Yes, you can convert a universal life insurance policy to a whole life insurance policy through a 1035 exchange, which allows you to transfer the cash value from one policy to another without incurring any tax consequences.
Here are the steps involved in the process:
Consult with an Infinite Banking Authorized Practitioner: Before making any changes to your existing policy, consult with a knowledgeable professional to discuss your financial goals, evaluate the costs and benefits of making the transition, and determine if a whole life policy is suitable for your needs.
Apply for a whole life insurance policy: Work with your insurance agent to apply for a whole life policy. This may involve additional underwriting, medical exams, and potentially higher premiums due to age or changes in health status.
Request a 1035 exchange: Once the whole life policy is approved and in force, request a 1035 exchange from your current insurance company. This tax-free exchange allows you to transfer the cash value from your universal life policy to the new whole life policy.
Complete the exchange: The insurance companies involved will handle the exchange of funds, transferring the cash value from your universal life policy to the whole life policy. The cash value transfer will typically be applied to the new policy as a single premium, reducing or eliminating the need for future premium payments.
Monitor your new policy: Once the exchange is complete, your whole life policy will be in force, and you can begin practicing Infinite Banking or using the policy to achieve your financial goals.
It’s essential to note that while a 1035 exchange allows you to transfer the cash value tax-free, you should carefully consider the potential surrender charges, fees, and other costs associated with the exchange.
Additionally, you should be aware of any potential differences in coverage or features between the two policies.
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Michiel Laubscher & Laubscher Wealth Management LLC is not an investment advisor and is not licensed to sell securities. None of the information provided is intended as investment, tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other offerings. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information contained herein is at your own risk. The content is provided ‘as is’ and without warranties, either expressed or implied. Michiel Laubscher & Laubscher Wealth Management LLC does not promise or guarantee any income or specific result from using the information contained herein and is not liable for any loss or damage caused by your reliance on the information contained herein. Always seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, or other content.
