Life Insurance with 1035 Exchange

Life Insurance with 1035 Exchange

Life insurance can be an alternative way to solve for a long term care situation. Most clients that purchase permanent life insurance products, do so with the intent of building up cash value inside the policy. As time goes on and their needs change, they may no longer have the need for as much life insurance, or they want to redirect their focus towards a long term care scenario. Owning a permanent life insurance product is the perfect way to do this.

In time, clients who have purchased permanent life insurance, may no longer have a need for that cash value. The government allows a 1035 exchange where the internal cash value of the policy can be moved to a new life insurance policy with the long term care rider. This, in turn, helps avoid any tax consequences on that money. Another popular approach is to create a monthly benefit with this internal cash value. If this doesn’t meet the amount you need for long term care in your state, you can then supplement with a small long term care traditional policy. Typically, most clients who are approaching retirement have an advisor review their assets, and their insurance policies. In many cases, clients forget they have a permanent life product and this is the perfect time to consider redirecting that cash value to a long term care situation.

In essence, you’re simply upgrading from your old permanent life insurance policy, to a new one that gives you this additional long term care feature. Usually in these policies, the death benefit is level like the previous plan, but you can accelerate the death benefit to be used for a long term care scenario.

About the author: Mark Yurkovic has been in the life insurance business for over 12 years, and holds CLTC, LUTCF, and CES designations. He enjoys building remote control boats, and playing instruments including the piano, guitar, banjo, and mandolin. Mark would love to discuss life insurance options and work towards finding the best policy fit for your family. You can contact Mark at 1-800-651-1953 or MYurkovic@Pivot.com.