Group Life & AnnuitiesQuestion 116 of 315
Which of the following exchanges is NOT permitted on a tax-free basis under Internal Revenue Code Section 1035?
a.An annuity exchanged for a life insurance policy
b.A life insurance policy exchanged for an annuity
c.An annuity exchanged for another annuity
d.A life insurance policy exchanged for another life insurance policy
Explanation
Section 1035 permits tax-free exchanges life-to-life, life-to-annuity, and annuity-to-annuity. The one direction not allowed is annuity-to-life, because that would convert taxable annuity gains into a life insurance death benefit and undercut the tax rules.
Law Reference: 26 U.S.C. §1035Practice all 315 questions free — no signup required.
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- Which statement about a typical annuity surrender charge schedule is correct?
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- Which of the following is NOT one of the eligible group categories for group life insurance in California?
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Sen Lin, PrepPass Founder · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)