Eric made a lump-sum premium payment of $100,000 for a qualified life insurance policy. He is the policy's insured, owner and beneficiary. Based on the IRS's 7-pay test, his policy is treated as a modified endowment contract. As a MEC, which of the following statements are true? 1) A loan from the policy is not a taxable event, as long as a reasonable rate of interest is paid 2) Any loan from the policy is taxed as ordinary income on an return-ofincome-first basis (LIFO) 3) The taxable portion of any distribution from cash value prior to age 591/2 incurs a 10% penalty 4) The death benefit from a MEC policy is tax-free to the beneficiary 2,3 and 4 1 and 4 2 and 3 1,2,3 and 4