1035 Exchange: Life Insurance Analysis

Many individuals who currently have a life insurance policy with an investment component such as a whole life or universal life policy do not fully understand how their policy performs or what the cash value/death benefit will be in the future. We offer life insurance policy audits. We look at past performance (annual statements) on the policy you currently have and project future performance (in-force illustration from the life insurance company you currently have) to help clients understand what they have in place and what the death benefit/cash value would be in the future. 

This is where the concept of a 1035 exchange comes into play. For example, if the policy you currently own has cash value of $300,000 and the death benefit is $1,000,000, we can analyze over 40 life insurance carriers for you to see if the same $300,000 of cash value would support death benefit, higher than $1,000,000. The transfer of the $300,000 from your old policy contract into a new life insurance policy contract is completely tax free. There is no penalty/extra tax for this transfer. Many individuals are shocked with the amount of value (increase in death benefit) they receive from a situation described above.  

The reason one life insurance company would offer more death benefit, let’s say $1,500,000 of death benefit, with the transfer of your $300,000 cash value (with no extra premium payments) is because every life insurance carrier has different costs of insurance and different rates of return on the cash value. We do an apples to apples analysis with your current life insurance company to help increase your death benefit with the same cash value transfer. We do our analysis with over 40 life insurance carriers that we spreadsheet out, to show you the extra value that can be generated if you decide to move forward with a 1035 exchange.