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
coverage for contingent liability exposure. ...
Written contract between an insured and an insurance company stating the obligations and responsibilities of each party. ...
Proceeds from a life insurance policy paid on a monthly basis instead of in a lump sum. ...
Coverage for the inside of an insured premises of a business firm if it experiences a loss of money, securities, personal property, and damage or destruction of real or personal property ...
Fund that concentrates primarily on short-term government securities, certificates of deposit with maturities less than one year, and high-quality interest-bearing corporate debt. The fund ...
Interest earned but not yet paid for a period of time that has elapsed since the last interest payment. ...
Approach that reflects losses expected. It is a calculation of the pure cost of property or liability insurance protection without loadings for the insurance company's expenses, premium ...
Program of health care designed for the prevention and/or reduction of illnesses by providing such services as regular physical examinations. This care is in opposition to curative care, ...
Figure in a mortality table derived by dividing the number of people alive at the end of a given year by the number of people alive at the beginning of that same year. ...
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