Final answer:
A modified endowment contract (MEC) can be treated as not a MEC with certain corrections. A policy that is initially classified as a MEC can later be treated as not a MEC with certain corrections.
Step-by-step explanation:
A modified endowment contract (MEC) is a life insurance policy that has failed to meet certain requirements set by the Internal Revenue Service (IRS).
Once a policy is classified as a MEC, it is generally subject to different tax rules compared to a non-MEC policy.
However, in certain cases, a policy that was previously classified as a MEC can be treated as not a MEC by making certain corrections or changes to the policy.
For example, if an individual has made excessive premium payments that caused the policy to become a MEC, they can make a correction by reducing the amount of future premium payments.
This can allow the policy to be treated as not a MEC going forward.
Therefore, the statement in the question is TRUE.
A policy that is initially classified as a MEC can later be treated as not a MEC with certain corrections.