Final answer:
The incorrect option under a 1035 Exchange is D) Fixed annuity exchanged for a whole life policy.
Step-by-step explanation:
The correct answer is D) Fixed annuity exchanged for a whole life policy.
A 1035 Exchange refers to a tax-free exchange of one insurance policy or annuity contract for another. This allows policyholders to switch between policies or annuities without incurring a tax liability.
In a 1035 Exchange, a fixed annuity can be exchanged for a variable annuity (option A), an endowment can be exchanged for a variable annuity (option B), and a deferred annuity can be exchanged for an immediate annuity (option C).
However, exchanging a fixed annuity for a whole life policy is not allowed under a 1035 Exchange.