A 1035 exchange is a specific transfer of funds from one life
insurance policy, endowment policy or annuity policy with no
gain or loss, meaning it is not taxable. 1035 is actually the
section of the tax code that provides for this transaction. This
means an individual must qualify based on the exact laws of the
tax code in order to pay no taxes on such an exchange. While a
1035 exchange is complicated and should only be done with the
assistance of an accountant, there are a few things every person
can understand.  1035 Exchanges Preserve Wealth  The main reason
to move forward with this type of exchange is because your
previous policy is outdated or needs revised. You may even be
looking to place your policy with a different company. In either
case, you want to make sure the wealth you have built up in your
existing policy is not lost. In some cases, you will lose money
on your existing policy if you elect to sell or surrender it.
For example, you have made payments totaling $15,000 on a life
insurance poli