BOLI Portfolio Optimization and 1035 Exchange to Single Premium Immediate Annuity (SPIA)

A relatively uncommon type of 1035 exchange has become the talk of the town in the BOLI market. Typically when we think of a 1035 exchange, it’s a transaction that involves exchanging the BOI policy of one carrier for another carrier, on the active lives, in order to improve performance of the BOLI. However a 1035 exchange can also be done from a BOLI policy into an annuity. Specifically, a single premium immediate annuity with a fixed number of payments. This strategy can be used for both active and inactive lives, and can be used for the same reasons as a BOLI to BOLI 1035 exchange.

SPIA Overview

 

SPIA Model

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