Questions About 1035 Life Insurance Exchanges

With a Section 1035 Exchange Life Insurance, you are permitted to exchange your life insurance policy for a new policy without having to pay tax on any investment earnings from your original policy contract. Many life insurance policies that are variable are actually registered securities. Since these policies are registered with the Securities and Exchange Commission, there may be investment returns on the insurance plan. As a result, based on the policy earnings, the cash value of the plan can fluctuate.

Nevertheless, if you are interested in a 1035 Exchange, you may not know much about this IRS allowance. Here are a few details:

Can you exchange the policy for a check?

Tax laws only allow your current insurance policy to be swapped for a new policy. You are unable to receive cash for the policy and then apply the money towards a new policy.

In what instances is the

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