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In the 1970s, life insurance companies exploited the tax-free growth of cash value policies by offering products with significant cash value accumulation. Policy owners could withdraw interest and principal as tax-free loans, creating large tax shelters. To address this, Congress enacted the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), which established the modified endowment contract (MEC) classification. Flexible premium policies must now pass the 7-pay test, capping premium contributions over seven years. Policies exceeding this limit become MECs, with irrevocable classification that forfeits previous tax benefits. New policies have specific premium limits that expire after seven years, allowing unused cap space to accumulate.