American General Life Insurance Review - An Insider's Guide
Take a look at our American General Life Insurance Review and find out why they were named as one the top life insurance companies for 2022.
Also known as AIG, American General specializes with a handful of pre-existing health conditions that other providers won't consider.
This insider's guide outlines the situations where we feel AIG is best. We've also listed the health issues they tend to be the most lenient with, their pricing sweet spots, and the types of coverage they sell.
While we represent American General and have recommended them to thousands of clients, there are some instances when AIG is NOT the best company for the job. We always recommend comparing their rates and approval guidelines against our other 50+ companies to ensure you are getting the best deal.
Here’s what we'll cover in this post:
Quick Article Guide
Here’s what we'll cover in this post:
Overview and Company Profile
Who is American General?
American General is the life insurance division of AIG (American International Group). They've been around since 1919, headquartered in the US since 1939. With over 90 million customers, AIG is one of the world's largest insurance companies.
AIG had a lot of negative press a few years back. Should I be concerned?
It's important to understand that life insurance is one of the most regulated industries in America. As a result, life insurance divisions operate separately and autonomously from other portions of multi-faceted financial institutions and funds cannot be co-mingled.
American General operates separately from AIG; in a similar way PruCo is the life insurance division of Prudential. That being said, the 2008 "government bailout" of AIG effectively rescued Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of America, and dozens of European banks.
To its credit, AIG paid back the government loan a year early in 2013. Less than two years later, the Global Finance magazine listed AIG as a top insurer world-wide in 4 categories.
Does American General Pay Its Claims?
American General has never failed to pay a valid life insurance claim in its history. Based on financial strength and stability and paying its claims, we have no hesitation recommending American General life insurance to our clients, family and friends.
What are their current Financial ratings?
|AM Best||A (Excellent)|
|Moody's||A2 (Low Risk)|
|Standard and Poor's||A+ (Strong)|
|Fitch||A+ (High Quality)|
|Comdex||83 out of 100|
What Type of Life Insurance Does American General Sell?
Most of our clients purchase American General's Term Life insurance products, though, they also sell "permanent" life insurance, including:
- Whole Life
- Universal Life
- Variable Life
• Term Life
Term life insurance is typically the least expensive type of “medically underwritten” coverage, at least initially, and the simplest to understand.
These policies do not build up a cash value. Coverage is in effect for a fixed term or period of time, usually one to 30 years, and typically may be renewed after the initial term. The policy pays your beneficiary a fixed death benefit if you die while the policy is in force. The premiums are fixed for the duration of the term. If you renew the policy at the end of term, it will be at a much higher cost.
If you need life insurance beyond the initial term, it is generally better to take advantage of the "conversion option"...you can convert you term policy to a lifetime Universal Life policy with no further proof of health.
This can be at the original or smaller death benefit. Be sure to check your policy for age or other renewal restrictions. Permanent life insurance includes whole life, universal life and variable universal life insurance.
American General's suite of term products is called "Select-a-Term."
• Whole Life
Whole life insurance provides protection as well as a guaranteed cash value. The premiums remain at a fixed level for the duration of the policy. Over time, the policy generally builds up cash value on a tax-deferred basis. Some companies pay a dividend, which is a return of excess premiums.
• Universal Life
UL insurance is a flexible life insurance plan. These policies are interest-sensitive and give the owner the option to adjust the death benefit and/or premium payments, within limits, to fit the owner's situation.
The net premium payments are applied to the accumulation fund, which earns a guaranteed interest rate. As with whole life insurance, the cash value belongs to the policy owner, who may withdraw it or borrow against it as provided for in the policy.
AG has multiple guaranteed UL products known as the Secure Lifetime GUL, Secure Survivor GUL, Elite UL, as well as several indexed UL products known as the Elite Global Plus, Elite Index, and the Elite Survivor Index.
• Variable Universal Life
VUL insurance is a life insurance policy that is based on the performance of the financial markets. The policy offers several professionally managed investment options and the policy owner decides how the net policy values are to be invested. The values may accumulate more rapidly than with other cash value policies, but the policy owner incurs additional risk.
If market performance is poor, the death benefit may decrease, and/or the policy owner may have to pay higher premiums to keep the policy in effect. As with whole life and universal life policies, policy owners may borrow against or withdraw the cash value at anytime.
Loans and withdrawals may reduce cash values and the death benefit. AIG also offers VUL products, but our agency does not sell variable universal life insurance.
• Accidental Death and Disability
AD&D insurance pays benefits for accidental death, dismemberment, loss of hearing, severe burns and paralysis…more comprehensive than “AD&D” sold by most competitors. They offer a “Return of Premium” option, where your premiums are returned if you keep the policy active for the selected time frame and don’t file a claim.
A key difference with AmGen’s coverage is these policies are renewable for lifetime. Most AD&D coverage ends at age 80. Benefits reduce by 50% after 70th birthday. Available in all states except CO, CT, FL, MN, NH, NY and VA.American General's website provides an easy-to-understand comparison for Term vs Permanent life insurance, including an explanation of insurance jargon. While the overview is easy to understand, permanent life insurance policies are confusing and complex.
There are many "moving parts", and one of a number of reasons we generally recommend purchasing term life insurance from American General, investing independently. Term life insurance has no cancellation penalties, whereas permanent life insurance can have "surrender charges", so read thoroughly and, if needed, seek out help from a professional.
How Does American General Determine Life Insurance Eligibility?
Is there a medical exam?
Yes, as with most life insurance, American General requires a standard life insurance health screening in order to qualify for coverage. American General pays the expense of this physical. They will send a nurse, licensed through your state, to your home or office.
The nurse will gather a small blood and urine sample, check your blood pressure, and record your height and weight. They'll also review your application with you and have you sign it to authorize the application process.
Again, there is no cost...you only pay for your actual life insurance once you've been approved at the rate applied for, or have authorized a rate adjustment if your lab work or medical records come back differently than expected.
Our Life Insurance Without A Medical Exam - An Insider's Guide explains opportunities and limitations of "no exam required" life insurance. Generally speaking, you'll get your lowest rate for life insurance without any waiting period by completing a free 15-minute life insurance physical.
How many policy prices does American General have?
Are their rates competitive with Prudential, Banner Life, MetLife and other term life insurance companies? American General uses the industry standard risk scale, comprised of 14 possible outcomes:
1. Preferred Plus
3. Standard Plus
5-13. Table 1-8 ("Table ratings are how life insurance companies label "sub-standard" risk. Higher rating = higher risk = higher cost of insurance.)
14. Decline (company chooses not to over coverage) American General's underwriters are generally less strict than most term life companies, and their rates are amongst the lowest in the industry. Let's take a look at some of their current underwriting guidelines:
Example Here is an example of American General's guidelines for a "Preferred Risk" client, 2nd best of 12 on risk. You don't have to be "Superman" to qualify:
Weight at 6': up to 220 lbs
Cholesterol: if ratio less than or equal to 6.0, 235; if than or equal to 5.5, 280
Blood Pressure: 145/85 up to 60 yrs old; 155/88 at 61 yrs of age and older
Driving: a single DUI more than 5 yrs ago
Family History: no death of parent prior to age 60 due to coronary artery disease or cancer $250,000 death benefit, male "Preferred Risk" monthly cost*. (Women approx 20% less)
|10 year term||20 year term||30 year term|
What Are American General Life Insurance "Sweet Spots"?
American General has some particular niches where it's most competitive:
Death Benefits: $100,000 to just under $1 million
Return of Premium: For applicants up to age 40, American General offers "Return of Premium" term life insurance options competitively priced with their regular term life products. If you outlive the policy, you get back every penny paid in.
Cigars: You can smoke 1 cigar a week and not have it affect your rates. You must disclose on your application, test negative for cotinine (nicotine) and have not tested positive for cotinine on any other insurance application in previous 12 months.
Health Considerations: American General is better than average for type II diabetes
Travel: With a few exclusions, American General allows travel up to 8 weeks of foreign travel annually in past 2 years or next 2 years before it affects the cost of life insurance.
Aviation: American General offers some of the best rates to private pilots.
What are common reasons American General declines life insurance applications?
• Uncontrolled diabetes
• Medical testing or surgeries advised but not completed
• Gastric bypass within past 6 months
• Alcohol or drug treatment within past 2 years
• Bankruptcy discharged fewer than 2 years
• DUI's--2 or more within past 5 years
• Active military with orders to deploy to a "hot spot"
• Mental disorder resulting in disability
• Parole or Probation current
As you can see, American General is NOT ALWAYS going to be the best choice. Regardless of your personal situation, be sure to compare your AG quotes against our other top company rates. You could save yourself thousands over the life of your policy.
What About Financial Underwriting?
At certain levels or age groups, American General requires more financial documentation than their competitors. This is to help deter life insurance fraud...people applying for more life insurance than their income or financial situation justifies.
At $1 million of life insurance and above, American General requires an IRS income tax transcript 4506T-EZ. along with a financial questionnaire.
We recommend applying with another life insurance company if you're unwilling or unable to provide tax returns, or apply for a death benefit under $1 million if you're under age 67.
At age 67, the tax return transcript/financial questionnaire requirement begins when applying for $500,000 of life insurance or more.
What else should I know about applying for American General life insurance?
• Along with the standard blood/urine samples, height/weight and blood pressure, American General will often administer a mobile EKG for men aged 40+ applying for $500,000 or more. The nurse will conduct this test and there is no cost.
• If you're between ages 60-70 and haven't had a full physical within a year, Standard (#4 of 12), meaning average within your population group, is the best risk class generally offered. Men and women with annual or bi-annual physicals are statistically better risks.
• If you're 71 or older and haven't had a full physical with your personal physician within 2 years, your life insurance application will be declined. You're an unacceptable risk for life insurance if not visiting a physician for regular check ups.
After your free in-home insurance physical, your policy underwriter will occasionally require additional information, such as a statement from your physician or a follow up test. For example, we often see cholesterol retests requested for applicants who've forgotten to fast.
Fortunately, the life insurance exam labwork is good for 6-12 months, depending on the insurer and your age when applying, so there is no need to start the process over. JRC's agents will arrange to have your retest results forwarded to the underwriter to minimize delays completing your life insurance process.
What Type of Business Life Insurance Does American General Sell?
American General offers the most common types of business life insurance. It's a pretty big market for them in conjunction with their other types of business insurance. The financial requirements are the same as detailed above for individuals, along with standard company financials including current P&L and balance sheet.
Key Person:"Key man" insurance protects the business from a financial loss due to the sudden death of a key employee. They'll offer 10 times current salary; 3-5 times income for older employees.
Buy Sell/Business Succession/Business Continuation: Cross person "Buy-Sell" insurance provides funds for the surviving partners to purchase the portion of the business from the survivor's heirs. American General limits this insurance to the insured owner's portion of the business.
Business Loan: Coverage is limited to 75% of the loan. The business is the Owner/Beneficiary, with a collateral assignment to the debtor.
AIG Real Life Example
Meet Arthur S. from Florida
One of our clients, Arthur, is in overall good health. He takes a blood pressure medication, Amlodipine HTCZ, and a cholesterol medication, Lisinopril.
Arthur is about 30 pounds overweight, smokes a cigar 3 times a month, he is 65, recently retired, and lives in Florida.
Arthur watches his grandchildren one weekend a month and he refuses to smoke when they are visiting. Arthur wanted a 20 year term to make sure if he is not around to help his grandchildren with college, he can leave some money behind for them. Typically it takes 7-10 days for all nicotine to leave your body.
Some companies will allow you to test positive for nicotine, as a cigar smoker, and still qualify for a non-tobacco rate. Knowing this, we applied Arthur with a company that would allow him to have nicotine in his system. When Arthur’s lab work came back; however he was negative for cotinine, an indicator of nicotine.
Arthur explained that his grandchildren had visited the week before and that he had not smoked a cigar for almost 2 weeks. At this point, we knew we could save Arthur money by moving his application to another company.
If Arthur had tested positive for cotinine, the best rate class he could qualify for would be “Standard Plus” but with AIG, even though he smokes cigars – at a height and weight of 5’8”, 198 pounds he qualified for “Preferred” rates.
A great niche that AIG offers is the fact that they will accept lab work that is up to 12 months old. We were easily able to transfer Arthur’s results within this time frame and we saved him a considerable amount of money on his 20 year - $150,000 policy.
In fact, Arthur’s final approved rate was $178.54 per month, AIG ended up saving Arthur $68.33 per month over the company that we initially recommended.
Important: Keep in mind if Arthur was an "every day" cigar smoker, American General would NOT be the best choice for him. Regardless of your situation, we as agents know the right company for the situation, so be sure to compare your AG rates against our other carriers:
Jim L. from California
Jim, a client of ours is 62, he is in excellent health overall. He is 5’10”, 201 pounds, and takes no medications. Jim is a non-smoker and still works full-time as a high-school principal.
Jim enjoys an occasional glass of wine and tries to make it to the gym at least 3-4 times a week. Jim currently lives in central California and plans to retire within 5 years. Jim needs the insurance because he still has a balance of roughly $100,000 on his mortgage.
Jim expects to pay the house off within 10-15 years using his pension and retirement income, once the mortgage is paid off, he will have enough in savings to handle all expenses.
Even though Jim is in excellent health, he explained to me that sometimes his blood pressure is slightly elevated.
We shared a few jokes that his blood pressure was probably job-related and Jim explained that every time he goes to the doctor’s office his blood pressure is high, but when he takes his blood pressure himself at the store on the weekends, it never seems high.
This is surprisingly common for people when they have their blood pressure checked by a doctor, it is a condition commonly referred to as “white coat syndrome”. Knowing that high blood pressure is an underwriting niche that AIG is very lenient with, we knew where to bring Jim’s application.
When Jim scheduled his medical exam, we recommended for him to complete the exam before work, during the weekend, so that his stress level would be minimal.
At the exam, Jim’s blood pressure was measured at 154/85, a number that is elevated enough for some companies to approve his application at a “Standard Rate”.
AIG actually offered Jim a “Preferred” rate due to their leniency with blood pressure readings, saving him about 50% over his local agent. Jim’s final rate for a $100,000 policy for 15 years was $68.16 per month or $779.00 per year.
HOWEVER, AMERICAN GENERAL DOESN’T ALWAYS HAVE THE LOWEST RATES
While we frequently use AG for many health conditions and client situations, there are a few cases where American General is usually NOT the best company:
- Overweight clients
- Clients with a DUI on their record
- Family history of cancer or heart disease
- Clients who smoke - especially marijuana, cigars, pipes, or chew tobacco
- Mental health disorders such as anxiety, depression, or PTSD
- Frequent travelers outside the US or non US residents
When AIG Wasn’t The Best Option
Last month, we received a call from a client who was upset that her husband’s policy was approved at a rate higher than he was initially quoted. Her husband was in perfect health, but his mother had passed away from cancer at the age of 59.
Her husband had called a call center for his life insurance, but the agent he worked with, did not ask about his family history. AIG reviews a family history of cancer before the age of 60, and this can prevent someone from being able to qualify for their “preferred best” rate class.
George’s $1.5 million, 20 year policy was approved at a “preferred” rate solely because of his family history. George’s final approved monthly rate was $159.16 with AIG. We were able to move George’s application to a company that did not consider a family history of cancer and he was approved for $130.05 with an A+ rated company.
By having access to the underwriting guidelines that the life insurance companies use to determine your final rates, we were able to save George and his family $6,986.40 over the course of his 20 year policy.
We're Here to Help You Find Your Best Options
If you are shopping for life insurance and want to compare prices and shop the market, please call to speak with an expert. We do not limit our customers to a handful or companies to choose from, we represent more than 50 top-rated life insurance companies.
Most importantly, our agents do not have quotas and weekly sales goals to meet. We provide a consultative approach to life insurance, and our shopping services are completely free. Call us at 855-247-9555 today to find out why our client’s recommend us to their close friends and family.
Managing Partner and Co-founder
Cliff is a licensed life insurance agent and one of the owners of JRC Insurance Group. He has helped thousands of families of businesses with their life insurance needs since 2012 and specializes with applicants who are less than perfect health. In his spare time he enjoys spending time with family, traveling, and the great outdoors.