Tax-free Exchange Of Insurance Products
Under Section 1035 of the Internal Revenue Code, stipulation that the exchange of one life insurance policy for another life insurance policy will generally not result in a recognized gain for the purpose of federal income tax purposes to the policy owner who exchanges the policy. The insured must be the same person under both policies. If the policy owner should surrender the second policy in a taxable transaction, the untaxed gain is then recognized. The types of policy exchanges that can be made on a tax-free basis are as follows: (1) a life insurance policy for another life insurance policy; (2) a life insurance policy for an annuity contract; and (3) an annuity contract for another annuity contract. An annuity contract cannot be exchanged on a tax-free basis for a life insurance policy. The annuitant must be the same person under both annuity contracts in order to maintain the tax-free basis.
Popular Insurance Terms
Risk distribution included by type of coverage, by kind of risk, and by geographical location. ...
Maritime acts resulting in a liability circumstance falling under common law and statutory law. ...
No limitation under a contributory pension plan of an employee's right to receive vested benefits, regardless of whether or not the employer withdraws contributions. ...
Same as term Convention Examination: audit of the convention blank (NAIC Statement Blank) every third year as to all of the financial activities of a company; company claim practices; and ...
Term used in the reinsuring of disability income insurance policies in that, after an extended period of time expires (in addition to the elimination period found in the disability income ...
Membership organization of individuals especially trained in the application of actuarial mathematics, including compound interest, annuities, life contingencies, measurement of mortality ...
Condition in which buildings are built with sealed windows resulting in poor ventilation causing occupants to experience dizziness, nausea, respiratory problems, headaches, fatigue, sinus ...
Arrangement that provides for the reduction of estate taxes and the payment of tax-deductible life insurance premiums. The procedure is for a donor to present a charity with a gift of a sum ...
Extension of coverage available under the Standard Fire Policy. The standard policy only covers the perils of fire and lightning. The endorsement covers riot, riot attending a strike, civil ...
Have a question or comment?
We're here to help.