It’s notable when an expert about a complicated subject like life insurance gives out advice as simple as to go with one company.
That’s just what James Hunt, a retired life insurance actuary and a former insurance commissioner of Vermont, did in a recent interview about cash-value life insurance. If you had to write one sentence about such plans, he said it would be: “Stick to cash-value policies at TIAA.”
Glenn Daily, a fee-only insurance advisor and prominent commentator on life insurance, also touts TIAA-CREF for those who are buying life insurance.
What is TIAA-CREF?
Industrialist and philanthropist Andrew Carnegie founded the Teachers Insurance and Annuity Association of America in 1918 “with the goal of supporting the financial well-being of college teachers through a pioneering system of annuities and low-cost life insurance,” according to the company’s official history.
In 1952, TIAA launched the first variable annuity — the College Retirement Equities Fund. The payments from variable annuities depend on the performance of investment choices within the annuity, while fixed annuities have a preset benefit.
Why TIAA-CREF has buzz
Today, TIAA-CREF still focuses on clients in the academic, research, medical and cultural fields. And now others can get in on the action — TIAA-CREF Life Insurance Co., created in 1999, offers low-load life insurance and annuities to the general public.
Unlike other insurance agents, TIAA-CREF’s “consultants” do not receive commissions for selling policies, the company says. Instead, “they are compensated through a salary plus incentive program that rewards client service excellence rather than product promotion.”
Another important difference: TIAA-CREF’s permanent life insurance policies do not have surrender fees, which other companies charge if you abandon a policy in the first few years. Surrender fees allow an insurer to recoup costs associated with issuing the policy, including commissions.
What does it offer?
TIAA-CREF sells two types of term life insurance, which provides a death benefit for as long as the policy is in place:
- Level term, which lasts a certain number of years
- Annual renewable term, which goes for one year at a time.
The other main kind of life insurance is permanent life, which builds up cash value that policy owners can borrow against and eventually use to cover premiums for the rest of their lives. TIAA-CREF does not sell whole life insurance policies, which have fixed premiums, death benefits and rates of return. But it does have two other varieties of permanent life insurance:
- Universal life, which provides a guaranteed interest rate on the cash value while allowing policy owners to adjust premiums and death benefits
- Variable universal life, which is similar to universal life but offers a menu of investment options, bringing potential for gains and losses.
If a low-load life insurance policy sounds good to you, it’s worth checking out TIAA-CREF.
Photo via iStock.