Are the cash value liquidations reported on a 1099-R of variable life insurance policies taxable when used to purchase another type of life insurance policy?

[mjrnascar24]

Took actual cash value from two Variable Life Insurance policies (myself & spouse) and used assets to purchase a combined hybrid Long Term Care policy with one death benefit. Right now Turbo Tax is showing all proceeds from policies as being taxable.Is this correct since the assets were used to purchase another life insurance product.

[Critter · Accepted solution]

If you did a qualified 1035 exchange then the 1099-R box 7 code would be reflecting that situation so unfortunately it is a taxable redemption  and a separate purchase.