The National Directory of Certified Public Accountants

Ask A CPA - Insurance

Is The Exchange Of One Life Insurance Policy For Another One Taxable?

The exchange of one life insurance policy for another one is considered a tax-free exchange. Also, an exchange of an annuity contract for another annuity contract with identical recipients is a tax-free exchange. An endowment policy for another endowment policy that provides for regular payments beginning no later than the date payements would have started under the old policy is considered a tax-free exchange.

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