skip to main content

The Ins and Outs of the '1035 Exchange'

The Ins and Outs of the '1035 Exchange'

Under Section 1035 of the IRS code, certain insurance contracts may be exchanged for another without generating a tax consequence. This specifically applies to life insurance policies, which can be exchanged for another policy, annuity, or long-term care policy, as long as the owner and insured person remain the same.

When considering an exchange, Partner Bob Lickwar said to take into account updates some insurance companies have made to their life expectancy tables. Longer life expectancies “could result in lower annual premiums for the same amount of insurance, or a higher death benefit with the same premiums,” he said.

But most importantly, speak with a financial professional before making the exchange, as this can be a big decision. “A quality financial professional should educate and inform the client of all charges, fees, tax consequences, and other potential pitfalls,” Lickwar said. And, if there are any doubts, “consider obtaining a second opinion.”


Read the full article published by Financial Advisor Magazine.

Have a Question?

Fill out the form to speak with Bob

Hide Firm Disclaimer


UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc., and its subsidiary entities. UHY Advisors, Inc.’s subsidiaries, including UHY Consulting, Inc., provide tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors” and “UHY Consulting”. UHY Advisors, Inc., and its subsidiary entities are not licensed CPA firms. UHY LLP, UHY Advisors, Inc. and UHY Consulting are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. “UHY” is the brand name for the UHY international network. Any services described herein are provided by UHY LLP, UHY Advisors and/or UHY Consulting (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

On this website, (i) the term "our firm", "we" and terms of similar import, denote the alternative practice structure conducted by UHY LLP and UHY Advisors, Inc. and its subsidiary entities, and (ii) the term "UHYI" denotes the UHY international network, in each case as more fully described in the preceding paragraph.