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LTC & 1035 Exchange

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Judi Woods

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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. 


Download this guide today or contact us to learn more about the long-term care insurance plans we offer. You'll be glad you did. 

LTC & 1035 Exchange

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