A primary advantage of cash value life insurance is the ability to replace an existing policy in the future. There are many reasons for exchanging an existing contract, including an opportunity for enhanced performance, as well as more robust features and benefits that align better with the policyholder’s needs.

Under Internal Revenue Code (IRC) Section 1035, a properly transacted exchange can result in deferred taxation of any accumulated gain until the policyholder surrenders (or otherwise disposes of) the newly acquired policy.

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