AIG Life Insurance

Fast Overview

American International Group, Inc. (AIG) is large insurance company that is headquartered in New York. AIG has additional offices abroad in London, Paris, and Hong Kong. Until 2008, AIG was one of the largest publicly traded companies in the United States and abroad.

Since September 2008, AIG has been featured extensively in the media. After almost 100 years of operation, AIG began to fail due to an inability to meet financial obligations to creditors. The company's failure began with its lowered credit rating that resulted in a liquidity crisis. Lenders perceived AIG as a risky business, and the company could not recover through loans and additional lines of credit.

In September of 2008, the Federal Reserve Bank offered AIG a bailout of $85 billion. The government received an equity stake with AIG in return. In simple terms, taxpayer dollars are currently helping AIG maintain its daily operations as the company continues to stabilize. Since the bailout, AIG has been subject to extensive media and public scrutiny. AIG employees even started receiving hate mail and death threats.
Since the bailout, AIG has continued to offer life insurance services. Even now, the business has been unstable: the company has gone through several CEOs, is selling its subsidiaries, and is experiencing net losses. In any case, AIG's life insurance products and services remain steady.

Benefits

AIG provides flexible options for individuals and insurance brokers with services that include a comprehensive product portfolio, marketing management tools, and constant product development for a variety of plans that include Term Life Insurance, Universal Life Insurance, Variable Life Insurance, and Whole Life Insurance. Policy holders select plans that match their financial objectives. For example, people might wish to invest their death benefits, or they may wish to designate beneficiary who receives a certain amount of cash. AIG's insurance plans may be used to cover funeral expenses. Even though AIG's business is undergoing a major overhaul, its available services remain steady and reliable.

How It Works

You can think of life insurance as a contract between an insurer and a beneficiary. When the policyholder dies, the insurance company will pay the beneficiary. The policyholder can purchase or receive life insurance in a number of ways. Some companies provide options for subsidized life insurance as a benefit to employees. People might also want to purchase life insurance policies to ensure that a family remains secure and stable. You can pay for life insurance on a monthly, quarterly, and annual basis.
AIG was able to offer a wide variety of life insurance options after acquiring American General Life Companies in 2001. At the time of acquisition, American General Life Companies had operated for over 75 years. This merger positioned AIG with the ability to offer life insurance services to corporations, associations, and individuals.
AIG provides specializes in five types of services for life insurance:

• AIG provides life insurance packages for institutions looking to buy plans for many members or employees
• Universal Life insurance allows policyholders to change premiums and coverage amounts as life situations change. The policyholder is always covered no matter how the life insurance plan adjusts. American General will issue benefits as long as the policyholder pays the minimum premium amounts.
• Unlike Universal Life insurance, Whole Life insurance remains the same throughout a person's life. You can plan for the amount that your beneficiaries will receive in the event of your death.
• Term Life insurance is in place for a certain amount of time. You can select packages that keep you covered for 10 to 25 years. With Term Life insurance, you can customize your package to buy only the insurance that you need. You can avoid paying additional premiums for life insurance packages that you do not need.
• Variable Universal Life insurance allows you to allocate your death benefit. You can choose to receive cash, or you can choose an investment package. You can also select a combination of both.

Cost/Pricing

Costs vary substantially based on individual needs and preferences. If you'd like to be insured for a greater amount, you will need to pay more. In general a $1 million policy will be more expensive than a policy for twenty thousand. If you are a company seeking to provide life insurance to employees, you can typically negotiate your rates. Your rates may vary by your company size and number of employees. If you are an individual, it is cheaper to receive subsidized life insurance by your company. Company subsidized policies can be free or of very low cost to you. If you are interested in purchasing life insurance through AIG, you should work with an agent or broker to review your options.

Timing

You can purchase a life insurance policy at any time. The best time is when people are dependent on you for money. If you are supporting a family or if you have debt with cosigners, you'll likely want to be prepared. Even if you are young, you should be responsible and assess potential financial impacts of your death. After an emergency, you do not want to leave your family or dependents suffering from additional financial burdens. Even though AIG is undergoing a major corporate overhaul, its available services are steady and reliable. If you are thinking of purchasing a plan through AIG, the best time to start your research is now.

Companies/Industries

AIG provides life insurance services through American General Life Companies. You can also learn more from AIG's corporate website.

How Much Life Insurance Coverage Do I Need?

Life insurance is supposed to make things easier for those you leave behind. It's designed to help pay for your final expenses, pay off your loans, make sure your children can go to school and help your family survive without your income. But how much insurance coverage do you need to have to make sure all of that is paid for?

Reasons For Coverage

The most common reasons to obtain life insurance are to cover the costs of:

• Funeral Expenses: Life insurance can pay for a funeral and burial and related expenses. Experts recommend budgeting for approximately $15,000.
• Loans: Life insurance can pay off debts such as mortgages, car loans and student loans so that loved ones do not have to carry the burden of these expenses. It is up to the insured to decide how much coverage to buy based on the amount of debt versus what a surviving spouse will be able to afford. There are online calculators to help with decisions about insurance coverage.
• Education: Life insurance can help pick up the cost of college education. Keep in mind that economic experts advise that the cost of college will increase about 5 percent each year so make sure to take this into account when calculating how much coverage you will need.
• Income Replacement: While your dependents may need supplemental income from life insurance to make up for your lost paycheck, they won't need 100 percent of your salary if debts, loans and educational expenses have all been handled.

How Much Insurance Do You Need?

There is no hard and fast rule for the dollar amount of insurance coverage each person needs because life circumstances differ greatly.
Many financial experts suggest coverage worth five to ten times your annual salary. Someone with no dependents might need a lot less insurance. Someone carrying large amounts of debt may need more.
Some financial advisers also believe in minimal life insurance coverage for the person who is not the primary earner in the family. It's important to remember that life insurance isn't strictly about income replacement. A stay-at-home parent may not be bringing in a paycheck that needs to be replaced, but if he or she died suddenly and the primary earner had to hire a housekeeper and pay for child care, the family's expenses would rise considerably.

When You Might Need More Insurance

Some life events may trigger the need for more life insurance. Kiplinger's financial data service notes that the following life events may warrant an increase in life insurance coverage:

• Getting married
• Having a child
• Buying an expensive home
• About to retire or leave your job - Many companies provide life insurance policies for their employees. Losing the company policy may leave a void that a personal policy must fill

Term Vs. Permanent Coverage

Term life insurance is the most basic form of life insurance. Term life policies are purchased for a set period of years. The policy expires at the end of the term whether death benefits have been paid or not. Families with small children often select term insurance policies for the number of years that those children will be dependents. Additionally, policies offered by employers are generally term insurance.
Permanent life insurance provides coverage for the lifetime of the covered individual. Because it does not expire, permanent life insurance is generally more expensive than term insurance. Additionally, permanent life insurance has an investment component to it which can fluctuate in value. The investment component can include stocks, bonds or money market funds. Many permanent policies will allow you to borrow against the value of the investment component.

Buying Life Insurance

The process of acquiring a life insurance policy requires a paperwork trail and patience. Providers generally require a medical exam before writing a policy. The exams are usually done by medical professionals who provide mobile services and meet clients in their home or office. The medical professional usually asks general health questions. The exam can often include blood work, urine samples and sometimes more sophisticated tests like EKGs and x-rays.
Providers look for markers of unhealthy lifestyles like tobacco or illegal drug use. They also want to pinpoint any conditions that could affect your life span.
The larger the policy and the older the applicant, the more tests they are likely to require.
Additionally, insurance companies share information about medical histories through a national clearinghouse.

How To Choose A Provider

There are many insurance companies underwriting life insurance policies. They offer different amounts of coverage at different prices. Providers also differ in the amount of fees and commissions they charge for a policy. Therefore, it makes financial sense to get more than one quote on a policy.
You also want to make sure you have selected a financially healthy provider for your coverage. After all, a life insurance policy is worthless if the company you have it with goes out of business. Standard & Poor's rates providers that offer insurance services on financial stability and the ability to payout policies and contracts.
Life insurance is an important part of estate planning. It's a way to make sure that your finances are in order and your death does not cause undue financial hardship to your family. Insurance comes in different forms and in different amounts. Selecting the necessary coverage requires a long, hard review of your expenses and debts and a practical view of how much money those you leave behind will need.

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