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Old 08-02-2017, 03:51 PM   #1
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Process of 1035 Exchange Process of 1035 Exchange
I am doing my first 1035 exchange and wanted to get an idea on how the process works. I have a client that has a foresters whole life 25k with 25k in cash value. He has had it for over 10 years so I believe we would be using the cash value instead of cash surrender value? I'm not familiar with how the process works and trying to get some more info. Also I am going to be using the cash value for a single premium for 39k death benefit. Any help is appreciated. Thank you
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Old 08-02-2017, 04:29 PM   #2
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Process of 1035 Exchange Re: Process of 1035 Exchange
First, WL only has a cash value. There are no additional surrender charges with whole life, so whatever the cash values are... is what it is.

For the new application, you input the premium is to be paid via 1035 exchange. Once underwriting is approved (should be very basic for a $39k single premium DB), they'll process the 1035.

If you have other questions, I'd suggest calling the company that will be issuing the new policy.
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Old 08-02-2017, 05:36 PM   #3
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Process of 1035 Exchange Re: Process of 1035 Exchange americansenior is the thread starter for: Process of 1035 Exchange

Okay. i will contact them right away. Didn't realize how simple it really was. Thank you for your help!

-Jill
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Old 08-02-2017, 05:48 PM   #4
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Process of 1035 Exchange Re: Process of 1035 Exchange
Originally Posted by americansenior View Post
Okay. i will contact them right away. Didn't realize how simple it really was. Thank you for your help!

-Jill
There will be a few extra forms to fill out. 1035 form, replacement form, etc. No big deal.
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Old 08-02-2017, 06:37 PM   #5
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Process of 1035 Exchange Re: Process of 1035 Exchange
But a 10 year old policy with a 25k cash value and a 25k benefit. Am I missing something here? I may be.
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Old 08-02-2017, 08:07 PM   #6
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Process of 1035 Exchange Re: Process of 1035 Exchange
Could be a non-participating policy... but I agree, the numbers don't really add up.

But that's not our problem as that's the OP's job... and he can let the company tell him the bad news, if it doesn't add up.
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Old 08-02-2017, 08:31 PM   #7
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Process of 1035 Exchange Re: Process of 1035 Exchange
I would guess that cash value is not correct. I bet the face amount is $25,000 and the reduced paid up is quite a bit less and the cash value is quite a bit under that. Unless he is over 90 years old.
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Old 08-03-2017, 07:53 AM   #8
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Process of 1035 Exchange Re: Process of 1035 Exchange
How familiar are you with a Modified Endowment Contract, given that you are doing a single-premium life policy?
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Old 08-03-2017, 09:21 AM   #9
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Process of 1035 Exchange Re: Process of 1035 Exchange
The cash value and cash surrender value should be the same, assuming no loan is on the policy. I agree, the numbers aren't adding up... possibly the info was stated wrong in the orig post. Maybe they will come back and clarify.
Yes the new policy is a mec, but that really doesn't matter. Agree, they should at least know the rules.
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Old 08-03-2017, 09:59 AM   #10
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Process of 1035 Exchange Re: Process of 1035 Exchange
It only matters if the owner of the policy decides to take money out...as you know.
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