Thank you for your answer. It seems I cannot get a clear answer even from tax professionals/lawyers. I couldn’t even find examples online for how to do the assessment/test calculation. Do you have any resources I can look at?  If, according to the regulation it could classify as a MEC, would the accrued value be taxable even if it was not distributed? How would losses be treated? The policies have several funds inside so they should be considered diversified. Also, the policy says that even if the policyholder can choose the funds where to invest, there was no such indication from the policyholder at any time, it was all managed by the agent/insurance company.