QoL Max Accumulator+ Cash Value Accumulation IUL Policies issued by American General Life Insurance Company ("AGL )
Introducing the QoL Max Accumulator+ Index Universal Life Insurance An attractive life insurance solution that can provide a route to cash value accumulation and tax-free income potential GROWTH Help accumulate tax-deferred funds STABILITY Protect against losses due to market volatility ACCESS Leverage multiple options for tax-free income PROTECTION Helps provide security for beneficiaries 26
Rate Summary Index Strategy Guaranteed Minimum Interest Cap Rate Participation Rate Non- Guaranteed Crediting Rate AG 49 Current Account Value Enhancement AVE (policy yrs 6+) Blend Participation Rate 0.00% NA 100% 7.38% 0.65% Utilizing MLSB Index Participation Rate Utilizing S&P 500 High Cap Rate Utilizing S&P 500 Core Cap Rate Utilizing S&P 500 0.00% NA 65% 7.35% 0.45% 0.00% 13.50% NA 7.47% 0.25% 0.25% 10.00% NA 6.11% 0.75% Declared Interest 2.00% NA NA 2.65% 0.25% Rates current as of 4/15/2016 and subject to change. 27
ML Strategic Balanced Index Dynamically Blending Equity and Fixed Income Indices designed to Provide Stability with Upside Growth Potential
Rules-Based Indexing 1. Volatility Control measures seek to provide smoother results and mitigate sharp market fluctuations. While this type of strategy can lessen the impact of market downturns, it is important to note that it will also lessen the impact of market upturns, therefore limiting upside potential. 29
The Value of a Dynamic Rules-Based Approach from 1/31/1994-12/31/2013 Note: Past performance is not a guarantee of future results. The ML Strategic Balanced Index was created on August 12, 2014. Levels for the Index before August 12, 2014 represent hypothetical data determined by retroactive application of a back tested model, itself designed with the benefit of hindsight. The above hypothetical chart only reflects the performance of the ML Strategic Balanced Index. It does not reflect the amount of interest credited to an index annuity or index life product during this time. Actual results for a specific insurance contract would depend on the crediting strategy chosen and the spread or participation rate for the time period(s) shown. 30
Thoughts on which strategy when? MLSB Blend Participation Diversification Hedge against S&P negative performance Capitalize on times of low volatility by overweighting Potentially higher returns Uncapped strategy Second highest bonus Highest illustrated values S&P Core Cap Highest Guarantees Hedge against S&P negative performance Designed to perform best at lower rates or return High bonus and guarantee S&P High Cap Great use as a combo with the MLSB for years when S&P performance is positive Index with highest illustrated rate per ag49, but not highest total overall illustrated rate. S&P Participation If you expect positive S&P Performance Great use as a combo with the MLSB for years when S&P performance is positive Uncapped strategy 31
Product Specs Issue Ages 0-80 Minimum DB $50,000 14 Year Surrender Charge Period Monthly Admin Fee Current $10.00 / Max $20.00 Premium Load Current charge varies by gender, issue age, class, and policy year Max charge of 18% up to target, 18% above target Monthly Per $1,000 Expense Charge first 15 years only 32
Product Specs Product Highlights Target Underwriting Classifications Death Benefit Option 2 Year Rolling Target Premium Preferred Plus Non Tobacco Preferred Non Tobacco Preferred Tobacco Standard Non Tobacco Standard Tobacco Special (Substandard) Non Tobacco Special (Substandard)Tobacco Option 1 (Level Death Benefit) Option 2 (Increasing Death Benefit) We have improved our Standard non tobacco rates and added a Preferred Plus non-tobacco class! 33
Underwriting Class Structure Transition 34
Standard Loan 3% Charge / 2% Credit Preferred Loan 2% Charge / 2% Credit Available after policy year 10 but are restricted to a policy year maximum of 10% Participating Loans 5% rate at product launch Loan rate will vary between 4% and 8% declared monthly loan rate is governed by The Model Policy Loan Interest Rate Bill (MDL-590) Switch Loan Type up to 3 times during the life of the policy 1 Policy loans and withdrawals may be taxable. 35
Riders Accelerated Access Solution Accidental Death Benefit Children s Insurance Income for Life Rider Select Income Rider Overloan Protection Rider Spouse/Other Insured Term Rider Waiver of Monthly Deductions Waiver of Specified Premium QoL Accelerated Benefit Riders There may be a charge for each rider selected. See the rider for details regarding the benefit descriptions, limitations and exclusions. Adding or deleting riders and increasing or decreasing coverage under existing riders can have tax consequences. Policy owners should consult a tax advisor prior to exchanging their policy. Riders are not available in all states. 36
Another option the insured can choose for their beneficiaries is the optional Select Income rider. 37
Select Income Rider No cost rider Potentially increases policy s funds available to access by policy owner Helps beneficiaries manage ongoing expenses Optional rider converts a portion or all of the life insurance benefit for beneficiaries to a predefined guaranteed set of annual payments Minimum percentage of life insurance benefit available to convert is 10% (up to 100%) 38
Select Income Rider Only available at issue Once selected at issue, the installment payment period is irrevocable for the beneficiary May lower the policy s cost of insurance charges, which may enable cash value to accumulate faster Income or withdrawal amounts may increase by 2-5% on average compared to what it would be without the rider 39
Select Income Rider Schedule of life insurance benefit payments will be determined at issue You can choose payment durations to beneficiaries of 10, 20, and 30 years Benefit schedule will be based on the initial face amount of the policy at issue Life insurance benefit payments will increase annually at a rate set at issue (1%) 40
Select Income Rider Payout Example DB $1,000,000 Payout $100,000 $101,010 $102,030 $103,061 $104,102 Period 1 2 3 4 5 Payout $105,153 $106,215 $107,288 $108,371 $109,466 Period 6 7 8 9 10 $1,046,696 Total Minimum Installment Amount: $10,000 Hypothetical representation for illustrative purposes only. 41
Select Income Rider QoL Max Accumulator+ Without SIR With SIR Initial DB $588,992 $588,992 Age 65 CV $326,546 $338,477 Annual Income $35,323 $37,246 Total COIs age 85 $39,039 $22,913 F45SNT $10,000 annual premium to age 65 Increasing DB, switch to level at 65 ML Index, max rate Participating Loans Only Income age 65-85 Hypothetical representation for illustrative purposes only. 5.44% Increase 42
Select Income Rider QoL Max Accumulator+ Without SIR With SIR Initial DB $396,706 $396,706 Age 65 CV $318,209 $336,760 Annual Income $34,066 $37,048 Total COIs age 85 $58,556 $31,909 F45SNT Table E $10,000 annual premium to age 65 Increasing DB, switch to level at 65 ML Index, max rate Participating Loans Only Income age 65-85 Hypothetical representation for illustrative purposes only. 8.75% Increase 43
Income For Life Rider What s Better Than Income For Life? Tax Free Income For Life!
Income For Life Rider With the Income for Life rider, the cash values can be used to produce a guaranteed stream of lifetime income with optional annual cost-of-living adjustments. There is no additional cost to add this rider to the policy, only a onetime charge deducted from the account value when you activate this feature. Income is not guaranteed until the rider is activated. The one-time charge and annuity factor rates can be re-priced by the company before activation. 45
Income For Life Rider After activating this feature, the guaranteed income stream will continue for the policy holder s lifetime and never decrease even if the market experiences a significant drop and the policy will retain a life insurance benefit. Plus with a built-in step-up feature, the income amount may increase if the market does well. On each policy anniversary, the step-up feature recalculates the income stream if the underlying account value exceeds the current target performance. The choice on whether or not to activate this feature is up to the policy holder. 46
Income For Life Rider Issue Ages: 0-75 Waiting period: 10 years Be no younger than 55 and no older than 85 at time of election Automatically included Income stream: Guaranteed income stream (similar to an annuity payout) Fixed Loans after withdrawals to basis Optional annual Cost of Living Adjustment (COLA): 0%, 1%, 2%, or 3% options 47
Income For Life Rider Upon election of rider DB switched to Level Payments can be paid monthly, quarterly, semi-annually or annually One time charge assessed at time of activation No accelerated benefits must be paid out prior to exercise No policy changes (no additional premiums/withdrawals/loans, face changes, DB option changes, etc.) can be made after rider election or else it terminates the rider. Riders like AAS & QoL ABRs are dropped when IFLR is activated. 48
IFLR Calculation Example Male Age 45 Face Amount $220,000 Increasing DB switching to Level in year 21 $10,500 Annual Payment for 20 Years Cash Value at age 65 is $414,231 One time IFLR charge is the tabular rate multiplied by the cash value: 414,231 x 6.855% = $28,396 The IFLR Annuity Factor in this example would be 0.0493% IFLR Payout Calculation: (414,231 28,369) x 0.0493 = $19,013 Hypothetical representation for illustrative purposes only. 49
Combination Example Base SIR IFL Both Riders Income Amount $31,657 $32,879 $15,169 $15,660 Male 45 PNT Initial DB $498,886 $10K pay to 65 SIR run at 100% of DB, 30-year Max Rate run with ML Index Account Standard Loan Switch at Basis Hypothetical representation for illustrative purposes only. 50