With a Modified Endowment Contract, or MEC, Distributions (Including Policy

Multiple Choice

With a Modified Endowment Contract, or MEC, distributions (including policy loans) are subject to income tax to the extent that the gross cash value of the policy exceeds the policy owner's basis in the contract. In addition, a penalty of __________ may also apply if the distribution was made prior to the recipient attaining the age of 59 ½.

A) 25%
B) 15%
C) 10%
D) 0%