Annuity Guys®

Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes.


Helping You Create Great Results Your Retirement Deserves!



(217)753-1515
  • Home
  • About Us
    • About Us
    • Contact Us
    • Site Terms & Disclosure
    • Privacy Policy
  • FAQs
    • Most Frequently Asked Annuity Questions
  • All Annuity Guys Videos
  • Annuity Types
    • Best Annuity Reviews
    • Market Free™ Annuities
    • Choosing an Annuity
    • Deferred Annuities
    • Hybrid Annuity Choices
      • Hybrid Annuity Pros&Cons
      • Hybrid Income Riders
      • Hybrid Annuity Guarantees & Strategies
    • Fixed Annuity Choices
      • Fixed Annuity Performance
      • Better Fixed Annuities
      • Fixed Deferred Annuities
      • Fixed Rate Annuities
      • Fixed Annuity Alternatives
      • Fixed Annuity Pros & Cons
      • Fixed Annuity Negatives
    • Index Annuity Choices
      • Fixed Index Annuity Features
      • Fixed Index Annuity Performance
      • Better Fixed Index Annuities
      • Fixed Index Annuity Alternatives
      • Fixed Index Annuity Pros & Cons
      • Fixed Index Annuity History
      • Fixed Index Annuity Negatives
    • Immediate Annuities
      • Immediate Variable Annuity
      • Immediate Fixed Annuities
    • Variable Annuities
      • Variable Annuity Features
      • Better Variable Annuities
      • Variable Annuities Disadvantages
      • Variable Annuity Alternatives
      • Variable Annuity Negatives
      • Variable Annuity Performance
    • Pre-Issued Annuities™
      • Hybrid Annuities versus Pre-Issued Annuities ™
    • Annuity Glossary
  • Articles
    • How Do MarketFree™ Annuities Work?
    • Are Annuities Safe?
    • Living Benefits
    • FIA Performance
    • Beware of FIAs?
    • Annuities & Retirement
    • Annuities & Estate Tax
    • Rollovers & Annuities
    • Annuities & Tax
    • Charity & Annuities
    • The Lost Decade
    • Best Annuity Videos
    • Social Security Benefits
  • Calculators
    • Retirement Planning Calculator — Basic
    • Retirement Shortfall Calculator — Basic
    • Immediate Annuity Calculator & Quotes
    • Fixed Index Annuity Calculator & Fixed Annuity Calculator
    • Variable Annuity Calculator & Hybrid Annuity Calculator
  • Blog
    • Annuity Guys® Weekly Annuity Video Blogs
  • Get Annuity Guys Help
    • Request Annuity Guys’ Planning Help Today
You are here: Home / Annuity Commentary / Index Modified Endowment Contract vs a Fixed Index Annuity

Index Modified Endowment Contract vs a Fixed Index Annuity

February 19, 2016 By Annuity Guys®

A while back, we attended a training where one of our colleagues waxed poetically about what he called “the best financial product”.  He lauded about how his clients loved him for solving many of their core desires – safety, growth, and liquidity with tax advantages; not to mention benefits for long-term and chronic care with this little known–under used financial instrument. [continued below video…]

Annuity Guys, Dick and Eric, reveal why some call an IMEC “the best financial product ever”!

Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities and Non-Variable Life insurance unless otherwise specified. 

We were slightly surprised when he mentioned it was an Index Modified Endowment Contract – only because it seems that very few advisors understand IMEC’s and how to utilize them properly. Like our colleague we have also utilized index modified endowment contracts often to help our clients balance their retirement portfolios for safety without sacrificing meaningful growth potential. It is important to know that all IMECs are not created equal; just like annuities, there are many different IMECs and companies that make them available.

Are these really “the best financial product”? Let’s look at some of the Pros and Cons of IMECs in general.

PRO’s:

  1. Annual Locked In Cash Account Value;
  2. Lump Sum allocation typically $50,000 up to $1,000,000;
  3. No 1099s or IRS Tax Reporting Required (withdrawals may be taxable);
  4. High earning potential (Cap Rates up to 17%);
  5. Many Popular Market Indices (DOW, S&P500, NASDAQ, Russell, etc.);
  6. Many Popular Index strategies(annual pt-pt., spread, monthly sum, etc.);
  7. Limited Market Upside with No Market Risk;
  8. Minimum Guarantees up to 3% (can offset fees and costs);
  9. Average Interest potential based on back testing up to 8%+;
  10. Third Party Rated for Safety (A+ or Better Available);
  11. Tax Deferred Growth;
  12. Tax Free Wealth Transfer Death Benefit for Heirs;
  13. Heirs are Guaranteed Tax Free up to four-times the initial contribution/premium or more;
  14. Advanced IMEC strategies can transfer tax-qualified wealth Tax-Free to heirs;
  15. Tax Free Long Term Care Options Available;
  16. Tax Free Home Health Care Options Available;
  17. Tax Free Chronic Care Options Available;
  18. Cash Access High Liquidity;
  19. Potential for No Surrender Charges;
  20. Built on a Life Insurance Chassis;
  21. Can be Designed with the lowest insurance costs allowed to meet IRS Guidelines;
  22. Lower commissions paid to agents as a result of intentionally low built-in insurance costs;
  23. Many similarities to Roth IRAs without IRS limits on contributions.
  24. Allowed by Internal Revenue Code 72(e) and 7702.

CON’s:

  1. You must qualify medically; (can be easier than qualifying for long term care insurance);
  2. Four to six week approval period is typical;
  3. Designed for lump sums initial optimization is needed cannot be easily added to;
  4. Minimum lump sum is typically about $50,000 to optimize potential;
  5. Will not accept most qualified money such as IRAs;
  6. Income is available but not **guaranteed for life, like annuities;
  7. Fees can typically run from 1.5% up-to 3% (these can be offset by minimum **guarantees);
  8. IRS imposes 10% penalties on cash distributions before age 59.5;
  9. Not FDIC Insured;
  10. Requires an experienced specialist to structure correctly.

 

MEC Detailed Instructional Video – View Now
Mec Pros & Cons Instructional Video

 

Learn More About the Wise Use of MECs >>>

 

1k
SHARES
ShareTweetGoogleLinkedinPinterestSkypeStumbleuponTumblrDeliciousDiggRedditMail

Filed Under: Annuity Commentary, Annuity Fees, Annuity Guys Blog, Annuity Guys Video, MECs, Modified Endowment Contract Tagged With: annuities, Annuity, Financial Products, Google, Hybrid Annuity, MEC, Modified Endowment Contracts

About Annuity Guys®

Annuity Guys®, Dick & Eric, enjoy entertaining you with their off-beat sense of humor, lighthearted sarcasm, and no shortage of expertise on annuities as they discuss today's retirement challenges. Got annuity questions... they've got annuity answers!

 

Empowering Annuity Reference Book

 
DOWN-LOAD NOW - FREE!
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 

  • Should You Buy Annuities in our Trump Influenced Bull Market?

    Should You Buy Annuities in our Trump Influenced Bull Market?

    What would Trump do? Do you think he might be the type to buy low & sell high? This sounds …Read More »
  • Can Annuities Enhance Stock Market Investing?

    Can Annuities Enhance Stock Market Investing?

    The stock market is well known for its roller coaster effect of up and down account values. For many retirees, this can mean more than …Read More »
  • Five Common Annuity Regrets to Avoid

    Five Common Annuity Regrets to Avoid

    Most of us have a few regrets in life… but seriously – annuity regrets???Perhaps we have gone too far as …Read More »

Revealing Fun Video: Fiduciary Advisors Vs. Annuity Salesmen
MUST KNOW FACTS 90% of
ANNUITY ADVISORS AVOID TELLING!
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"


  • Reduce Your Concern of Outliving Retirement Dollars!

    Reduce Your Concern of Outliving Retirement Dollars!

    Have you ever made a trip to the grocery store where you picked up a few items, walked up to …Read More »
  • Can Annuities Solve the Retirement Challenge?

    Can Annuities Solve the Retirement Challenge?

    Why does it feel like everyone is talking about annuities these days? Could it be due to the approximately 10,000 …Read More »
  • How Do Index Annuities Pay Higher Interest?

    How Do Index Annuities Pay Higher Interest?

    Okay, what’s the catch? How is it possible that a fixed index annuity (FIA) can eliminate market risk and earn higher interest than standard fixed annuities …Read More »
  • Does Your State Have Good Annuities?

    Does Your State Have Good Annuities?

    There’s no place like home… but when it comes to annuities, your Home State may not be the best place for …Read More »
  • What is the Best Annuity?

    What is the Best Annuity?

    Are you trying to figure out which annuity will offer the best way to grow your money and safely generate …Read More »
  • Are Annuity Surrender Charges a Deal Breaker?

    Are Annuity Surrender Charges a Deal Breaker?

    The last time you bought a new car, how much of a factor in your purchase decision was the vehicles …Read More »
  • Seven Ways to Use Annuities for Estate Planning!

    Seven Ways to Use Annuities for Estate Planning!

    Annuities are not commonly thought of as financial tools that are utilized within an Estate Plan. You may be surprised to know that there are, in …Read More »
  • Who Should Not Buy Annuities?

    Who Should Not Buy Annuities?

    Are You One of These Five Profiles who probably should NOT buy an annuity?Are you an Aggressive Investor with an Appetite …Read More »

View Our Newest Videos! Subscribe Now
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Variable Annuities Vs Fixed Index Annuities – FIAs

    Variable Annuities Vs Fixed Index Annuities – FIAs

    Suze Orman came by the office the other day… Okay, true confession, so, she was actually on the cover of an …Read More »
  • Are You Too Young or Old to Purchase an Annuity?

    Are You Too Young or Old to Purchase an Annuity?

    What is the best age to purchase an annuity?There have been a plethora of articles and reports about unscrupulous agents …Read More »
  • Top Ten Fixed Index Annuity Questions to ask Before Purchasing!

    Top Ten Fixed Index Annuity Questions to ask Before Purchasing!

    And now, here’s your Fixed Index Annuity TOP TEN Countdown… while we are definitely not the Casey Kasem version of counting down the top …Read More »
  • Government Shutdowns Affect Annuities

    Government Shutdowns Affect Annuities

    Can you feel the impending doom of the government shutdown?Every night, it seems that the media cannot wait to tell …Read More »
  • Stop Annuity Procrastination: New Years Resolution!

    Stop Annuity Procrastination: New Years Resolution!

    Procrastination – or the act of replacing high-priority actions with tasks of lower priority.We always hear of people who spend more …Read More »
  • Annuity Ratings, are they Believable?

    Annuity Ratings, are they Believable?

    U.S. to sue S&P over Ratings – that was this years’ February 5th headline in the Wall Street Journal. If the federal government …Read More »
  • Fixed Index Annuity & Hybrid Annuity Info

    MarketFree® Fixed Index Annuity Case Study…Case Study:  In November of 2006, Jan and Steve, a couple concerned about the security of …Read More »
  • Relying on Annuities for Retirement Pensions

    Relying on Annuities for Retirement Pensions

    The private sector has been bailing on providing pensions for employees over the last few decades. Now, it appears legislation to …Read More »
Get Newly Released Annuity Guys® Videos on Saturday Mornings
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Avoiding Annuity Gimmicks, Amateurs, & Charlatans!

    Avoiding Annuity Gimmicks, Amateurs, & Charlatans!

    Everyone loves a good practical joke – until the joker happens to be the salesperson who just sold you an annuity …Read More »
  • Are 8% to 15% Returns an Annuity Scam?

    Are 8% to 15% Returns an Annuity Scam?

    “Eight Percent Annual Annuity Returns”… or even better!  Before You Lock In Rates… Discover Up To 15% Income For Life …Read More »
  • What is the Best Annuity?

    What is the Best Annuity?

    Are you trying to figure out which annuity will offer the best way to grow your money and safely generate …Read More »
  • Why get out of the market now?

    Why get out of the market now?

    What? Markets were on their way back to all-time highs – There must be a mistake! Did we hear the …Read More »
  • Five Early Annuity Surrender Options

    Five Early Annuity Surrender Options

    There may be 50 ways to leave your lover, sings Paul Simon! And, there are at least five ways to …Read More »
  • Are Annuity Surrender Charges a Deal Breaker?

    Are Annuity Surrender Charges a Deal Breaker?

    The last time you bought a new car, how much of a factor in your purchase decision was the vehicles …Read More »
  • Stocks, Bonds and Annuities – How Much in Each?

    Stocks, Bonds and Annuities – How Much in Each?

    Remember making decisions this way, growing up, eeny, meeny, miny, moe, this may have been a helpful rhyme for making …Read More »
  • Annuities – The Best Financial Product No One Wants!

    Annuities – The Best Financial Product No One Wants!

    Why would an insurance actuary call annuities the best financial product no one really wants? And why would he go …Read More »
  • Can Annuities Solve the Retirement Challenge?

    Can Annuities Solve the Retirement Challenge?

    Why does it feel like everyone is talking about annuities these days? Could it be due to the approximately 10,000 …Read More »
  • Are MarketFree® Hybrid Annuities Good for Retirement?

    Are MarketFree® Hybrid Annuities Good for Retirement?

    What would the perfect retirement financial vehicle look like if we could design it from the ground up?Would it allow for stock index …Read More »

 

Empowering Annuity Reference Book

 
Start Reading Now - Instant Download
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 
Comprehensive Site Terms and Disclosure | Privacy Policy | Copyright © 2023 Annuity Guys®


  ** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
Annuities are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.


1k SHARES