Tax-free 1035 exchanges to purchase LTC insurance
June 5, 2023
Would your life insurance or annuity serve you better if it included long-term care benefits?
Explore the tax advantages of exchanging your life insurance or annuity for hybrid long-term care insurance.
If you think your existing annuity or life insurance policy would protect you more if it were a long-term care (LTC) insurance policy, then a 1035 exchange may be the right solution. While certain criteria must me bet, the tax code allows for these exchanges. And because long-term care benefits are not taxable, you’ll never have to pay taxes on the gains.
Some insurance carriers have options allowing a partial exchange of your life insurance to pay for your LTC insurance premiums.
Another option is to exchange your life insurance policy for one that combines life insurance with long-term care protection. This type of policy provides a pool of money that can be used as either a death benefit or long-term care benefit. If you don’t end up needing long-term care, then your estate will receive the death benefit. Eligible policy types for 1035 exchanges are:
- 1035 Exchange Life Insurance to Life Insurance
- 1035 Exchange Life Insurance to Annuity
- 1035 Exchange Annuity to Annuity
You cannot 1035 Exchange an Annuity to a Life Insurance policy. Learn more >
Compare 1035 Exchange Options
Explore funding a hybrid long-term care insurance policy with an existing annuity or life insurance policy. We have highly rated companies, multiple plan options, and expert long-term care advisors. Expect personalized service on topics such as:
✓ Suggestions for the product best suited to your 1035 exchange
✓ Guidance when comparing products from multiple companies
✓ Assistance with health qualifying for coverage
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