What Is A 1035 Exchange From Life Insurance To An Annuity?

  1. 12689 POINTS
    Ted Ratliff
    Owner, SFS Associates,
    To put it simply, it is a means of rolling the cash value of a life insurance policy into an annuity directly by the companies involved rather than filling out surrender forms, waiting for the check to arrive, and then placing the funds into the new contract.  Keep in mind that when you do this you are losing your life insurance.  Make  sure it is truly to your advantage and not just the advantage of the person trying to sell you an annuity.  Be very careful when replacing life insurance.
    Answered on May 26, 2013
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    David RacichPRO
    Fountain Hills, Arizona
    A 1035 exchange is an IRS code section that allows a tax free transfer of cash vales from one annuity policy to another annuity policy or a life insurance policy to an annuity policy. This is also an opportunity to transfer basis in a policy as well for future use. You cannot use section 1035 to transfer cash values from an annuity policy to a life insurance policy.
      
       
    Answered on May 26, 2013
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