A quality life insurance program is an essential part of a successful financial plan. American General Life Insurance Company is committed to meeting the needs of our more than 4 million customers across the country. Our first and foremost commitment is personal service to our customers. Our products reflect our commitment to personal service and our effort at making insurance easier to understand.
In this section of the site, you will find descriptions of our insurance products. To assist you in understanding the various terms associated with insurance products, we have provided a glossary of terms below.
Contracts in which the buyer pays funds to a life insurance company for investment and, in return, the life insurance company agrees to pay the annuity owner periodic payments during his or her lifetime, typically for retirement purposes. During an annuity's accumulation phase, funds within the contract grow either at a fixed or variable rate, depending on the type of annuity chosen. In the payout phase, the insurance company makes a series of payments to the contract owner, usually at regular intervals, for a fixed period or for life. Most annuities are tax-deferred, meaning cash values accumulated are not taxed until the funds are paid out.
Cash value life insurance policies offer the ability to accumulate cash values on a tax-deferred basis (based on current federal income tax laws). Depending on the type of policy, the funds can grow at guaranteed fixed interest rates or at variable rates tied to the performance of selected investments. Assets that accumulate within a life insurance policy (net of loan and surrender provisions) may be available to the policyowner during his or her lifetime through policy loans and withdrawals and may also increase the death benefit available to the beneficiary.
The person(s) named in the policy to receive the life insurance proceeds upon the death of the insured.
The amount of money that a policyowner is entitled to receive (minus any surrender charges and any outstanding loans and interest) if the policyowner cancels the coverage and surrenders the policy to the insurance company.
Policies, unlike term insurance, that provide both a death benefit and a method of accumulating funds over time. Cash value life insurance policies differ from term life insurance in several other ways, including higher initial premiums to pay for the cash value feature of the policy, greater flexibility through features such as policy loans, tax-deferred growth opportunities and dividend payments.
Policies purchased to ensure that loans or charge account balances will be paid off in the event the insured dies with an outstanding loan balance. Some lenders or sellers may require credit life insurance before they will approve a loan.
A life insurance contract provides payment of a death benefit to a designated beneficiary upon the death of the insured.
A refund of excess premiums paid to the owner of an individual participating life insurance policy.
A procedure for the accumulation, conservation and distribution of personal wealth. Estate planning seeks to transfer the estate to heirs with a minimum loss in taxes and other expenses. Life insurance is typically used as part of an estate plan. Depending on the size and nature of the estate, an individual should solicit the expertise of an accountant, financial planner, attorney and life insurance agent.
Annuities in which the insurance company promises to pay a fixed rate of return on the funds deposited into the annuity, regardless of the company's investment performance. All the investment risk is carried by the insurance company.
Annuity contracts that begin making payments to the contract owner immediately (within one year) after the annuity is purchased. An immediate annuity does not go through the accumulation phase. Each payment that is made from the immediate annuity is a return of part of the investor's original investment plus any interest earned during the payout period.
Policies that insure two lives under one policy, with the death benefit payable at the death of the second insured. When the first insured dies, the policy remains in force and no death benefit is paid. The mortality cost - the cost of the pure insurance - is generally lower with this type of policy compared to the cost of purchasing two individual life policies.
Payments to the insurance company to buy a policy and to keep it in force.
Term policies that provide a refund at the end of the level-premium period of the cumulative premiums paid.
Policies that offer life insurance protection for a specified term or period of time - typically from one to 30 years or until a specified age. Term life insurance provides a death benefit only, and does not typically offer an opportunity to build up cash values within the policy. As a result, term insurance is generally less expensive than cash value life insurance. Premiums for a term life policy typically increase with the age of the insured.
Cash value life insurance policies that offer the policyowner the flexibility to choose his or her amount of insurance, the premiums he or she will pay and the opportunity to change these amounts over the life of the policy (within certain guidelines) to meet changing financial needs. Premium payments are credited to a cash value account where the money earns interest at a rate set by the company which may change from time to time. Policy expenses are deducted from this cash value account. The policy's cash value may be accessed through policy loans and withdrawals.
Also known as permanent insurance that offers life insurance protection throughout the life of the insured as long as the premium is paid when due. The premium may be level or increase after a fixed period, but it will not change from the premium schedule provided when the policy was purchased. Part of each premium payment is applied to the policy's cash value account, which grows on a tax-deferred basis. In addition to providing guaranteed premiums, death benefits and cash values, whole life policies may also pay policy dividends in some cases.
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