Annuity glossary
1035 Exchange
A tax-deferred swap under Section 1035 of the tax code that lets you replace an existing life insurance policy or annuity with a new one without triggering current taxes on the gains. Funds must move directly between insurers, never through your hands. Life insurance can exchange into an annuity, but an annuity cannot become life insurance. Tax treatment depends on current law and the contract's facts, so individual guidance may be appropriate.
Any guarantee is backed by the claims-paying ability of the issuing insurer.
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