Can an annuity be exchanged for a life insurance policy?

Although you can exchange one annuity for another annuity, Nasdaq reports that you cannot exchange an annuity for a life insurance policy. However, you can exchange an existing life insurance policy for an annuity.

The process of converting a life insurance policy is known as a 1035 exchange. This kind of exchange is available for individuals who realize they no longer need the payout from an existing life insurance policy and would like to take the cash value they have accumulated and convert it to a new annuity or apply it to an existing annuity. The IRS allows this transaction to be done without having to pay income taxes on the switch.