What Will Be Covered in this Annuity ReviewIn this annuity review, we will be going over the following details regarding the AIG (American General) American Pathway Annuity:
- Product type
- Current rates
- Realistic long-term return expectations
- How the annuity is best used
- How the annuity is most poorly used
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If you are considering the purchase of an annuity because you want assurance that you’ll have a guaranteed stream of income in retirement and that your money will be safe up until that time, then the American Pathway Annuity from AIG (American General) could be a good option for you. This is because the American Pathway annuity offers a fixed rate of interest that you can count on, as well as lifetime income in retirement – and if you choose the lifetime income option, you’ll receive this income stream for the remainder of your lifetime, no matter how long that may be. Over the past several years, annuities have become more popular – especially with retirees and those who are approaching retirement. One reason for this is because they provide a guaranteed income stream, and they (deferred annuities) offer tax-deferred growth of your principal. With a fixed annuity, you also have the added bonus of assurance that your money will be safe – no matter what occurs in the stock market. This can help to alleviate the worry of a market correction impacting your future savings. Before you sign on the dotted line, however, it is always a good idea to take a closer look at the annuity’s “fine print.” This is because annuities can often have hidden charges and fees. And, while most insurance and financial companies do a great job of giving you all of the nice, rosy benefits that annuities offer, there can also be a few downfalls. With that in mind, it is much better to know these drawbacks now, as versus after you have already committed a large chunk of your savings to it. That’s where the Annuity Gator comes in.
Annuity and Retirement Income Planning Advice that You Can TrustIf this is the first time you have been to our website, we would like to personally welcome you here to AnnuityGator.com. We are a team of experienced financial professionals who are dedicated to providing non-biased and in-depth reviews of annuity products. We’ve been doing this for a number of years now – far longer than most of our “copycat” competitors – and because of this, we have come to be known as a highly trusted source of annuity information. If you’ve been seeking information about annuities online, it is likely that you have come across many conflicting details about these financial vehicles. This isn’t really very surprising, though, because there are a lot of opinions (both positive and otherwise) about these products floating around the Internet. While there are a number of very good websites on the Internet that are focused on offering their annuity products, there are some that will attempt to lure you in with some pretty bold claims like:
- Lowest Fees
- Highest income payouts
- Guaranteed lifetime income
- Top-rated companies
The AIG / American General American Pathway Annuity at a Glance
|Type of Product
|Fixed Deferred Annuity
Opening Thoughts on the AIG / American Pathway AnnuityFor more than 100 years now, AIG has been in the business of providing financial growth and protection products to its customers. This company was founded in Asia in the year 1919, and throughout the years, it has grown into a stable force in the insurance industry. Due to its strong financial foundation, AIG has received high marks from the insurer rating agencies, which include the following:
- Standard & Poor’s – A+
- A.M. Best Company – A
- Moody’s Investor Services – A2
Before we get into the in-depth details, we have some legal disclosures to present…This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. AIG / American General has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners. For more details on how to compare fixed annuities so that you can decide which may be the best one for you, click here in order to obtain our free annuity report.
How AIG / American General Describes the American Pathway AnnuityAIG describes the American Pathway annuity as a single premium deferred annuity that allows you to build income for the future. In the case of this particular annuity, it is designed to help you achieve long-term financial goals. With this annuity, you can choose from a variety of different initial interest rate guarantee options, including one-year, three-years, five-years, or seven-years, whereby the rate is locked in for that time period, no matter what happens with interest rates in the economy. At the time of issue, you may also select an optional return of premium guarantee which allows you to return the annuity at any time for an amount that is equal to the single premium that you paid into it (minus any withdrawals that you had made). If, however, you opt for this feature, then it is important to note that it will result in a slightly lower initial interest rate than if you had not selected it. As with other annuities, the funds that are in the annuity are allowed to grow and compound on a tax-deferred basis. And, you can choose from a variety of different income options – including the lifetime income feature, which will allow you to receive income for the remainder of your lifetime, regardless of how long that may be. There are some other features related to this annuity, including a death benefit whereby if the annuitant dies before income has started, then a named beneficiary can receive the funds that were in the account. (If your spouse is the sole beneficiary, then he or she may alternatively elect to become the new owner of the annuity and continue the contract). There are also several instances where you could receive a waiver of the surrender charges if you need to take money out of the annuity. These include the following situations:
- Extended Care – After the first contract year (the second year, if in New York), early withdrawal charge fees will be waived if the annuity owner is confined to a qualifying institution or an extended care facility for 90 consecutive days or longer.
- Terminal Illness – Early withdrawal charge fees will be waived on one full or partial withdrawal upon the diagnosis of a terminal illness that will result in the death of a contract owner within one year. (Here, the written documentation from a qualified physician is required).
- Activities of Daily Living (ADLs) – After the first contract year, early withdrawal charge fees will be waived if the owner of the annuity is unable to perform – based on the written certification of a licensed health care practitioner – two or more of six defined activities of daily living (ADSs) for at least 90 consecutive days. These ADLs include bathing, continence, dressing, eating, toileting, and/or transferring).
How an Insurance or Financial Advisor May “Pitch” this Annuity to ClientsBecause life can oftentimes be filled with many uncertainties, whenever you have an opportunity to receive a guarantee, it can be a nice benefit – particularly if it has to do with your financial situation. With that in mind, when it comes to the AIG / American General American Pathway Annuity, it is likely that a financial or insurance advisor who is offering this product to you will focus on the fact that you can get a guaranteed rate of interest for a set period of time, and that you can also count on a set amount of income from this annuity in retirement. However, whenever you have a guarantee presented to you, you could also find that there are certain “tradeoffs” that you need to accept in order to attain those benefits. This is certainly the case with this annuity. First, due to the painfully low-interest-rate environment that the U.S. has been stuck in for roughly ten years now, don’t expect that the rate you get will really grow your money all that much. In fact, the low rate here is barely that of a savings or money market account – even though your funds won’t be very liquid (i.e., accessible, at least without incurring a surrender/withdrawal penalty). And, while these low rates might appear to be a good tradeoff for safety, the reality is that you could end up being unable to meet, much less beat, the rate of inflation over time. This, in turn, could have a negative impact on how much you are able to spend on the goods and the services that you need in the future. So, prior to diving into a long-term financial commitment on the AIG / American General American Pathway annuity – or any annuity – be sure that you are aware of what you are giving up in return for what you’re getting.
What About the Fees on the AIG / American General American Pathway Annuity?Even though there is no up-front charge on this annuity, as well as no annual fees, don’t let that make you believe that you won’t have any type of fees or charges at all with this annuity. In fact, one place where you could incur a substantial fee is if you opt to withdraw more than 15% of the contract’s value. In this case, you could be hit with a withdrawal charge. These charges begin at 9% in the first contract year, and they grade down over time as follows:
The Annuity Gator’s End Take on the AIG / American General American Pathway AnnuityWhere this annuity works best: This annuity may be a good product for those who are looking for the following benefits:
- A fixed rate guarantee for a set number of years
- Protection of principal
- Lifetime income
- Want the opportunity for a higher rate of return
- May need to take large withdrawals during the surrender period
- Do not plan to use the lifetime income feature