IRC Section 1035 Tax Free Exchanges
How it works
The Pension Protection Act of 2006 was designed to help people get Long Term Care Coverage through section 1035 of the IRC. An efficient way to obtain Long Term Care coverage is to review your current Life Insurance Policy or Annuity. Chances are if you've had it for some time, it does not contain a Rider for Long Term Care. Newer policies have been designed with these Riders and allow access to your policy values to cover the cost of Long Term Care. The IRS has section 1035, which allows for the Tax Free Exchange of a Life Insurance Policy or Annuity as long as the new policy is similar in benefits to the one being exchanged.
The benefit to the policyowner is they now get Long Term Care coverage at a much more reasonable cost than purchasing a Long Term Care policy outright, which as we age can become cost prohibitive. The same applies to older annuities that don't have Long Term Care Riders. To see if this strategy makes sense for your particular circumstances, call or email me to schedule a complimentary appointment to review your existing policy or annuity to see if its eligible for the 1035 Tax Free Exchange.
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5.10% for 4 years, 5.00% for 5 years , Tax Deferred
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