TIAA, one of the largest U.S. annuity providers and one of only a handful that sell no-load, fee-only life insurance policies, is exiting the life insurance business by the end of the year.
According to InvestmentNews, a memo last week from Dennis Rupp, TIAA’s director of insurance wholesaling, confirmed the exit but stated the company’s annuity business will be unaffected by the strategic decision. TIAA will cease the manufacture and distribution of its life insurance products by the end of 2019, according to the article.
TIAA will continue to service its existing term, universal life and variable universal life insurance policies, and will honor any life insurance cases with a completed application submitted by Sept. 30, according to the memo.
A TIAA spokesperson told InvestmentNews the company moving forward will offer a variety of solutions from other carefully selected providers to meet its customers’ life insurance needs.
The article notes TIAA’s exit from the life insurance business is particularly bad news for registered investment advisors (RIAs), as the company was one of just a handful that sold no-load, fee-only life insurance policies. No-load policies allow RIAs that don’t receive commissions to count the cash value in a life insurance policy toward the client’s overall assets under management.
More advisors are expected to move toward offering fee-only policies due to a New York state rule going into effect next year that requires life insurance sales to be in clients’ best interests, and a new fiduciary standard for certified financial planners is set to take effect this October.
According to S&P Global Market Intelligence, term insurance makes up the bulk of the existing book of individual life insurance business for TIAA. As of year-end 2018, the insurer had almost 150,000 policies in force with 81% being term policies. The amount of insurance for the term block was $53.38 billion, compared to a total of $11.17 billion for other product lines combined.
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