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Modified Endowment Contracts (MECs) are life insurance policies, specifically whole life policies, into which too much money has been paid. This practice mainly occurred before 1984, when the IRS implemented a rule to prevent wealthy individuals from using these policies as high-interest cash accumulation vehicles. The IRS aimed to ensure these policies fulfill their intended purpose of providing financial support to families upon the policyholder's death. The seven-pay rule was established, limiting the total contributions to a life insurance policy over seven years. If the contributions exceed this limit, the policy is classified as a MEC, which imposes certain tax consequences.