Q&A – small cash value 1035

Question: My client has a small life insurance policy, can I use the cash value from that policy to fund the Continuation of Benefit Rider (COB) of an Asset-Care policy?

Answer: Heck yeah!  The Pension Protection Act allows for 10335 exchanges from life insurance and annuities into “qualified” LTC products like Asset-Care & Annuity Care.

If your client has a small cash value in an existing policy, it may be sufficient enough to fully fund the COB.  In this scenario, I would use an Asset-Care IV (10 pay, 20 pay, or “whole life” funding) base policy and single pay the COB via 1035 exchange.