What Does Section 1035 Exchange Mean?

This term in legal parlance means a very advantageous option of exchanging an already existing annuity policy for a new contract, but without having to pay taxes for this operation.

Section 1035 Exchange Explained

The new annuity contract will not qualify to be a Section 1035 Exchange unless the policyholder has already exchanged his or her annuity policy for a similar new one. There exist some additional terms and conditions as well as requirements that must be met until a contract qualifies for such an exchange. One of the most important things is that the owner of the annuity contract must remain the very same person.

However, one is not entitled to apply for a Section 1035 Exchange with a check which was acquired from the old policy. This check cannot be used to prove the eligibility for a Section 1035 Exchange.