A modified endowment contract (MEC) can be an efficient way to neutralize several retirement risks, particularly for individuals aged 60 and up. Key risks addressed by MECs include:

• Long-term care
• Income replacement
• Legacy or inheritance planning

While not every MEC includes a long-term care rider, having such options can be beneficial when strategically allocated. If you have savings, a MEC can help keep assets safe, relatively liquid, and provide significant tax-free benefits.

Setting Up a MEC

When setting up a MEC, especially for older clients, it's essential to ensure it offers at least a waiver of surrender or return of premium rider. This protection ensures policyholders can recover their investment should the index performance not meet expectations.

Modified endowment contracts typically only become relevant during the decumulation phase of retirement savings. This involves funding the contract with a single premium or multiple smaller premiums over time.

Choosing the Right Products

Financial products, including MECs, shouldn't be labeled as strictly good or bad. Rather, their utility depends on how they fit into an individual's financial strategy to meet personal goals.

To find the best approach for each person, it's vital to:

1. Understand personal financial goals and priorities
2. Recognize the individual's current financial stage
3. Evaluate potential risks and benefits of products like MECs

For people 60 and older, a MEC might offer an effective way to mitigate major retirement risks while maintaining liquidity and safety for their assets.