Thursday, August 3, 2017

2017 IFAPAC and MEC

In the early years of Single Premium Life (endowments), producers sold the heck out of them. It took a while before the feds figured out they were being used as tax-shelters. That epiphany led to the resurrection of the decades old debate about taxing the inside build-up in a life insurance contract, a war NAIFA has been fighting since 1913. And won every battle.

But this time a law was even closer to being enacted, a law that would cause the taxation of inside build-up in all life insurance policies. And the lawmakers were not going to “grandfather” older contracts. Producers feared the end of their careers! NAIFA’s PAC swung into action once again and, with the ACLI and other advocates, convinced the itchy-fingered representatives in Washington, DC to avert the disaster.

The result was the Technical Corrections Act of 1988 (H.R 4333, S. 2238) and the Modified Endowment Contract, or MEC. The MEC is a cash value life insurance contract where the premiums paid have exceeded the amount used to keep the full tax treatment of a cash value life insurance policy. Anyone that sells permanent life insurance knows about the MEC. It’s important to remember that NAIFA was a key player in negotiating the legislation that saved the beloved life insurance contract from being taxed as was the original plan of said lawmakers.

NAIFA, on both the State and Federal level, continues to fight battles to preserve this noble business. If the life insurance industry is to survive, we need Advocates. The PAC sustains our Advocates in Olympia and DC which means NAIFA represents you and your clients. Which really means NAIFA and IFAPAC work to assure that your career is allowed to continue. IFAPAC has been called “Career Insurance” and it is! That’s why I continue to contribute to the PAC after 42 years in the business. That’s why Alex Collins and I urge you to contribute to IFAPAC monthly, by bank draft.

$8.50/month makes you a Century Club member. Do it! It won’t hurt. In fact, it will help your career.

Richard Ek
NAIFA member since 1975

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