American General Life Insurance Review
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 there insurance products. We hope this helps with your life insurance buying experience.
History of American General
American General Life Insurance Company has been in business for over 150 years. Today they are part of the American International Group (AIG) family.
AIG acquired American General Life Insurance 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-American General 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-American General 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-American General 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.
Ratings for AIG-American General Life Insurance Company
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 Life Insurance Company
American General offers a variety of life insurance products, including permanent and term life insurance.
American General Life Insurance term 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 35 years.
This is unique because most companies term insurance only comes in lengths of 10, 15, 20, 25, 30 or 35 years depending on your age.
The AIG-American General Select-A-Term is a great choice for consumers who need coverage for a certain number of years. For example, you can choose a term length that coincides with a student loan or mortgage loan.
The American General Life Insurance 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.
American General Life Insurance Select-A-Term Rates
Rates are for a 20 year term-Standard Non-Tobacco
Secure Lifetime GUL 3 (Guaranteed Universal Life)
The Secure Lifetime GUL 3 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. The Secure Lifetime GUL 3 also has a return of premium feature that allows you to cash out the policy early.
The way it works is that in the 20th year you can cancel the policy and receive back 50% of premiums paid in, but if you wait till the 25th year you could get back 100% or premiums paid in.
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.
The Secure Lifetime GUL 3 also offers a variety of riders to help you customize the policy to your needs. Riders available are:
- Accidental Death Benefit
- Children’s Insurance Rider
- Enhanced Surrender Value Rider (Return of Premium)
- Accelerated Access Solution
- Lifestyle Income Solution
- Terminal Illness Rider
- Waiver of Premium
AIG-American General Secure Lifetime GUL 3 Rates
Rates based on Standard Non-Tobacco Health Class
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
The Elite Index II and Survivor Index II are Indexed Universal Life policies offered by American General Life Insurance. 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.
American General Life Insurance Company offers a “Choice Loan” as 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
The Platinum Choice VUL is a variable universal life insurance product offered AIG-American General. 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
- Potential to lose cash value
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.
American General Life Insurance Company offers a GIWL to its consumers age 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.
AIG Guaranteed Issue Rates
Pro’s for AIG-American General
Favorable Underwriting for High Risk Cases
American General is an excellent choice for people who are considered high risk for life insurance.
AIG-American General has cutting edge underwriting that puts them at the top of list of companies who accept many of today’s top health issues, such as diabetes, heart disease, cancer, and sleep apnea.
Lifestyle conditions such as medical or recreational use of marijuana can be issued standard non tobacco with American General.
American General Life Insurance Company rates usually rank in the top 10 for lowest premium for 20 and 30 year term life insurance.
They are also competitive with tobacco users. American General’s table rating for high risk clients is lower than most of the competition.
Con’s for American General Life Insurance
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.