Definition of «modified endowment contract»

A modified endowment contract is a type of life insurance policy that offers both death benefit protection and an investment component. The policyholder makes regular premium payments, which are invested by the insurer to help accumulate cash value over time. However, if the policyowner surrenders or cancels the policy before it reaches its maturity date, they may be subject to tax penalties and other financial consequences due to the specialized nature of this type of contract.

Sentences with «modified endowment contract»

Certain cash value life insurance policies can become modified endowment contracts if they're paid - up over a shortened period, which can have negative tax implications. (valuepenguin.com)
Certain cash value life insurance policies can become modified endowment contracts if they're paid - up over a shortened period, which can have negative tax implications. (valuepenguin.com)
However, an extra cost can arise from withdrawals or loans from your SPL, since SPL policies are usually considered modified endowment contracts. (investopedia.com)
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