TIAA-CREF Life Insurance Company. Guide To Planning and Choosing Life Insurance. The Key to Your Financial Plan is How You Help Protect It

Transcription

1 TIAA-CREF Life Insurance Company Guide To Planning and Choosing Life Insurance The Key to Your Financial Plan is How You Help Protect It

2 TIAA-CREF A Brief History of TIAA and TIAA-CREF Life Insurance Company American industrialist and philanthropist Andrew Carnegie recognized the value of a good education and the hard work and dedication of the teachers who made it possible. To reward that dedication and to attract the most talented teachers to the education profession in 1918 Carnegie, through the Carnegie Foundation for the Advancement of Teaching and the Carnegie Corporation of New York, established a fully-funded system of pensions for professors at institutions of higher learning: Teachers Insurance and Annuity Association (TIAA). Beyond the Pension Needs of Educators. More than 90 years ago, on January 15, 1919, TIAA issued its first life insurance policy to Louis C. Karpinski, an associate professor of mathematics at the University of Michigan. Professor Karpinski eventually owned nine TIAA life insurance policies starting a tradition of service that continues to this day with life insurance and annuities that benefit members of the education, medical, cultural, governmental and research communities. In 1999, TIAA launched TIAA-CREF Life Insurance Company (TIAA-CREF Life), a wholly owned subsidiary of TIAA to make our life insurance and annuity products available to a larger audience, including family and friends of educational professionals as well as to the general public. Today, TIAA-CREF Life is a member of one of only three insurance groups in the United States to hold the highest ratings currently awarded from all four leading independent insurance industry ratings agencies. 1 Our Dedication Continues. The Appreciation Continues. We remain dedicated to insuring the future of those who shape it. We are committed to offering life insurance and annuities that are designed to help provide educators and their families with the potential for a more financially secure future. 1 TIAA-CREF Life Insurance Company (TIAA-CREF Life) is a wholly owned subsidiary of Teachers Insurance and Annuity Association (TIAA). TIAA-CREF Life s ratings are provided as a result of its relationship with TIAA. A.M. Best (A++ as of 4/12), Fitch (AAA as of 6/12), Moody s Investors Service (Aaa as of 12/11) and Standard & Poor s (AA+ as of 5/12). There is no guarantee that current ratings will be maintained. Per S&P criteria, the downgrade of U.S. long-term government debt limits the highest ratings of U.S. insurers to AA+ (the second-highest rating available). Ratings represent a company s ability to meet policyholders obligations and claims and do not apply to variable annuities, mutual funds or any product or service not fully backed by TIAA-CREF s claims-paying ability.

3 Learning About Life Insurance Is Important and It's Simple! The key to a sound financial plan is protection against income loss in the event of your death. Even a sizable portfolio could be depleted quickly from final expenses, college tuition, estate taxes, mortgage payments, retirement, and other costs. That s where life insurance comes in. While nearly 4 in 5 U.S. households own life insurance, the average person owns less life insurance than they believe they should own. 2 So, even if you already own a policy, chances are you may not have enough coverage or the right kind. The best way to choose the right kind of coverage is to understand the different kinds of life insurance products, the advantages of each, and which one is best suited to your situation and life stage. Determining your insurance need is easier than you think. This guide objectively explains some of the different types and general features of life insurance policies available in the marketplace and from the TIAA-CREF Life Insurance Company (TIAA-CREF Life). You ll find easy-to-understand descriptions, examples, a worksheet, and other tools to help you arrive at the solution that s best for you. 2 The Facts of Life and Annuities, LIMRA International, Inc.,

4 InTRoduCTIon How Life Insurance Works When you choose a life insurance policy which you pay for by making payments called premiums the insurance company agrees to pay your beneficiaries a specified amount of money when you die, as defined by the policy. The premiums you pay depend on your age, gender, health and lifestyle, the kind of insurance you buy, and any extra optional features (called riders) you add to the policy. There are two significant features of life insurance death benefits: 1. The death benefit is generally free of income tax and, if structured properly, free from estate taxes as well. 2. The amount of death benefit is usually significantly greater than the premiums paid for the policy. It is, however, important to keep in mind that the death benefit is a guarantee that is subject to the claims-paying ability of the issuing company. For most people, life insurance covers the loss of their most important asset their future earnings. For people who have sizable investments and other assets, life insurance can be used to help protect those assets from federal estate taxes and other transfer costs such as state death taxes, probate fees, and legal and administrative costs. The kind of policy you choose depends on a variety of factors the amount you need, the intended purpose, your age, gender, health, life stage, and your budget. Before you decide on the type of insurance you want, figure out the amount of insurance you ll need and what you can afford. 2 All solicitations pertaining to a contract for insurance or annuity may be handled only by an agent or broker licensed to engage in the business of insurance in the state in which you reside.

5 How Important Is Life Insurance? Ask Laura Diss. When Laura Diss s father died suddenly, Laura, who lived with her divorced dad, had to deal not only with the loss of her sole guiding light and mentor, but also with the problem of how to pay for expenses, including her college tuition. Laura s father had no life insurance, and left Laura with no benefits and no estate. Insurance proceeds could have paid the rent on his house without straining Laura s very limited funds. It could have covered Laura s college tuition. And it could have allowed her and her brother some breathing room during the terrible days immediately following their father s death. In addition to the financial burdens she was facing, Laura s responsibilities as next of kin included dealing with her father s financial affairs, moving his things out of his house, taking a job to help pay for her own living expenses and schooling, and giving her brother emotional support in their time of loss. Despite the fact that college had been a lifelong dream, Laura made the hardest decision of her life: she chose to withdraw from school and help handle the effects of her father s death. This was a big blow. College had been Laura s ultimate goal. Unable to give up on her dreams of getting a truly great college education, she set about finding a way to make it happen, despite the lack of her father s financial support and guidance. With determination, brains, and luck, Laura achieved her goal. She won several scholarships, was able to get student loans, and went on to attend Wellesley College, a school her father had suggested she look into before he died. Not everyone is as fortunate. But nearly everyone can be protected by life insurance. This story was made available to you by TIAA-CREF Life Insurance Company (TIAA-CREF Life). This story is created and prepared by The Life and Health Insurance Foundation for Education (LIFE), and was printed with their permission. TIAA-CREF Life is a proud supporter of LIFE s efforts to educate consumers about life insurance and the importance of safeguarding their families financial futures through proper insurance planning. 3

6 The TIAA-CReF LIFe DIFFeRenCe Estimate Your Life Insurance needs Use this simple worksheet to get an idea of how much life insurance your survivors might need in the event of your death. RePLACInG InCOMe AnnuAL InCOMe TO be RePLACeD In general your family may need about 75% to 100% of your total net income to maintain its standard of living after the death of a primary breadwinner. number OF years TO RePLACe InCOMe How many years would it take your survivors to recover from the loss of your income? Consider providing replacement income for the number of years until you would have retired. A $ b TOTAL InCOMe TO be RePLACeD (C=Axb) C $ OTheR special ObJeCTIVes TO be COVeReD emergency FunD AnD FInAL expenses emergency Fund Consider including an amount to help your survivors meet any unexpected expenses. A general guideline is half of your annual income. Funeral expenses The national median cost of a funeral is about $7,300, 3 depending on cemetery costs, local costs and personal preferences. It s a good idea to allow approximately $9,000 for these expenses. In addition to funeral costs, other settlement expenses may include unpaid hospital and medical bills, tax return preparation and legal fees. Probate Costs Estate probate and administration costs are usually about 3% to 5% of total assets. The exact amount depends on how complex your estate is and where you live. D $ PAy OFF MORTGAGe AnD DebTs e $ establish COLLeGe FunD FOR survivors The average cost of a four-year college education can range from $60,852 at a public institution to $142,544 at a private institution and varies by whether the student commutes or lives in residence. These ranges are based on average annual costs for and include tuition, room and board, books, and incidentals. 4 It does not take into consideration the effects of inflation or other increases. F $ TOTAL FInAnCIAL ObJeCTIVes TO be COVeReD (G=D+e+F) G $ how MuCh LIFe InsuRAnCe you need (h=c+g) h $ 3 Source: NFDA General Price List Survey for 2006, National Funeral Directors Association, Source: Trends in College Pricing 2009, The College Board, New York, NY Please note that the worksheet does not reflect the effects of inflation, taxes or the time value of money. The actual amount required to help meet your dependents needs may be higher or lower than the amounts shown. Please contact your advisor for a more detailed and accurate analysis of your life insurance needs. 4

7 Life Insurance Comes on Your Terms Once you ve determined how much coverage you need, and what you can afford, you re ready to choose the type of policy. Life insurance comes in a range of products to serve a variety of needs and budgets. They fall into two broad categories: TERM and PERMANENT. Term Life Insurance Is Simple, Affordable Coverage You Buy For a Set Period of Time It s like renting a home as opposed to buying one. Term insurance is a good choice if you need protection for the shorter term or have limited resources to pay for coverage. Initial premiums are typically lower for Term insurance than for permanent coverage, but generally increase in cost as time goes on. Like renting, you don t build equity or cash value when your term is up, so is your coverage. In general, if you need protection for a specific period of time, typically less than 15 years, term insurance may be the better choice. TIP What s Your Earnings Potential? You Might Be Surprised. If you re 40 years old and earning $100,000 a year, you will have earned $2,500,000 by the time you re 65. If you factor in salary increases, that number would be higher. Your earnings potential is likely to be your biggest asset. Help make sure it s protected. 5

8 Types of Term Life Insurance LEvEL TERM Protection for growing families The level in Level Term insurance refers to the unchanging amount of both the death benefit and the premium during the level term period selected. Because Level Term insurance generally offers a large amount of coverage for a fixed premium, it s often recommended for young families on a budget. < Typically available for 10-, 15-, 20-, and 30-year periods < Premiums and death benefit guaranteed to be level for the specified period of the policy < Typically convertible to permanent insurance without undergoing a medical exam 5 < Many companies allow coverage to extend beyond the initial term period, but premiums are generally higher Example of Level Term: Mike and dana LeVeL TeRM provides predictability for planners on a budget Mike and Dana are in their mid-30s and have two children, ages 6 and 8. As part of their financial protection plan, they need life insurance that will replace their income and pay for their children s college education in the event of either parent s premature death. Their carefully figured budget requires a fixed, rather than increasing, expense. They each buy a 30-year Level Term policy to provide coverage that helps meet this need, providing a safety net for their children and a premium that is guaranteed to be level for the entire 30-year term. 6 5 A change that represents an increase to the amount of your death benefit may require evidence of insurability/a new medical exam.

9 AnnuAL REnEWABLE TERM Insurance for short-term needs Annual Renewable Term insurance covers you for a year at a time and gives you the right to renew for additional one-year term periods. During each yearly term, you pay only for the insurance that s covering you during that time period as opposed to Level Term. With Annual Renewable Term, your initial premiums are typically lower than for Level Term insurance. Each year when you renew the coverage, the premium increases. < Low initial cost < Premiums are lower at the outset, and typically increase each year thereafter < Typically convertible to permanent insurance without proof of good health Example of Annual Renewable Term: Anisha and Jay AnnuAL ReneWAbLe TeRM offers the most insurance for the lowest initial premium Anisha and Jay are both 24 and have been married for two years. Jay is still in the beginning stages of his career as a sales representative for a printing company. Money is tight for this young family. They want the most coverage for the lowest price while leaving their options open for the future. They each buy an Annual Renewable Term life insurance policy to replace Jay s income and Anisha s child care and household responsibilities in the event of death. This is the best match for their current budget. Later on, they plan to convert their policies to permanent life insurance. 7

10 How to Cover Longer Term needs Permanent Life Insurance combines insurance with cash value accumulation and covers you for life It s like buying your own home you re meeting both your immediate and future needs with a long-term solution. Premiums are usually higher than for Term insurance, just as homeowners expenses are often greater than the cost of renting, but your policy builds cash value just like you build equity in your home. And you can access your cash value by making partial withdrawals or taking out loans as long as there is enough cash value to cover the minimum costs of maintaining your insurance protection. Of course, unpaid loans and withdrawals reduce death benefits. There may also be some restrictions imposed by the issuing company on withdrawals and loans. It is always advisable to consult your tax advisor before taking any such action. In general, the longer you need life insurance protection, the better value permanent insurance can be. TIP How to know when cash value withdrawals are tax free The amount you pay in premiums for your life insurance policy is called the basis. In most cases, as long as the amount you withdraw from your policy s cash value doesn t exceed your basis, the withdrawal is considered a nontaxable return of premiums. Any accumulation from investment performance (rather than from contributions) is not usually taxable as long as the policy stays in force and will escape taxes entirely if the policy terminates at death. Withdrawals from a policy that is classified as a Modified Endowment Contract (MEC) are taxed under a different set of guidelines and may be subject to a 10% penalty if received before age 59½. Please see page 17, which defines an MEC. Withdrawals during the first 15 years may be subject to taxes if a reduction of face amount accompanies the withdrawal. Please note that TIAA-CREF Life does not provide tax advice. Please consult your own tax advisor before taking any action. 8

11 Types of Permanent Life Insurance universal LIFE Permanent insurance with flexible premiums and adjustable face amounts plus interest-sensitive cash values Universal Life Insurance is designed to provide lifetime coverage while accumulating cash value. < Earns interest at a rate that may be slightly higher than current market rates < Cash value can be borrowed, withdrawn or used to pay policy costs. Restrictions may apply. Any outstanding loan balance or partial surrender will reduce the payable death benefit < Flexibility to increase or decrease the face amount as your needs change (increases may require a new medical examination and additional proof of good health) < Choose between various death benefit options such as level or increasing Want More Information? Call , Monday through Friday, 8 a.m. to 8 p.m. (ET), or visit Example of universal Life: Arianna universal LIFe provides permanent coverage with a flexible premium Arianna is a single mother who sells real estate for a living. She wants to help protect her daughter with permanent insurance, but is concerned about her fluctuating cash flow. She also worries about her retirement plan and wants to use life insurance cash values to supplement her retirement savings. She buys a Universal Life insurance policy for its long-term protection and its potential to accumulate cash value. In addition to helping her save for retirement, the cash value in her policy could provide Arianna with a source of funds in the event of an emergency. Another benefit of her Universal Life policy is the flexibility it offers her to vary, skip, or make additional premium payments (as long as her payments are within insurance company limits and insurance costs are covered). Changes in premium payments may adversely impact the death benefit and/or cash value potential. 9

12 variable universal LIFE (vul) Permanent insurance protection that provides a variety of investment options VUL is permanent life insurance with investment accounts, as well as, in some cases, a fixed account option contained within the policy. The value of the investment accounts fluctuate according to the performance of the underlying investment options. VUL provides flexibility of face amount, premium amount, and investment choice. < Potential to build tax-deferred cash value in a variety of investment options. Investment performance is not guaranteed and your cash value will fluctuate. There are risks associated with investing in securities < Choose between various death benefit options, such as level or increasing benefits < Cash value can be borrowed, withdrawn or used to pay costs. Restrictions may apply. Any outstanding loan balance or partial surrender will reduce the payable death benefit < Flexibility to increase or decrease the death benefit amount (increases may require a new medical examination and additional proof of good health) Example of variable universal Life: Jarvis VARIAbLe universal LIFe offers protection plus savings Jarvis, 45, is a successful, well-paid executive at a technology company, with two children and a baby on the way. His financial advisor has suggested he augment his 20-year level term life insurance policy with permanent coverage, and also set aside money for emergencies. By buying a Variable Universal Life policy, he gets the additional life insurance protection he needs plus flexible premiums, which let him fund the cost of insurance protection and offer the potential to build tax-deferred cash value. If, in the future, Jarvis decides that he doesn t need the cash values, they can remain in the investment accounts for potential growth, which can be used to pay future policy expenses or reduce the need to pay future premiums. Changes in premium payments may adversely impact the death benefit and/or cash value potential. 10 Investment products are not FDIC insured, may lose value and are not bank guaranteed. you should consider the investment objectives, risks, charges and expenses carefully before investing. Please log on to for a prospectus that contains this and other information. Please read the prospectus carefully before investing.

13 SuRvIvoRSHIP LIFE InSuRAnCE Ideal for couples who want to transfer assets to children or who have other specialized needs Also called Second-to-Die Life insurance, Survivorship Life insurance is permanent life insurance that is generally used to pay estate taxes and other transfer costs. It covers two people (usually a husband and wife) and pays benefits only after the second person dies. It is available in products such as Survivorship Universal Life (SUL) or Survivorship Variable Universal Life (SVUL). Like Universal and Variable Universal Life, SUL and SVUL offer adjustable premiums and death benefits plus cash values. SUL s cash values are credited with interest based on rates declared by the insurance company, while SVUL offers variable investment options within a separate account as well as, in some cases, a fixed account option. It is always important to keep in mind that there are inherent risks associated with investing in securities. Both share the following traits: < Ability to increase or decrease the death benefit amount (increases may require a new medical examination and additional evidence of insurability) < Ability to change the amount and timing of premium payments (within specified limits) to tailor premium payments to fit your financial plan. Changes in premium payments may adversely impact the death benefit and/or cash value potential Example of Survivorship Life: nick and Tori survivorship LIFe lets a couple plan jointly Nick and Tori have acquired a vacation home, jewelry, successful investments and other assets during their 30-year marriage. To provide ready cash to pay estate taxes and other costs after their deaths, they buy a Survivorship Universal Life insurance policy, a type of insurance commonly used in estate and legacy planning. This will help them minimize the tax bite on their children s inheritance since the policy s proceeds will be used to help pay estate taxes. And, by insuring themselves on the same policy, they re saving money since the premiums are generally lower than for coverage on two separate policies. 11

14 Your needs Point the Way to The Best Policy In life insurance, one size doesn t fit all. The right policy for you is determined by the amount of money you have to spend, the amount of coverage you need, and your interest in investing, along with other factors. The diagram below can help guide your way. If your objective is temporary or short-term protection only If your objective is permanent protection plus potential growth Low initial premiums, gradually increasing Fixed premiums usually throughout initial term Fixed rate of return with guaranteed minimum interest rate 6 Potential for higher return based on investment account performance AnnuAL ReneWAbLe TeRM LeVeL TeRM LIFe universal LIFe VARIAbLe universal LIFe OPPORTunITy FOR CAsh VALue ACCuMuLATIOn ACCess TO CAsh VALue None None Insurance company s General Account N/A N/A Can withdraw, or borrow through policy loans 7 Variable investment options under Separate Accounts Maximum flexibility: allocate, transfer, withdraw, or borrow 7 FLexIbILITy OF PReMIuM PAyMenTs None (premium increases each year) None (premium increases upon renewal) Can adjust, skip, stop, or suspend 8 Can adjust, skip, stop, or suspend 8 FLexIbILITy OF FACe AMOunT None None Adjustable 7 Adjustable 7 APPROPRIATe FOR Limited funds; temporary needs; flexible or unspecified needs Limited funds; temporary needs; specific personal or business needs Affordable protection, cash value, flexibility, fixed rates of return Potential higher cash values, greater risk There are inherent risks associated with investing in securities. As with all securities, the accumulations can increase or decrease depending on how well the underlying investments perform over time. We do not guarantee the performance of the underlying investments. Variable universal and survivorship Variable universal Life insurance is a flexible premium life insurance policy. It offers a choice of investments and an opportunity for the cash value and death benefit to grow based on the investment results of the investment options. The policy value and the death benefit may go up or down on any given day. Due to various charges associated with life insurance contracts, the policies are not suitable as short-term investments All guarantees are based upon the issuing company s claims-paying ability. Fees and/or expenses may apply to the products referenced above. 7 Some restrictions may apply. 8 Changes in premium payment may adversely impact the death benefit and/or cash value potential.

15 First Things First Preparing for Your Meeting Life insurance is sold through an agent or broker who is licensed in your state. Whether you purchase your policy from a licensed life insurance agent from TIAA-CREF Life or an independent broker, knowing what to expect from the process can help make it easier for you and get the most out of it. FInAnCES Your agent will work with you to help you decide the amount of insurance you need. Assets (including your salary) and liabilities (like mortgage payments) will factor in, but you can get a more detailed idea by making a list of your living expenses prior to your meeting everything you spend to keep your household and family going. Housing, medical, food and auto costs come to mind easily, but remember to include clothing, vacations, and other incidentals like pet care, school supplies, and restaurant meals. HEALTH During your meeting, your agent will ask you about your age, medical history, any medical conditions you may have, even your family health history. Subsequently, a medical professional will visit your home or office to perform a simple health exam. (In some instances, a statement from your doctor may be required.) It s important to answer your agent s questions truthfully. In the event of a claim, accurate answers will help your beneficiary receive prompt payment. But inaccurate or untruthful answers can delay or even cause denial of a claim. understanding Feeling that your agent understands your needs, and that you have a good understanding of the product you re buying, is essential. Your agent should provide you with several options and explain each thoroughly. Take your time and make sure you understand the policy you re considering. Don t be afraid to ask questions, even if you think you should know the answer. If your agent seems impatient, find another one. This is an important purchase, and you may have further contact with your agent over the years as your needs evolve, so finding the right one is important. 13

16 overcoming Inertia: 5 Excuses to Avoid 1. I m still young and healthy, I can afford to wait. Life insurance isn t for the most likely scenario, it s for the what ifs that could devastate your family. If you wait until you have a medical condition, your premiums will probably be higher or you may be uninsurable. 2. Life insurance is expensive. In fact, life insurance can cost less than you might think. It comes in many varieties to suit a wide range of situations. Even a small amount of coverage can make an enormous difference. And the cost of life insurance is small compared to the costs of leaving your family financially unprotected. 3. It s too confusing. Sorting through the different types of life insurance is simple when they re explained to you in a booklet like this one or by a qualified professional. 4. I have insurance through work. Insurance provided by your employer may not be enough. And you typically can t take it with you when you change jobs. 5. I ve been meaning to do it. With so little free time and so many responsibilities, many people have a nagging feeling they should make a decision about life insurance but don t manage to get around to it. Once you make up your mind to tackle the subject, however, it s a surprisingly easy process. And the relief you ll feel is huge. 14

17 Want to talk it over? Call Monday through Friday, 8 a.m. to 8 p.m. (ET), or visit REvIEWInG YouR PoLICY The needs You Have Today May Change: Review Your Policy often Life is always changing. So is life insurance, which frequently offers new features, options, and riders. Making sure your insurance keeps pace with your evolving needs is important to your family s financial well-being. Financial advisors and insurance experts recommend you evaluate your life insurance needs at least every two to three years or whenever you experience a major life event. Occasions that signal the need for a life insurance review include: < Getting married, remarried or divorced < Starting a family < Taking on a new or bigger mortgage < Saving for your children s or grandchildren s education < Getting a raise < Borrowing money (for example, to buy a car or vacation property) < Changing jobs < Taking care of children or other family members with special needs < Preparing for retirement < Planning your estate < Death of a spouse or close family member 15

18 A commitment to personal service. A reputation for financial strength and stability. That's TIAA-CREF Life. A History of Integrity. More than 90 years ago, Teachers Insurance and Annuity Association (TIAA) sold its first life insurance policy to a college professor in the Midwest and started a tradition of service that continues to this day with life insurance and annuities that benefit members of the education, medical, governmental, cultural and research communities. In 1999, TIAA-CREF Life Insurance Company (TIAA-CREF Life), a wholly owned subsidiary of TIAA, was created to make our insurance available to family and friends of TIAA-CREF participants and to the general public. Today, TIAA-CREF Life offers a broad range of quality insurance and annuity products at affordable prices. A++ Superior A.M. Best Company (as of 4/12) AAA Exceptionally Strong Fitch Ratings (as of 6/12) Financial Strength Ratings* Aaa Exceptional Moody s Investors Service (as of 12/11) AA+ (Second Highest) Very Strong Standard & Poor s (as of 5/12) The Best Way to Get Covered is to Get Started Call Us Today at We are here to talk to you Monday through Friday, 8 a.m. to 8 p.m. (ET). Or, if you want more information, you can also visit Per S&P criteria, the downgrade of U.S. long-term government debt limits the highest rating of U.S. insurers to AA+ (the second-highest rating available). There is no guarantee that current ratings will be maintained. Ratings represent a company s ability to meet policyholders obligations and claims and do not apply to variable annuities, mutual funds, or any other product or service not fully backed by TIAA-CREF Life s claims-paying ability. 16 Life insurance is issued by TIAA-CREF Life Insurance Company (TIAA-CREF Life), which is a wholly owned subsidiary of Teachers Insurance and Annuity Association (TIAA). TIAA-CREF Life Insurance Company is headquartered at 730 Third Avenue, New York, NY

19 Glossary of Life Insurance Terms AnnuAL REnEWABLE TERM (ART) InSuRAnCE Term life insurance that gives the policyowner the right to continue the coverage at the end of each year. The premium typically increases upon renewal. This renewal right continues for a specified number of years or until the insured reaches the age specified in the contract. Also called yearly renewable term (YRT) insurance. BEnEFICIARY(IES) The person(s) or other party designated to receive life insurance death benefit proceeds. CASH SuRREndER value The amount available in cash that the policy owner receives, less outstanding loans. CASH value The savings element offered in most permanent forms of life insurance. death BEnEFIT The amount of money paid when a person insured under a life insurance policy dies. This amount does not include adjustments for outstanding policy loans, dividends, or late premium payments. FACE AMounT The amount of insurance you buy. In a Universal or Variable Universal policy, this amount is exclusive of the cash value. LEvEL TERM InSuRAnCE Term life insurance that spreads premium payments evenly over a specified time period (like 10, 15, 20 or 30 years). This makes it easier to budget, knowing the payment amount up front. ModIFIEd EndoWMEnT ConTRACT (MEC) A life insurance policy may be classified as an MEC if cumulative premium payments exceed certain amounts specified under the Internal Revenue Code. If a policy is classified as an MEC, all withdrawals, including loans, will be taxed as current income and may be subject to the 10% penalty for withdrawals before age 59½. RIdER An amendment to an insurance policy that becomes a part of the insurance contract and expands or limits the benefits payable. Riders may or may not contain an additional fee. SuRvIvoRSHIP LIFE InSuRAnCE A type of permanent life insurance which insures two people and pays benefits only after the second person dies. It is generally designed to provide funds to pay estate taxes and transfer costs. Also called second-to-die life insurance. TERM InSuRAnCE Life insurance under which the benefit is payable only if the insured dies during a specified period. universal LIFE (ul) InSuRAnCE A form of permanent life insurance that offers both a face value and a cash value which is based on credited interest rates. Universal Life provides flexible premiums and a flexible death options. variable universal LIFE (vul) InSuRAnCE A form of permanent life insurance that combines the premium and death benefit flexibility of UL insurance with investment options. 17

20 Please visit our Website at: to Learn More. Life insurance is an important addition to the financial security of those you care about. We understand you have many options, and at TIAA-CREF Life we provide peace of mind to individuals, families and businesses by helping you take care of your life insurance needs. Contact your Life Insurance Representative at, or by at Please visit our website at to learn more. Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not bank deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value. TIAA-CREF Individual & Institutional Services, LLC, member FINRA, distribute s securities products. Annual Renewable Term life insurance, policy form series TCL-RT.1, Level Term Life insurance, policy form series TCL-LPT.1, Universal Life insurance, policy form series AM-SUL.3 (2008), Survivorship Universal Life insurance, policy form series AM-JUL.3 (2008), Survivorship Variable Universal Life insurance, policy form series AM-JVUL.3 (2008) and Variable Universal Life insurance policy form series AM-SVUL.3 (2008) are issued by TIAA-CREF Life Insurance Company, 730 Third Avenue, New York, NY All products may not be available in all states Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), 730 Third Avenue, New York, NY C2521_Gen Printed on 10% recycled post-consumer fiber. A11144 (06/12)