If you're trying to decide whether 1035 exchange life insurance is a good financial move for you, you need to be aware of all of the potential benefits.
Switching your life insurance provider while taking advantage of 1035 exchange regulations can provide numerous benefits. The following are four of the most common and useful financial advantages of this life insurance practice:
Increasing the amount of money you can "put down" on a new life insurance policy
Any large purchase in life is typically made in increments. However, the amount of money you come up with initially when you make the purchase generally has a huge influence on how financially advantageous the purchase will be.
When you switch over to new life insurance with a 1035 exchange, you can improve your situation after having initially purchased life insurance without much money down. With your life insurance replacement, you can come up with more money upfront and therefore enjoy better terms from your new insurance provider. These better terms could include faster interest accumulation, a larger death benefit, and lower monthly premiums.
Enjoying more affordable life insurance thanks to an improved health rating
Those who initially purchased life insurance when they had some health problems are especially likely to benefit from 1035 exchange life insurance. When your health is compromised, life insurance providers figure that you won't be living as long and making premium payments as long. Therefore, they don't offer as high a death benefit.
Switching over to another policy with a 1035 exchange after significant health improvements will probably allow you to start over with more generous policy terms.
Taking advantage of lower premiums
With a 1035 Exchange, you can get out of excessively high monthly premiums that are creating a financial burden without being subject to tax consequences when you cash in the initial policy.
You can simply cash in the initial policy and transfer your funds to a new policy with a lower premium without having to pay taxes on the money you're getting from the initial policy.
Switch over to a more reliable insurance carrier
Perhaps you opened up a life insurance policy a few years back with a company that is struggling financially. If this is the case, you really want to get out of that life insurance policy and switch over to a carrier that is going strong financially. Otherwise, your own financial future- and the financial future of your family- will be put in jeopardy.
Have you done everything possible to prepare for your family after you pass away? So many of us think that there is always more time to take out a life insurance policy or think that we cannot afford one. What we fail to remember is that there may not be a tomorrow. If you were to pass away today in a tragic accident, would your family be able to survive? Would your family be able to continue living in your home? I started working on this blog after I went to a friend's funeral. It was that moment that I realized that I wasn't ready for death and that if it was to happen at that time, my family would struggle to survive.