WHAT IS A 1035 EXCHANGE?
According to the most recent information available, Americans have individual life insurance with a total face value of $12 trillion.
Due to a variety of factors, these individuals may find themselves in circumstances where the specific life insurance policy or annuity contract they own does not suit their needs. They may want to exchange products without incurring a taxable event.
That’s where Section 1035 of the Internal Revenue Code comes in. A 1035 exchange provides a means for
exchanging an annuity contract or life insurance policy without being treated as if it had been surrendered or sold. Keep in mind that a 1035 exchange can be used only when it involves the same contract or policyholder and the same type of product.