If you have loved ones that depend on you financially, then you probably need life insurance. Life insurance proceeds are paid out tax-free so that your loved ones can use it for such purposes as paying off debt, paying off mortgage, or income replacement to name a few.
When purchasing life insurance there are some important factors to consider such as, the adequate amount for your situation, type of policy, and most important is the financial strength of the insurance carrier. You want the insurance company to be able to pay the claims when the time comes.
If you are shopping around for life insurance coverage, AIG-American General is sure to have come up as a top pick.
In this article we are going to review AIG-American General as a company and their insurance products. We hope this helps with your life insurance buying experience.
American General has been in the insurance business for over 150 years. Today they are part of the American International Group (AIG) family. AIG acquired American General back in 2001. With the purchase of American General, AIG-American General became the largest insurance provider in the United States.
In 2008, during the recession, AIG was in the news for suffering some financial setbacks. Also during this time, AIG fell into default, which in turn led to the United States government providing a “bailout.”, which has since been paid back with interest.
As embarrassing as this was, AIG has made a strong comeback. In the past five years, AIG and subsidiaries have paid more than $40 billion in claims to individuals and business’s.
AIG has over 88 million customers, located in 130+ different countries. The company earned $64 billion in revenue in 2014 and had a net operating earnings of right at $700 million in 2016.
In order to do a good review of an insurance company, the ratings need to be looked at.
Even though AIG-American General had its bump in the road back in 2008, today they are a strong financial company. Below are the ratings for AIG:
- Standard & Poor: A+
- A.M. Best: A
- Fitch’s: A+
- Moody’s: A2
Products Offered by American General
American General’s term life policy is unique in the industry. They offer level term life insurance with term period options starting at 10 years and increasing in 1 year increments (10, 11, 12, 15, etc.) all the way to 30 years. This is unique because most companies term insurance only comes in lengths of 10, 15, 20, or 30 years.
American General life Select-A-Term is also fully convertible to a permanent life insurance policy anytime during the term period. This could be beneficial for someone whose health status has changed and would not be able to qualify for another term life policy.
Return of Premium Select-A-Term
This product functions just like the term policy above with the one exception: all premiums are returned at the end of the term period chosen.
Secure Lifetime GUL 3 (Guaranteed Universal Life)
This is a guaranteed universal life product with a guaranteed premium and death benefit to age 120.
The Secure Lifetime GUL 3 is competitively priced and builds cash value.
Guaranteed UL policies are great for estate planning or a buy/sell business agreement. If more concerned about death benefit than you are cash value build-up, then the Secure Lifetime GUL 3 is a great option.
Secure Survivor GUL II
This is a survivorship policy or sometimes called “second to die” policy. These policies cover the two lives and pays out upon the second insured death. They come with a guaranteed premium and death benefit to age 120.
These policies are great options when funding a special needs trust, leave money to charity, or to minimize estate tax burdens.
Elite Index II & Survivor Index II
These are American General’s Indexed Universal Life Insurance products. They are similar to the GUL products above, except for two distinct reasons:
- The cash value is tied to three interest crediting accounts, like the S&P 500 or Nasdaq.
- Premiums are not guaranteed and could increase if cash value element doesn’t perform.
The Elite Index II has guaranteed minimum of .25% for the index accounts while also offering a cap (most interest you can make). Caps are declared by the company each year and usually range from 10%-12% annually.
A Choice Loan is an option included with the Elite Index II. This option allows you to take a loan out on your policy, while allowing the loaned amount to earn interest in the indexed account. Let me explain further:
Lets say you were to borrow $20,000 from your life insurance policy. Even though you received the $20K, it is allowed to still sit in your indexed account and earn interest. It’s never considered fully withdrawn, just a loan.
Accelerated Access Solution (Living Benefits Rider)
This is an option to access a portion of the death benefit if you become chronically ill. This is also referred to as the living benefits rider and varies by company.
Platinum Choice VUL
This is American General’s variable universal life insurance product. These policies are similar to the indexed universal life policy except:
- No floors or caps/ Potential for unlimited gains and losses
- Invests in sub accounts that mirror mutual funds
Variable universal life allows the consumer to invest directly into the market, but the consumer bears the risk of the investment.
While we don’t recommend VUL’s, they do fit into some consumers portfolio’s.
Guaranteed Issue Whole Life (GIWL)
A guaranteed issue whole life insurance policy offers coverage to consumers who can’t qualify for other types of insurance because of a pre-existing high risk health condition.
This policy is available for ages 50-85. The maximum death benefit is $25,000.
These policies have a graded 2 year death benefit. This means the first 2 years, the death benefit is paid out only on accidental death. After 2 years, the benefit is paid out for any death, sickness or accident.
Riders are extra benefits that can be added to your life insurance policy, usually at an extra cost. The riders offered by American General are:
- Accelerated Death Benefit Rider
- Waiver of Premium
- Disability Income Rider
- Children’s Term Rider
- Accidental Death Benefit Rider
- Conversion Option on Select-A-Term
Pro’s for American General
Favorable Underwriting for High Risk Cases
American General is an excellent choice for people who are considered high risk for life insurance.
Lifestyle conditions such as medical or recreational use of marijuana can be issued standard non tobacco with American General.
American General’s life insurance rates usually ranks in the top 10 for lowest premium for 20 and 30 year term life insurance. They are also competitive with smoker rates.
American General’s table rating for high risk clients is lower than most of the competition. Check out the term rates below:
Select-A-Term rates based on a 40-year-old male/ Preferred Plus Rate
Select-A-Term rates based on a 40-year-old female/ Preferred Plus Rate
Con’s for American General
Lack of a No-Medical Term Life Product
While American General’s underwriting is favorable to many health conditions, all policies except for the GIWL require a para-med exam along with blood and urine. This can be an inconvenience to some consumers.
While most insurance companies have moved towards some type of non medical underwriting scheme, American General has fallen behind.
Non-medical policies can be valuable to someone who hasn’t seen a doctor in a few years and may not be sure how blood work might turn out.
We often encourage our clients if they are unsure of their health and it was good last time checked to pursue a non-medical policy first. You can always apply for a fully underwritten policy if you think you will qualify better than standard.
But if for some reason the underwritten policy is not accepted for a health condition you had no knowledge of, then you would still have the non-medical policy.
“Bailout” of 2008
Although American General has bounced back from the “bailout” of 2008, many consumers are still wary about doing business with them. The uncertainty of “can it happen again” is always in the back of consumers minds.
If you are looking to purchase a life insurance policy then you really can’t go wrong by choosing American General. They are a financially sound life insurance company with top ratings from all the credit agencies. Even though they had a hiccup in 2008, American General is a reputable company.
With that said, it’s always best to get rates from multiple companies before settling on what type of policy to purchase. Working with an experienced independent agent, like us, can help guide you to the policy that fits your unique situation. If you have any comments or questions, please don’t hesitate to reach out or give us a call.