is a modified endowment contract a good thing 
generally speaking converting a life insurance policy to an mec isn t good this is because the mec loses many of its prior tax advantages in place when it was classified as life insurance however purposefully creating an mec can be an estate planning tool under certain circumstances the bottom linean mec is a cash value life insurance policy that has been stripped of its tax benefits because it contains too much cash once reclassified by the irs as an mec the policy s withdrawals and loans are taxed it s a permanent change and usually disadvantageous for most policyholders but mecs may be useful for some because they provide higher low risk yields than savings accounts and can ease the transfer of assets upon the owner s death investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal investors should consider engaging a financial professional to determine a suitable retirement savings tax and investment strategy 