LTC & 1035 Exchange

1035 exchange is an IRS rule that allows policyholders to transfer money from an existing life insurance policy or annuity to a new insurance policy without paying any income tax. 

This type of exchange is often used to fund long-term care insurance, as it can provide a tax-free way to pay for long-term care insurance premiums. Types of long-term care insurance policies include traditional long-term care insurance, hybrid policies, and short-term policies.

FAQs for 1035 Exchange and Long Term Care Insurance

Q: What is a 1035 exchange?

A: A 1035 exchange is a tax-free transaction that allows you to move funds from a qualified life insurance policy into a new policy, often with the same insurance company. This is commonly done to take advantage of better policy features or to save money on premiums.

Q: How can I use a 1035 exchange for long term care insurance?

A: A 1035 exchange can be used to purchase a long term care insurance policy, or to move funds from a qualified life insurance policy into a long term care policy. This allows you to use the cash value of the life insurance policy to pay the premiums for the long term care policy.

Q: What are the advantages of using a 1035 exchange for long term care insurance?

A: Some of the advantages of using a 1035 exchange for long term care insurance include tax-free transactions, lower premiums, and the ability to take advantage of better policy features. Additionally, it can provide a more secure way of obtaining long term care insurance coverage, as the funds are held in a life insurance policy.

As independent insurance brokers, we offer State Long-Term Care Insurance policies to meet your long-term care needs. 

We are here to assist in your insurance and planning needs. Please reach out to us today. And, as our gift, you are welcome to download this informative FREE resource.  

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