AIG Annuity Review March 2024 (2024)

The American International Group (AIG) has been in business since 1919. They are one of the largest insurers in the world covering many different areas. In 2022, they decided to spin off their individual life insurance and retirement division into a separate company, called Corebridge Financial.

Corebridge Financial continues to offer the same products as AIG, including annuities. If you’re considering an annuity as part of your retirement plan, here’s how Corebridge Financial (AIG) stacks up against the competition.

AIG Fixed Annuities

American Pathway Fixed Annuity

The AIG American Pathway Fixed Annuity is a standard fixed annuity.

You can set one up with a guaranteed interest return lasting between one to seven years. At the end of the fixed term, the annuity switches to paying market interest rates. American pathway fixed annuities include popular features like a guaranteed death benefit.

The minimum deposit for an American Pathway Fixed Annuity is $5,000. This annuity does not charge an annual fee.

Assured Edge Income Achiever

The Assured Edge Income Achiever is a little more complex. This annuity shows what your guaranteed lifetime income would be once you start collecting payments, based on your total premiums paid. Every year you wait to collect increases this guaranteed income by a fixed, predetermined amount.

In AIG’s product brochure, they showed someone earning $6,000 a year off an initial $100,000 purchase. But every year this person waited to collect payments increased their guaranteed lifetime income by $510 per year. Note these numbers are just an example provided by Corebridge and your actual outcome could be different.

The Assured Edge Income Achiever does charge an annual fee of 0.95% a year of your account balance. You also need at least $25,000 to buy this annuity.

AIG Variable Annuities

AIG Polaris Variable Annuity

AIG’s Polaris Variable Annuity lets you invest in a wide range of investment funds including those from Fidelity and Morgan Stanley. These funds are spread across 12 different asset classes and include various strategies like Large Growth, Small and Mid-Cap and Emerging Markets. You must deposit at least $10,000 to buy this annuity.

The value of your annuity and your future income depends on the investment performance. However, for an additional fee you can add their Polaris Income Plus Daily Flex rider. This locks in the value of your gains each year for future income. In other words, even if your portfolio value falls, AIG sets their future income payments on your previous high.

The rider also promises a set growth rate for what you would earn with guaranteed lifetime income even during market downturns. This set growth rate is obviously lower than you would expect from standard investments.

AIG Variable Annuity Add-On Fees

AIG’s Polaris Variable Annuity can offer a death benefit with protection against market losses. The death benefit is what your heirs inherit if you die without starting income payments from the contract.

You can set the death benefit to be based either on your initial purchase value or the peak value of the contract during your investments, even if the value falls later.

All these features do add on to the cost of the annuity, which decreases the amount in your pocket . Here are the Polaris Variable Annuity fees:

• $50 annual contract fee (waived if your balance is at least $75,000).
• 0.43% – 1.21% annual professional management fee for the investments.
• 0.15% – 0.40% for the death benefit protection against investment losses.
• 1.45% and up for income protection even after investment losses.

AIG Fixed Index Annuities

AIG Power Series Index Annuity

The AIG Power Series Index Annuity combines market index returns with protection against market losses. For an added fee, you can add riders that boost your return for when you convert your annuity to get guaranteed income for life:

• The Power Series Index Annuity with Lifetime Income Plus Multiplier Flex® applies double your index return to your income base. For example, if your index grew by 4%, AIG would grow your income base by 8%. If you started with $100,000 and your balance grows 4% to $104,000, AIG would say your balance is worth $108,000 for generating retirement income.
• The Power Series Index Annuity with Lifetime Income Max®, which promises to grow your income base by 10% a year for future income, regardless of your investment performance.

Note that these return guarantees won’t apply if you transfer your contract balance elsewhere instead of collecting annuity income from AIG.

AIG Immediate Annuities

AIG American Pathway Annuity

AIG offers one immediate annuity, their American Pathway Annuity. You must deposit at least $10,000 to buy one. There are no annual fees for this contract, standard for immediate annuities.

One extra perk of this immediate annuity is that you can buy it up to age 90. The other AIG products limit you to age 85.

Advantages of AIG Annuities

• Decent product selection. AIG offers all the most common types of annuities, with multiple options for many of them. They also provide optional riders to finetune the contracts to your preference.
• Excellent benefits for future lifetime income. If you plan on turning your annuity into future income one day, AIG provides excellent performance guarantees. They also offer protection against market losses, both for your lifetime income and the death benefit for your heirs. These protections do come with a cost that shouldn’t be ignored.
• Most annuities offer some early access to funds. Annuities are long-term investments. If you try to cash out early, you likely will owe a surrender charge worth a percentage of your account balance. While AIG does have surrender charges, their annuities let you withdraw 10% of your balance early without a fee.
• Long-term company with good customer satisfaction. AIG has been in business for over 100 years, a sign of long-term financial stability. They also rank above average in customer satisfaction for their annuity business, according to JD Power.

Downsides of AIG Annuities

• Moderately high initial premiums. While you can buy one of the AIG fixed annuities for $5,000, most products require at least $10,000. Their Assured Edge Income Achiever needs at least $25,000 to get started, which is a high bar for many retirees.
• Expensive variable annuity fees. If you tack on all the income and death benefit guarantees for an AIG variable annuity, plus the investment fees, it could reach up to 4-5% a year. In comparison, the typical variable annuity annual fee is about 2-3%. Leaving your money invested with a brokerage could cost as low as .02%. The less you spend on fees, the more you can spend on enjoying your retirement.
• Limited rate and product information online. While AIG has some product information online, they don’t publish their current rates. You can’t request an annuity quote by yourself online. Many of the details of their annuities are difficult to find even for our seasoned researchers who found many of the data points in this article hidden in old powerpoint presentations or in the fine print of AIG’s YouTube videos.
• Buying process isn’t clear. If you’re trying to buy an annuity as an individual investor, the AIG website doesn’t make it clear how to set up a meeting for information or what you need to do to purchase.

Alternatives to AIG Annuities

MassMutual

MassMutual has been in business since 1851, making them one of the oldest insurers in the country. They do a particularly good job with their immediate income annuities.

Nationwide

Despite being primarily known as an auto and home insurer, Nationwide is also a top annuity company. They ranked #3 in customer satisfaction for their annuity business with JD Power. They are best known for delivering excellent variable annuities.

Allianz

If you are looking for a fixed index annuity, Allianz could be worth considering. They offer low-fee index annuity contracts that are also highly customizable for your goals.

Athene

Athene is a relatively new annuity company and has only been around since 2008. Since then, they have grown into one of the largest annuity providers in the country. They score highly for providing contract benefits, like guarantees for lifetime income, without charging additional fees.

Keeping Your Portfolio Invested

Avoiding annuities entirely is a good alternative for seasoned investors. Working with a financial advisor to ensure your portfolio is managed well can provide more income in retirement and a larger nest egg to pass down to your heirs than you’d get with an annuity.

How Annuities Work

An annuity is an insurance contract that turns your money into future income. You pay the insurer to fund the contract, either through a lump sum deposit or through many payments over time.

When you’re ready for income, you can ask the annuity company to turn your balance into guaranteed future payments. These payments can be guaranteed for your entire life.

Before you start collecting income, the annuity pays a return on your balance. There are a few common types of annuities:

• Fixed annuities pay a set interest rate guaranteed by the insurer. They are safe, predictable, and typically have lower fees.
• Variable annuities let you invest your balance in the market through funds. Your balance grows more if the investments do well, but less if the investments perform badly. Variable annuities could even lose money. Variable annuities can come with some performance guarantees, like promising a minimum amount of future income even if your investments lose money, generally for a fee.
• Fixed index annuities grow based on a specified market index, like the S&P 500. But instead of giving you the market return, these contracts set limits on your possible losses and gains. An index annuity might say you won’t lose money during downturns, but then there’s a cap on how much you earn during good years.
• Immediate annuities start paying you income right after your purchase. There is no investment stage to grow your balance.

Annuities in general have several pros and cons that should be considered.

What to Look For in an Annuity

Annuities are sizable investments. They are also expensive to reverse should you change your mind after buying because of surrender charges.

If you want an annuity, some of the ideal features to look for include:

• Competitive returns and income. An annuity should provide a competitive return. This includes growth before you retire, with protection against market losses, as well as the income you receive once you start collecting payments.
• Reasonable fees. Annuities can charge annual fees, which are a drain on your return. Make sure the fees are at a rate you feel comfortable with.
• Options for customization. There are multiple different types of annuities, which allow you to customize. Ideally, your annuity provider offers a good selection of options so you can find the right fit.
• Some early access to funds. Even though annuities are long-term investments, some companies let you take a percentage of your money out each year penalty-free.
• Backed by a reliable company. Your annuity could last years, even decades. It’s important to work with a company with a strong financial strength rating and reputation to make sure they continue to make payments for the decades you’ll be in retirement.

The right fit for you can depend on your personal circ*mstances. Consider collecting quotes from several companies to see your options. You could also meet with a financial advisor representing multiple companies to help you compare.