AIG Life Insurance Review: Low Rates & Great Selection of Term and Permanent Policies
Nearly every AIG policy is unique or better designed than those of competitors, meaning you can find the best coverage for your particular situation.
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Editor's Rating
American International Group, or AIG, is a life insurance company that provides customizable policies to fit nearly every financial situation.
While AIG's life insurance rates aren't the absolute cheapest, the company's flexible product selection is what sets it apart.
From term life insurance policies that can be combined and adjusted to reflect your financial obligations, to guaranteed universal policies that can be used for income in your senior years, AIG has unique coverage options that are focused on addressing client needs. The only real downside to AIG is that its customer service and claims reviews don't hold up to those of other top insurers, which is a concern when purchasing a permanent life insurance policy.
Pros and cons
Pros
Great term life insurance rates
Offers “return of premium” options
Many ways to access the money in your policy while still alive and healthy
Cons
Poor customer service ratings
Very limited selection of no-exam policies
AIG term life insurance
Term life insurance guarantees a prespecified payout if the policyholder dies within the stated term. AIG offers a term life insurance policy called "Select-a-Term," which can be customized with terms between 15 and 35 years.
AIG term life insurance quotes
AIG's term life insurance rates aren't the absolute cheapest, but the rates are consistently better-than-average as compared to other national life insurance companies. In particular, nonsmokers face rates that are over 15% lower than those of competitors.
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Depending on your age, AIG's term insurance can be purchased for:
Term length | Age availability (no tobacco use) |
|---|---|
| 10 years | 20 to 80 years old |
| 15 years | 20 to 75 years old |
| 16 to 20 years | 20 to 70 years old |
| 21 to 30 years | 20 to 68 years old |
| 35 years | 20 to 45 years old |
AIG's term life insurance policies have a minimum face value of $50,000, but you can purchase up to $10 million in coverage if approved. The term policies have level premiums for the specified policy terms, but they're renewable, so you can continue renewing your coverage for one-year increments after the initial term. However, premiums will increase annually, and the policy can only be renewed until you turn 95.
Since AIG term insurance comes with flexible term lengths and coverage amounts, the company allows you to ladder life insurance policies to meet your financial situation. With laddering, you can essentially determine the exact periods and amount of life insurance you need and combine policies to fit that situation.
For example, say you have a 30-year mortgage for $500,000 that you'd want your family to pay off if you die, and you also have a child that you want to send to college in 16 years. You could purchase a 30-year term life insurance policy from AIG to cover your mortgage and ladder it with 16 years of coverage for the amount you'd expect to pay for your child's education.
AIG's term life insurance is also convertible until you reach age 70. This means you can convert the policy to a whole or universal life insurance policy with AIG if, for example, you're diagnosed with an illness that would make it difficult to find affordable permanent coverage. Since there's no requirement to demonstrate insurability before you convert to a permanent life insurance policy, you would be accepted.
AIG's underwriting guidelines for life insurance are quite flexible, meaning underwriters won't automatically decline you for coverage for certain common conditions, such as sleep apnea or diabetes. And life insurance customers who smoke marijuana are even eligible to qualify for their best rates. However, you may get better life insurance quotes from another insurer if you have other things on your medical history, such as high cholesterol.
AIG return of premium term life insurance
AIG also offers a return of premium variation on its Select-a-Term policy. The "return of premium" term policy is limited to those under the age of 55; customizable term lengths start at 20 years, and the minimum policy size is $100,000. AIG's return of premium policies typically cost two to three times as much as a standard term policy.
However, you can recoup or otherwise use your premium payments after the initial policy term length. Essentially, it acts like a whole life insurance policy during the initial term length, building a cash value, which is guaranteed to be equal to the amount you've paid in premiums by the end of the term. So, for example, if you paid $1,000 per year in premiums for 20 years, the policy's cash value at the end would be $20,000.
At the end of the level term period, you have the option to:
- Surrender your policy and receive the full amount you've paid in premiums.
- Convert your term life insurance to a permanent policy, rolling in the existing cash value.
- Instead of surrendering your policy, simply stop paying premiums and have a paid-up life insurance policy that extends until age 95. However, the death benefit will be smaller than it was when you initially purchased coverage.
- Use your policy's annual renewability feature, and continue to make premium payments, though the cost will increase each year. The potential benefit of this option is that, if you live until age 95, you would receive the policy's entire face value at that point. However, your family would not receive the cash value if you died before.
AIG's return of premium term life insurance is a great option to consider if you can afford the higher premiums right now and are willing to sacrifice the opportunity cost of having that money available to you.
It can also be a good choice if you're undecided between term and permanent life insurance and want the ability to choose a permanent form of coverage later on.
AIG term life insurance riders
AIG's term life insurance policies can be customized with riders, or policy add-ons, which extend your coverage in certain situations. The following riders are available for AIG's term policies:
Accidental death benefit
Acts like an accidental death insurance policy, providing up to $250,000 in additional coverage, or your term policy's face value if it's less than $250,000. Accidental death coverage is less expensive than that from a term policy because your beneficiaries would only receive a payout if you die in an accident. Coverage expires when you turn 70 years old.
Child rider
Acts like a child life insurance policy and can cover all of your children with a single rider. You can purchase between $500 and $25,000 of coverage on your children, which extends until your child turns 25 or you turn 65.
Terminal illness rider
The only rider included for free with the company's term life insurance policies. If you're diagnosed with a terminal illness and have less than two years to live, you can receive a portion of your death benefit while still alive. AIG's terminal illness rider does have a fee for accelerating the death benefit early, up to $500, and some terms change by state, so you should contact the company if you're interested in using this feature.
Waiver of premium
Waives your premiums if you become totally disabled for at least six months, and premiums continue to be waived so long as the total disability persists. The only exception is if you become totally disabled after age 60, in which case the coverage extends for up to one year (or you turn 65).
AIG universal life insurance
AIG offers two indexed universal life insurance policies, the Value+ Protector and the Max Accumulator+. Both universal policies offer permanent coverage, and a portion of your premiums fund the cash value of the policy. This cash value can either be held in a fixed interest rate "subaccount" of your policy, which has a guaranteed interest rate of 2%, or invested in index accounts. The index accounts are similar to mutual funds, in that their performance is based on the performance of an index, and AIG offers either three or four index account options, depending on the universal life insurance policy.
AIG's universal life insurance index accounts options work in one of two ways, depending on the account you choose:
Participation rate
Cap rate
Participation rate index accounts track the performance of a specified index, and your account is credited with a percentage of that index's positive performance. For example, if the index rose 10% over the course of a year, your cash value invested in that account would increase 6%, assuming a 60% "participation rate." On the other hand, if the index declined in value, you would at worst receive a 0% interest credit. A participation rate account is the better choice in years when an index performs very well, as you have higher upside potential than with a cap rate account.
Participation rate
Participation rate index accounts track the performance of a specified index, and your account is credited with a percentage of that index's positive performance. For example, if the index rose 10% over the course of a year, your cash value invested in that account would increase 6%, assuming a 60% "participation rate." On the other hand, if the index declined in value, you would at worst receive a 0% interest credit. A participation rate account is the better choice in years when an index performs very well, as you have higher upside potential than with a cap rate account.
Cap rate
Cap rate index accounts similarly track the performance of an index, but you "participate" in 100% of the index's upside up to a certain "cap," generally 10%. So, if the index had a 6% gain, your cash value would be credited with that 6% interest. But if the index increased 20%, you would only get credited with 10%. Therefore, a cap rate index account is the better choice in years when an index performs moderately, since you participate in all of the upside potential. There's also a floor on these accounts, so you don't participate in negative index performance.
Universal life insurance policies from AIG are available if you're between the ages of 18 and 80, and they have a minimum face value of $50,000. And, with the Max Accumulator+ indexed universal life policy, you can actually purchase coverage with no exam if you're under 50 years old and your policy's face value is below $500,000. When you purchase a universal policy, you have the option to choose between a death benefit that equals the policy's face value, or its face value plus its cash value, though this option will increase your rates.
The policy's cash value can be accessed via withdrawals or policy loans, similar to most universal life policies, but you may also have the option to purchase paid-up additions. Paid-up additions essentially add to your indexed universal life insurance policy's death benefit without increasing your premiums, as the addition is fully paid for. You can also use the policy's cash value to pay for a portion of your premiums.
More uniquely, you can access your death benefit from AIG while still alive through the company's Accelerated Access Solution, if you're diagnosed with a chronic illness, or the Lifestyle Income Solution, after you turn 85.
AIG variable universal life insurance
AIG also offers a variable universal life insurance policy, called AG Platinum Choice VUL, which is similar to the company's indexed universal policies but has a wider variety of cash value investment options. Instead of investment accounts that track indexes, the accounts in AIG's variable universal policy are more akin to actively managed mutual funds and span a wide variety of investment focuses. There's no participation rate or cap on performance of these investments, meaning there's higher upside potential. But there's also no floor, so you can lose money if you choose the wrong investment accounts.
Variable policies are available up to age 80 and require a $100,000 minimum face value. As with AIG's indexed universal life insurance, the death benefit can either be the policy face value or also include its cash value, though quotes for this option will be higher.
AIG guaranteed issue whole life insurance
AIG offers guaranteed issue whole life insurance, also called burial insurance or final-expense insurance, if you're between the ages of 50 and 85. There is no health questionnaire or medical exam since acceptance is guaranteed. Instead, policies are limited in size to a maximum of $25,000 of coverage. And, during the first two years of coverage, AIG will only pay a reduced death benefit unless you die in an accident.
If you pass away due to illness, suicide or another nonaccidental cause in the first two years, your beneficiaries would only receive 110% of the premiums paid up to that point. This is actually a shorter reduced payout period, and higher payout, than you'd receive with most burial insurance policies.
AIG's guaranteed issue whole life insurance policies have level premiums for the duration of coverage, which can extend for your entire lifetime. Burial insurance policies also come with two riders at no cost, which can provide benefits while you're still alive if you become particularly ill:
Chronic illness rider
You may receive a return of all your premiums paid, up to 50% of your policy's face value, if you're diagnosed with severe cognitive impairment. It may also provide a benefit if you're unable to perform common activities of daily living.
Terminal illness rider
You may accelerate up to 50% of your policy's death benefit if you're diagnosed with a terminal condition.
AIG guaranteed universal life insurance
AIG's guaranteed universal life insurance policy is incredibly flexible and a great alternative if you're looking for permanent coverage at a lower price than you'd get with most cash value policies. AIG's guaranteed universal life insurance policies are available if you're between the ages of 18 and 80, and they have a minimum death benefit of $100,000. Like most guaranteed universal policies, there's some cash value accumulation (guaranteed 2% interest rate), but it's not the core part of the policy. The policy is guaranteed to not lapse so long as premiums, which are fixed for the duration specified when you purchase coverage, are paid.
Coverage can extend up to age 121 and, though premiums are fixed, they're also flexible. So you can use your cash value, if there's enough, to pay a portion of your premium. Alternatively, you can pay premiums early, shortening the payment period. At any point during the policy, you can either decrease the benefit, proportionately reducing your premiums or increase it, though you'll need to demonstrate insurability.
AIG's guaranteed universal policies can be further customized with riders, and they have a few policy add-ons that are quite unique:
Accelerated Access Solution
If you're diagnosed with a qualifying chronic illness, you can access your policy death benefit via monthly payments that are tax-free. Payments will continue until you're no longer ill, your death benefit is entirely used up or you die, in which case your beneficiary would receive any remaining death benefit.
Enhanced Surrender Value Rider
If you decide you no longer want your life insurance policy, you can surrender it in year 20 of coverage and AIG will pay out 50% of your total premiums paid up to that point. Or, you can surrender the policy in year 25 and receive 100% of premiums paid, with a maximum payout of 40% of the policy's face value.
Lifestyle Income Solution
Once you turn 85, you can access your policy's death benefit and use the money for whatever purpose you'd like. The maximum amount you can take out is 10% per year and, when you die, the remaining death benefit will go to your beneficiaries. So long as the amount you withdraw in payments is less than what you've paid in premiums, the money will usually be tax-free.
If you're interested in additional "living benefits," or ways you can use your death benefit or take advantage of savings while still alive, AIG offers variations on these guaranteed universal life insurance policies through its Quality of Life Insurance program. Quality of Life Insurance policies come with extended riders either automatically included or available to add to the policies, such as a critical illness rider. AIG also offers a survivorship version of its guaranteed universal life insurance policy, but it's restricted to those between the ages of 50 and 75. However, it's also a good alternative if you're looking to leave money to your heirs or a charity after you and your spouse have passed away.
AIG accidental death and dismemberment (AD&D) insurance
One of the few policies AIG offers with no medical exam requirements is accidental death and dismemberment insurance. Accident insurance policies are available if you're between the ages of 18 and 80, and you can buy up to $500,000 in coverage. Since AIG's accidental death insurance policies have no term, they can provide short-term insurance coverage while you're applying for another policy, or if you need coverage for a very limited period of time. Just note that accidental death or dismemberment caused by a nonaccident, such as an illness that causes paralysis or a heart attack, will not be covered.
AIG's accidental death and dismemberment insurance payouts depend on the extent of your injuries from an accident:
Extent of injury | % of death benefit paid |
|---|---|
| Death | 100% |
| Loss of two separate limbs (hand, arm, foot, leg) | 100% |
| Loss of sight of both eyes | 100% |
| Loss of one limb and sight in one eye | 100% |
| Loss of one limb (hand, arm, foot, leg) | 50% |
| Loss of sight in one eye | 50% |
| Quadriplegia | 100% |
| Paraplegia | 50% |
| Hemiplegia | 50% |
AIG ratings and reviews
AIG insurance is not one of the best-rated life insurance companies with regard to its customer service and client reviews. The company received just a 2 out of 5 rating from J.D. Power for customer satisfaction and has a disproportionately high NAIC Complaint Index as compared to its size. AIG's Complaint Index was 2.37, with the index median being 1.00.
According to customer reviews, AIG offers a broad suite of products that are fairly tailored to the needs of different groups. The company also tries to make parts of the purchase process simpler for consumers, allowing you to complete certain applications and make payments online by logging in to the company's payment center. You can also complete other actions online as a policyholder, such as accessing policy information, updating beneficiaries and changing your address.
However, AIG's customer service and claims department have received criticism, as it can be challenging to contact the right person, and you may be asked for a number of forms in order to file a claim or change policy ownership. The company is legitimate, but the challenges in the process of contacting customer service and sometimes getting bounced to different departments has led some families to feel scammed.
If you're considering a policy with AIG, we recommend you take the time to minimize potential issues later by providing your beneficiary with a copy of your policy, as well as necessary information to submit a claim, along with who to contact in case of questions. Claims cannot be submitted online, so your beneficiary will have to submit an accident insurance or death claim form.
AIG has a solid Financial Strength Rating of A (Excellent) from A.M. Best, but this does not stand out, as many top life insurance companies receive a similar or better rating. American International Group, AIG, is headquartered in New York and is made up of several companies in the group:
- AIG Direct
- American General Life Companies
- VALIC
- Western General
- AIG Life and Retirement
What is AIG Direct?
AIG Direct is a life insurance company that sells life insurance policies underwritten by American General Life Insurance. The primary difference is that AIG Direct's life insurance policies are sold online or through a call center, whereas other AIG policies are typically sold through life insurance agents. Most of the policy selections available through AIG Direct are the same, so the primary choice to make when buying an AIG policy is whether you'd want an assigned agent.
Agents can meet you in person if they're local, and they offer a consistent voice when you need answers. They also generally spend more time assisting you to understand how a policy fits into your broader financial objectives. There's no difference in quotes if you decide to purchase the same product from AIG Direct or an AIG agent.
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