s) named in the application, unless changed in accordance with the policy provisions. Partial Surrender - A withdrawal of a portion of the Account Value. Planned Premium - The amount we will ▇▇▇▇ you or, in the case of our automatic premium plan, the amount we will deduct from the account selected by you. Policy Anniversary - The same date each year as the Policy Date. Policy Data Page - The Policy Data Page or the Supplemental Policy Data Page most recently sent to you by us. Policy Date - The date from which Monthiversaries, Policy Years, and Policy Anniversaries are measured, as shown on the Policy Data Page. Suicide and Incontestability periods are measured from the Policy Date. Policy Year - One year from the Policy Date and from each Policy Anniversary thereafter. Premium Mode - The frequency of the Planned Premium as shown on the Policy Data Page or as subsequently changed by you. Portfolio - The separate investment fund in which the Separate Account invests. Proper Notice - Notice that is received at our Home Office in a form acceptable to us. Reduction Free Partial Surrender Amount - The amount which may be withdrawn without a reduction in Total Face Amount. Refer to the Surrender section of your policy. Required Premium for the No-Lapse Guarantee - The current monthly premium that must be paid on a cumulative basis to keep this policy in force during the No-Lapse Guarantee.

Examples of Modified Endowment in a sentence

• If this excess amount is not refunded by the end of such 60-day period, the Death Benefit shall be increased retroactively and prospectively to the minimum extent necessary (e.g., to the end of any MEC 7-year test period) so that at no time is the Death Benefit ever less than the minimum amount necessary to avoid Modified Endowment Contract classification.

• In order that this policy not be classified as a Modified Endowment Contract under Section 7702A of the Code, the sum of premiums paid less a portion of any withdrawals may not exceed the 7-Pay limit as defined in the Code.

• Any request that would change the Death Benefit or any other benefit or rider under the policy will not be processed if the change would cause the policy to be classified as a Modified Endowment Contract.

• Requested changes that could cause the policy to be classified as a Modified Endowment Contract include, but are not limited to, an elective reduction in the Face Amount, a Death Benefit Option change that would cause a reduction in the Face Amount, and a withdrawal that would cause a reduction in the Face Amount.

• To the extent that a premium payment would cause such limits to be exceeded, we will refund the excess payment to you, in accordance with the Modified Endowment Contract Tax Status section of this policy.

• In the event that a premium payment would cause the 7-Pay limit to be exceeded, we will refund the excess payment to you, unless you have provided a Written Request in which you accept your policy being classified as a Modified Endowment Contract and indicate that we may accept such payments and apply them to the policy, in accordance with the Modified Endowment Contract Tax Status section of this policy.

• In order that this Policy not be classified as a Modified Endowment Contract under Section 7702A of the Code, the sum of premiums paid less a portion of any withdrawals may not exceed the 7-Pay limit as defined in the Code.

• Unless and until you have given us a Written Request to accept a Modified Endowment Contract (“MEC”) classification for your Policy, the provisions of this Modified Endowment Contract Tax Status subsection apply to your Policy.

• Unless you specify otherwise by Written Request, any request for a Death Benefit Option change will not take effect if the requested change would cause the policy to be classified as a Modified Endowment Contract under the Code.

• Unless you specify otherwise by Written Request, any request for a Death Benefit Option change will not take effect if the requested change would cause the Policy to be classified as a Modified Endowment Contract under the Code.