This is a YouTube video titled '@IBCGlobalInc 60 Day Unscheduled & Scheduled PUA MEC Rules On Whole Life Insurance' created in July 2025. The content is a detailed technical discussion between two speakers about the IRS MEC rules related to whole life insurance policies, specifically focusing on the 60-day rule for unscheduled and scheduled Paid-Up Additions (PUAs) and how it affects death benefits and MEC limits. The speakers explain the implications of these rules for insurance agents and policyholders.
Now Guardian's got this, this rule about in the first year about, you know, first 60 days, you know, you got to get in that set amount of money that you're wanting to pay into the policy. And I think agents often get confused about this rule. And this is again, more technical. This is for the agents.
Unscheduled pua. MEC rule. Yeah, yeah.
Help me understand that because, yeah, I've got a policy where it's set up to pay 70,000 a year.
Yeah. Mm.
And in my first year, although I did that number day one, I could have spread that number out throughout the year without obligating myself. 270. And so my minimum amount was 9,000. So what, so what end up actually getting, actually got a bill to pay 9,000 day one of the policy and then I was able to dump the other 61 at leisure. In my case, I did it kind of both at the same time. But to have that flexibility is huge. Where you're like, okay, I'm able to get all of the benefits as if I was doing it all at once, but not be obligated to it. But then there's this rule with Guardian about this whole unscheduled PUAs and SCH schedule. PUAs 60 day.
Yeah. So, yeah. So that rule is actually with all companies, it's a, it's a MEC rule. So it's IRS rule, not so much the insurance company. So.
Okay.
Yeah. So the simple answer is, if you've got a one year term rider where your death benefit doesn't increase, whether you add extra PUAs or not, like you if you just paid 9 or if you paid 70, your net death benefit in year one, no different. It's no different from when you started either. So that whole 60 day rule is you don't have to worry about it at all. What it's referring to is, with a life insurance policy, if I started a policy with no term rider, say the death benefit is $1 million, my MEC limit might be $30,000. Now, if I dump in $10,000 into PUAs, yes, it's going to give me cash value, but it's also going to push my death benefit up. Let's call it $1,030,000 or yeah, $1,030,000. Now, which, if my death benefit increases, my MEC limit is going to go up a little bit. So if it was $30,000 with a $1,000,000 death benefit, now it's $31,000. Right. With $1,030,000 from adding those PUAs. So adding PUAs to a policy without a one year term rider will push the whole life death benefit up. Like when you see a classic whole life insurance illustration with the increasing death benefit. The higher the death benefit is, the higher the MEC limit is. So what Guardian shows in their software, a couple other companies do it too, but they'll show okay when you add PUAs, death benefit goes up and the software will show the MEC limit that matches that death benefit, including the PUA payment. However, the IRS rules with the MEC rules stipulate that during the first 60 days you've got to add those PUAs to have the MEC limit based on the death benefit figure you see in that illustration. To simplify, a million dollar death benefit gives you $30,000 in MEC space. If you add $30,000 upfront on day one, that might push your death benefit up to $1,100,000, which now your MEC limit is $33,000 or whatever higher.
Yeah.
And then now it's 33k per year. However, if day one, you start with a $1,000,000 death benefit, $30,000 MEC limit, you just pay the minimum and then 61 days later you throw in $30,000 or up to $30,000, you fund it up to the MEC limit, the death benefit is pushed up to $1,100,000, but the MEC limit's still at $30,000 because. Yeah, so if I add it in the first 60 days, then the MEC limit is going to be based on what that death benefit is during the first 60 days. Whereas if I add the PUAs after the first 60 days, the death benefit still goes up, but the MEC limit doesn't go up with it because I've passed that 60 day window. It's somewhat meaningless when you're using that one year term rider because your death benefit won't increase at all and ever for the as long as the one year term rider is attached because you're inflating it with the term rider from the get go you're building in the future increase from day one. So the whole 60 day rule is at the window, but that's what that's referring to. Yeah. I hope that makes sense.
