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1035 Exchange: Why?
- Any taxable gain or loss is carried forward into the new policy.
- The cash value transferred from the old policy receives favorable treatment under TAMRA (7-Pay) modified endowment regulations, meaning the cash value rolled over is not counted as new premium for the new policy.
- When rolled into a new guaranteed life insurance policy, the cash values may be sufficient to provide a "paid-up" policy and lower costs since the insured has just been found healthy in a medical evaluation.
Related Terms:
1035 Exchange,
1035 Exchange: Steps
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