You Can Swap an Unneeded Life Insurance Policy for an Annuity
There may come a time in your life when you’ll no longer need life insurance. For example, if you’re divorced (or widowed) and no longer have any beneficiaries, you’re retired, collecting Social Security and a pension, and if you’re already paid off your mortgage.
In this case, swapping your life insurance policy for an annuity is possible thanks to section 1035, provided that the owners of the two are identical.
You could swap for an income annuity, which comes in two varieties. Immediate annuities provide income immediately, hence the name, or within a year at more while deferred annuities pay a stream of income at a future date that you chose.
They can pay out for a set term, and lifetime annuities are most popular, but you have to check which one works for you before making the call.