Life insurance Cash Value question

Aug 14, 2019

  1. Moving4ward
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    Moving4ward New Member

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    I have looked at my fathers TIAA life insurance policy to know more about it. The policy is for 25K.

    I called TIAA and was told two different contradictory things by two different people on two different days.

    The first call I made, the lady said there’s a cash value of over 15K and that both the 25K AND the cash value would be paid at death. I made sure to ask again and was told that yes, both are paid.

    The next day I called and a younger girl informed me that ONLY the 25K would be paid. I asked if they could take the cash value and was told it would be a loan, and if not paid back, only 10K remaining would be paid.

    Why would one person say BOTH the 25K AND the 15K (cash value) would be paid? Then the other person said otherwise.

    It’s an ordinary life insurance policy and he still makes quarterly payments on it.

    Thanks for any thoughts.
     
  2. DHK
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    DHK Guru

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    If the policy is a UL policy with an increasing death benefit, then it's the Cash Value + stated Net Amount At Risk - any loans = net death benefit

    Otherwise, the formula is still:
    Net death benefit = cash values + net amount at risk - any outstanding loans.

    The cash value is a component of the death benefit, but it's not "on top of" or "in addition to". It's just how the sum is paid out.
     
    DHK, Aug 14, 2019
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  3. FEX Quotes
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    FEX Quotes Guru

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    The first person was wrong. The second person was right.
     
  4. Moving4ward
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    Moving4ward New Member

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    I know nothing about life insurance. I sort of thought girl #2 was right. But that first Lady was so confident in her answer. When I questioned her more, she said well sometimes people will use the cash value after the life insurance policy is paid out to continue paying premiums. Makes little sense to myself.
     
  5. WinoBlues
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    WinoBlues Guru

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    images.jpg
     
  6. Robert Barney
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    Robert Barney Guru

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    Always put your questions in writing and only rely upon answers given in writing.
     
  7. fed up
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    fed up Guru

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    Most Car's at phone centers are NOT agents and give wrong information All of the time. That seems to be the structure of the phone tree. Yes, get the answer in writing, especially if you think it is wrong
     
    fed up, Aug 15, 2019
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  8. jensing0406
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    jensing0406 Super Genius

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    They probably didn't drug test her. If the death benefit isn't increasing, then the cash value will be washed once the insured dies and the beneficiary will only get the face amount minus any loans taken out on the policy.
     
  9. DHK
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    DHK Guru

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    Please use correct terminology that promotes the values of these policies.

    Net death benefit (not face amount) = cash values + net amount at risk - any outstanding loans.

    The cash values don't just "vanish". They are a component of the total death benefit. Not in addition to, but a component of it.

    The "face amount" is only the beginning of the calculations of an illustration. It's not the death benefit. Terminology makes a big difference.
     
    DHK, Aug 15, 2019
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  10. jensing0406
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    jensing0406 Super Genius

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    Terminology also confuses people. The best way to teach is to keep things very simple so they can understand. Much like when you go to the Doctors and they tell you have some (insert fancy medical term) and everyone and I mean everyone ask what does that mean? And they say something like you have a cold. Then you ask why didn't you just say that?
     
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