29 May 2014 0 Comments

Is a MEC bad? Can it be avoided?

The term “MEC” is an acronym for Modified Endowment Contract.  A MEC is created when the premiums paid in the first 7 years of a life insurance policy exceed certain limits.  Unless you’re an actuary there is no need to know the formulae that defines those limits.  If you are contemplating the purchase of a […]

2 May 2014 0 Comments

Potential Pitfalls of Deferred Annuities – Part Two

In Part One of this discussion on the potential pitfalls of Deferred Annuities I mentioned Surrender Charges.  Surrender charges are imposed to compensate insurance companies for the commissions and other acquisition costs they incur when a Deferred Annuity is purchased.  If the annuity stays in force long enough, these costs can be amortized over the […]

30 April 2014 0 Comments

Potential Pitfalls of Deferred Annuities – Part One

In my previous entry “The Truth About Annuities” I provided an overview of the two types of annuities, Immediate and Deferred, touching on the strengths and weaknesses of Immediate Annuities as well as the major strength of Deferred Annuities—tax deferral.  Now it’s time to cover the downside of Deferred Annuities.  But, first it’s important to […]