What You Should Know About 1035 Exchange Life Insurance

Posted on: 27 October 2016

Are you unhappy with the terms of your life insurance policy? You might be able to get exchange it for a new policy, but it is only a good idea if you will actually benefit from it. All you have to do is talk to an agent about a 1035 exchange life insurance policy to find out if switching is in your best interest or not. It is possible for you to end up having to pay a higher premium under a new life insurance policy. Take a look at this article for some helpful information about 1035 exchange life insurance coverage.

What 1035 Exchange Life Insurance Is About

Basically, when you opt for 1035 exchange life insurance, you will be given a break on your taxes. The policy is a tax code that will help you avoid being charged taxes as your policy is being switched over to the new one. You can actually switch life insurance policies without the 1035 tax code, but you will likely end up having to pay a lot of money in the process.

How Coverage Might Improve

One of the best benefits of a 1035 exchange life insurance policy is that it will give you the opportunity to upgrade your coverage. For instance, if you only have term life insurance, it will only cover you up to a certain amount of years. Under the 1035 policy, you will be able to switch to a permanent policy like whole life insurance. The perk of whole life insurance is that it comes with a cash value that accumulates throughout the years and can be loaned out if you need it before death.

Why a Higher Premium Might Be Charged

If you switch to a 1035 exchange life insurance policy, it can sometimes lead to a higher premium. For example, the premium might be higher if your health has deteriorated since the original life insurance policy began. As long as your health is in good shape, you are not likely to be charged a higher amount of money.

How You Can Get a Lower Premium

If you are not happy with the premium amount of your current life insurance policy, a 1035 exchange policy will allow you to search for a plan that meets your budget needs. You will simply have to search around and find a life insurance company that charges a premium amount that you are comfortable with paying. Get in touch with an agent to discuss obtaining a 1035 exchange life insurance policy.