Tax-free exchanges of life insurance policies
Abstract: A periodic life insurance review is essential to ensure life changes have not altered the original intent for purchasing a policy, cover new or additional requirements, address concerns about the financial soundness of the insurer, and deal with various other issues. However, replac-ing a life insurance policy can create adverse federal income tax consequences. But there’s a way to do so while ensuring that any gain or loss is not recognized currently for income tax purposes. This article explains how this “1035 exchange” works.