Modified endowment contracts: Swiss Army knife of investments

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When the stock market goes down, the investor still gets his minimum annual interest, and the account value will never decrease, regardless of market performance. However, when the stock market goes up, the insurance company will credit interest to the MEC account value, equal to the upside of the stock market, with a maximum limit, as high as 8% in any one year. As a result, the cash value of the initial deposit not only creates a large life insurance benefit and a large pool of funds that could be used for long term care, but it also creates a cash savings account with interest paid annually at somewhere between 3% and 8%, with all interest paid tax deferred and a tax-free death benefit.