TIAA Life Insurance Company Review
B.A. Risk Management
Life Insurance Agent
AM Best Rating
Teachers Insurance and Annuity Association of America, more commonly known as TIAA, is an insurance provider based in Manhattan, New York.
The company has been around for more than 100 years and is one of the most recognizable and reliable names in the insurance industry today.
What are the policies offered by TIAA and how good are they? Let us find out!
TIAA has the highest A.M. Best (A++) financial currently offered to any life insurance company. If you are in the market considering TIAA as your life insurance provider, now is the time to buy. TIAA is ceasing all life insurance sales effective December 2019.
If you are reading this after December 2019, consider the following companies as alternatives to TIAA for life insurance
Northwestern Mutual in one of the few life insurance companies that shares the financial rating of A++. Unfortunately, their product portfolio is more competitive on permanent than term life insurance policies.
If you are looking for term life insurance USAA is very similar to TIAA. While TIAA has focused on serving teachers throughout America, USAA does the same for military families with a similar product lineup. They also have a AA+ financial rating from A.M. Best.
Company History and Background
TIAA was established in 1918 by noted business magnate and philanthropist Andrew Carnegie (lots of wealthy Americans have helped make America much better and stronger). The company was founded for the specific purpose of providing educators with life insurance as well as a guaranteed retirement income.
In 1929, despite being a new entrant to the industry, TIAA managed to survive the Wall Street Crash and the Great Depression which followed it, thanks to its conservative approach to investing.
In 1952, TIAA set up the College Retirement Equities Fund (CREF) and became the first insurance company in the country to offer variable annuity products. Industry observers called it the most notable development in the insurance business since the introduction of the Social Security Act in 1935.
In 1967, TIAA was named the fastest growing life insurance company in the country by Fortune magazine. In 1974, the company was hailed as the epitome of fiduciary responsibility by the congressional committee during the passage of the Employee Retirement Income Security Act (ERISA).
In 1979, TIAA started investing in stocks that were traded on foreign exchanges. In 1992, the company added Rollover IRAs to its product range. By 1995, it had become the largest pension organization in the entire country.
In 2018, TIAA completed its 100th year in the insurance business, making it one of the longest serving insurance providers in the country today.
On June 28 2019 Investment News announced TIAA is departing the life insurance market and will no longer be providing coverage by the end of 2019.
“TIAA, one of the largest U.S. life insurers, is exiting the life insurance business, ceasing the manufacture and distribution of its products by the end of the year.” - Source
TIAA Financial Ratings
TIAA is among the highest rated insurance providers in the country today. Given below is a list of its current financial ratings.
- A.M. Best: A++ (Superior)
- Moody’s: Aa1 (Very Strong)
- Standard & Poor’s: AA+ (Very Strong)
- Fitch: AAA (Exceptionally Strong)
TIAA has over $320 billion in total assets and $38.8 billion in capital and surplus, which solidifies its position as a financially stable insurance company.
Moreover, as mentioned above, TIAA not only survived the Wall Street Crash as well as the Great Depression, but it actually managed to emerge stronger in the aftermath.
It shows that the company has a solid investment strategy and is capable of holding its own even during downturns and crashes. It also shows that the company is led by an experienced and level-headed management team which is focused on long-term growth.
Let us take a look at TIAA’s current product range. Remember the life insurance products will no longer be available after December 2019.
Policies Offered by TIAA
Term Life Insurance
TIAA offers a pure term life insurance policy which is designed to protect you for a specific term period. You have four term lengths to choose from – 10, 15, 20, and 30 years. If you pass away at any point during the coverage period, the beneficiary designated by you will receive the death benefit.
The premium and the death benefit are set to remain unchanged for the entirety of the term period. TIAA gives you the option to convert your level term policy into a permanent policy any time you want. If there is no change in the coverage amount, you do not have to take any medical test.
If on the other hand, you want to increase your coverage amount, you might be asked to undergo a medical exam. It should also be noted that the convertibility option is only available for people less than 80 years of age.
TIAA also offers an accelerated death benefit rider completely free of cost along with its term life policy.
If you are diagnosed with a terminal disease while your policy is still in force, you are allowed to access a portion of the death benefit or the entire death benefit amount, depending on your needs. After your death, your designated beneficiary will be paid the remaining amount.
Permanent Life Insurance
TIAA’s permanent life insurance policies are designed to provide you with coverage until your death. The policies build cash value, which you can access from time to time for your financial needs.
TIAA offers five types of permanent life policies – universal life, survivorship universal life, long-term care universal life, variable universal life, and survivorship variable universal life.
This is a traditional universal life policy from TIAA. It offers a guaranteed, tax-free death benefit, which is paid out to your beneficiary in the event of your death.
The premium is not fixed, so you get to decide how much you want to contribute to your policy on a monthly or yearly basis. The coverage amount is also not fixed, which means you can adjust it from time to time, depending on your financial needs.
There are, however, a couple of caveats though.
- There is a minimum payable premium, which is set by the company at the start of the coverage period. If your payments fall below the minimum limit, your policy could lapse.
- If, at any point during the coverage period, you want to significantly increase the death benefit, the company might ask you to prove your insurability.
The cash value account is set to earn a minimum of 3% interest. The rate of interest could go up, depending on the company’s performance and a number of other factors.
You can access the money in your cash value account by making a free partial withdrawal or by getting a policy loan, which needs to be repaid with interest.
Survivorship Universal Life
The policy is designed to provide lifetime insurance coverage to two individuals. The death benefit is paid out to the beneficiaries after the second policyholder passes away.
It is ideal for couples who want to provide their heirs with tax-free income, which can be used to pay estate taxes, settle outstanding bills, take care of a person with special needs, and for a variety of other purposes.
The policy’s cash value account earns an interest of 3% or higher. You are allowed to make partial withdrawals on a regular basis and get a policy loan as and when needed. You can adjust the premium as well as the death benefit depending on your financial needs.
Long-Term Care Universal Life
The policy combines the guaranteed protection of a traditional universal life policy and the living benefits of a long-term care policy.
The policy offers a death benefit, which your beneficiaries are assured of in the event of your death. In addition to this, the policy also helps you cover the expenses associated with long-term care.
The insurance provider pays you in case you are confined to a nursing home, assisted living facility, adult day care, or hospice care due to your health condition. You are eligible to receive the payments even if you are taken care of by your own family in your own residence.
Variable Universal Life
This is an extremely flexible policy with high growth potential.
- You can choose the coverage amount you need and adjust it whenever your financial needs change. The death benefit is guaranteed, which means your beneficiaries are assured of a payout after your death.
- You are free to choose the amount of premium you want to pay, as long as your payments meet the minimum limit set by the insurance company. You can also choose the frequency of your payments – you can make the payments on a monthly or yearly basis or create your own schedule.
- You can invest the money in your cash value account into a fixed account as well as a number of other investment accounts. Depending on your appetite for risk, you can allocate your funds among a wide range of high-risk, fixed rate-of-return, and low-risk investment options.
You are allowed to transfer the money from one investment account to another as and when you need to.
- TIAA offers a dollar cost averaging program, which is designed to help you invest your money in a systematic manner to mitigate the risks involved to the extent possible and to maximize the earning potential of your portfolio.
- Perhaps the biggest advantage of a variable universal life policy is the potential for high returns. Indexed policies usually have a cap on the amount of money that can be credited to your account. Variable policies usually do not have any such upper limits.
So, under favorable market conditions, your policy is likely to accumulate cash value at a much faster rate compared to a traditional universal life policy or an indexed universal life policy.
- There is also a fixed account, which is set to grow at a steady rate. So even in the event of a downturn, your account is guaranteed to be paid a minimum rate of interest.
- You can access your life insurance policy’s cash value any time you want by making a partial withdrawal or by getting a policy loan. If you are unable to repay the loan, the insurance company will deduct the outstanding amount (principal, interest, and penalties if any) from your policy’s death benefit.
Survivorship Variable Universal Life
This is similar to the traditional survivorship universal life policy offered by TIAA, except for the fact that the policy’s cash value account is linked to a wide range of investment options.
Generally, survivorship policies are easier to qualify for than individual policies. So they are a great choice for couples who are looking to provide their children and grandchildren with the funds they need for various purposes.
Review the pros and cons of choosing TIAA as your insurance provider below.
Pros and Cons of TIAA
- TIAA is financially stable and has been in the insurance business for over a century. It is very reliable and is known to settle claims without unnecessary delays.
- It offers an excellent term life policy, which allows you to access the death benefit in case you develop a terminal disease. You also have the option of converting it into a permanent plan any time you want.
- It offers a traditional universal life policy as well as a variable universal life policy for individuals. It also offers a traditional survivorship life policy as well as a variable survivorship life policy for couples.
- An accelerated death benefit rider, which gives you access to your policy’s death benefit in the event of a terminal illness diagnosis, is included with all the universal life policies completely free of cost.
- TIAA is known for its top-notch customer service. The company’s customer service representatives are knowledgeable, polite, and responsive.
- The company’s website is user-friendly, easy to navigate, and is full of useful information. You can find out what kind of products they offer, determine how much coverage you need, and get a quote instantly.
TIAA does not offer a traditional whole life policy or an indexed universal life policy. Despite the fact that the company offers a number of other policies, which are great in their own right, the lack of these two policies is certainly a downside and might force some people to look for other insurance providers.
Final Thoughts on TIAA
TIAA is well known, reliable, and financially stable. It offers term as well as universal life policies, which are filled to the brim with excellent features. An accelerated death benefit rider is added free of cost to all the policies, which is something we really appreciate.
If you are looking for a traditional term life policy, universal life policy, or a survivorship life policy, you cannot go wrong with TIAA. In case you need a whole life policy or an indexed universal life policy, you have to choose a different insurance provider.