What changes could cause a loss of “grandfathered” status?
A face amount increase, the addition of a rider or an increase in its amount, a reduction in rating, a change to non-smoker status or a substitution of insured are all considered material changes and could result in a loss of “grandfathered” status. With the change, a new 7-pay period is started effective with the date of the transaction and a new 7-pay premium is determined. Premiums will need to be limited to the 7-pay premium for seven years following the change in order to avoid Modified Endowment Contract (MEC) status.
