Changing Life Insurance Plans Without Paying Taxes

While choosing the right insurance policies throughout our lives, especially health, home, and automobile insurance, is a very important task, making those choices can be very difficult. For that reason, I decided to start a blog to help others learn how insurance policies can differ and which features and options make one policy a better choice than another during a specific life circumstance and/or when insuring a specific person or item. I first started dedicating myself to learning more about insurance policies when I was in an auto accident and learned that the auto insurance coverage I had chosen was going to leave me in a financial hardship; I had chosen very high deductibles and regretted it. I had to learn how to make good policy decisions the hard way, but I am dedicated to helping others make the right choices before a difficult situation pops up!

Changing Life Insurance Plans Without Paying Taxes

Changing Life Insurance Plans Without Paying Taxes

2 July 2017
 Categories:
Insurance, Blog


Life insurance coverage is a great way to give your family a sense of financial security in the event that you pass away. If you are already covered under a term life insurance policy that you are unhappy with, it might be a good idea to switch to a different type of coverage. However, switching a life insurance plan isn't always an easy task, and it could also lead to you having to spend more money for coverage. One of the options that you can consider is 1035 exchange life insurance. Below, there is helpful information in regards to 1035 exchange life insurance that will help you decide if it can meet your needs.

1. Consider the Tax Break Involved

One of the things that can happen when switching a life insurance policy is having to pay taxes. The amount of taxes can vary depending on the specific life insurance policy that you are switching to. However, if you opt of 1035 exchange life insurance, it is actually a good way to avoid paying taxes on the new policy. The reason why is because 1035 exchange life insurance isn't just a new policy, it is simply a tax code. The code basically ensures that certain aspects of a life insurance policy are not seen as being taxable income, such as if you received a loan under your current policy that was paid in full.

2. Take Advantage of a Lower Premium

When you opt for a 1035 exchange life insurance policy, you will have the ability to search around for a lower premium. If you fell into bad financial situation since you first obtained the current policy, finding a new type of coverage can make your situation easier to cope with. If your current premium amount isn't an issue, 1035 life insurance can still be useful. For example, you can opt for coverage that is permanent rather than having to worry about your term life insurance policy ending. Whole life insurance is permanent coverage that comes with numerous benefits, such as being able to accumulate a cash value as you pay the monthly premiums.

3. Don't Worry if Your Health Has Deteriorated

You should be able to take advantage of 1035 life insurance even if your health has fallen into worse shape since your current policy began. Simply find a new insurance company that is willing to accept your health condition. The only thing that you should be prepared to do in such a situation is possibly have to pay a higher premium amount. However, you will still get to take advantage of the tax break during the exchange of policies.

About Me
Choosing the Right Insurance Policy Made Simple

While choosing the right insurance policies throughout our lives, especially health, home, and automobile insurance, is a very important task, making those choices can be very difficult. For that reason, I decided to start a blog to help others learn how insurance policies can differ and which features and options make one policy a better choice than another during a specific life circumstance and/or when insuring a specific person or item. I first started dedicating myself to learning more about insurance policies when I was in an auto accident and learned that the auto insurance coverage I had chosen was going to leave me in a financial hardship; I had chosen very high deductibles and regretted it. I had to learn how to make good policy decisions the hard way, but I am dedicated to helping others make the right choices before a difficult situation pops up!

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