Questions: XCEL Progress Multiple Choice Which of the following is NOT a valid contract exchange? A. O An annuity exchanged for another annuity B. O A life insurance policy exchanged for another life insurance policy C. O An annuity exchanged for a life insurance policy D. O A life insurance policy exchanged for another annuity Submit Certification Exam: Virginia Life Pre-licensing

XCEL Progress Multiple Choice Which of the following is NOT a valid contract exchange? A. O An annuity exchanged for another annuity B. O A life insurance policy exchanged for another life insurance policy C. O An annuity exchanged for a life insurance policy D. O A life insurance policy exchanged for another annuity Submit Certification Exam: Virginia Life Pre-licensing
Transcript text: XCEL Progress Multiple Choice Which of the following is NOT a valid contract exchange? A. O An annuity exchanged for another annuity B. O A life insurance policy exchanged for another life insurance policy C. O An annuity exchanged for a life insurance policy D. O A life insurance policy exchanged for another annuity Submit Certification Exam: Virginia Life Pre-licensing
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Solution

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The answer is C: An annuity exchanged for a life insurance policy.

Explanation for each option:

A. An annuity exchanged for another annuity - This is a valid contract exchange under Section 1035 of the Internal Revenue Code, which allows for the tax-free exchange of an annuity for another annuity.

B. A life insurance policy exchanged for another life insurance policy - This is also a valid contract exchange under Section 1035, which permits the tax-free exchange of a life insurance policy for another life insurance policy.

C. An annuity exchanged for a life insurance policy - This is NOT a valid contract exchange under Section 1035. The code does not allow for the tax-free exchange of an annuity for a life insurance policy.

D. A life insurance policy exchanged for another annuity - This is a valid contract exchange under Section 1035, which allows for the tax-free exchange of a life insurance policy for an annuity.

In summary, option C is the correct answer because exchanging an annuity for a life insurance policy is not permitted as a tax-free exchange under the relevant tax code provisions.

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