Can You Exchange Annuity To Life Insurance? 
The IRS created section 1035 for the free exchange of annuities to annuities polices as well as life insurance cash values to annuities polices . But you can not use the 1035 exchange rules to transfer annuity values to life insurance policy . If your annuity policy has no gain it you consider funding life insurance with your annuity surrender value . But consult your tax adviser before moving forward considering surrenders or exchanges . 