It is my understanding that if i have an underfunded Universal life policy that is not worth saving i can 1035 exchange the remaining cash value into an annuity and retain the basis (based on the amount of premium i paid into the contract). If i had a UL policy that i had paid $20000 of premium over the years and it has $1000 of cash value, can i 1035 exchange that and combine it with an existing non qualified annuity that has some tax deferred gains (i put $50,000 after tax contribution in and current value is $65,000) giving me a contract that now has basis of $70,000 eliminating the taxes on the gains from the prior non qualified annuity?

2nd question: I recently read that you can also 1035 exchange a term policy that is about to expire to annuity creating a basis based on premiums paid in over the years. is this true?