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Daily Coverage

Long-Term Care Insurance policies pay a daily amount towards home care, assisted living, or nursing home. Home care is the most common claim, with 75% of claims starting at home.

Plan Duration

Average claim: 2.9 years. Assuming you don’t have a crystal ball, you don’t know how long you’ll need Long Term Care for. The chance of needing Long Term Care is 1 in 2, but the chance of needing it for over five years is much smaller. Like any insurance, you may buy this and never use it, so finding a balance is key.

Return of Premium

Add this option and you’ll be able to leave your beneficiary the total sum of all of your premiums paid, less any claims you’ve made. If the thought of buying this and never using it bothers you, guarantee a return of funds with Return of Premium.

Home Health Care on Day 1

Coverage for care at home is available with no waiting period. This 10-15% extra option is the most popular add-on rider.

Shared Coverage

Women make longer claims than men, on average. Hedge your risk with your spouse by adding a Shared Care rider to your policy.

Inflation Protection

If you're buying this thinking of using in the future, include inflation protection.

AIG Polaris Platinum III Annuity

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AIG Polaris Platinum III is a variable annuity product that combines growth potential, a death benefit feature, and optional protection features for your retirement income. Your contract and optional benefits guarantee is backed by the financial strength of American General Life Insurance Company.

Policy Features

Costs and Related Information

The Polaris Platinum III variable annuity from AIG is very direct about all the fees they charge, but since they’re spread out, it might be hard for clients to add them all up and get the right total figure.

Since this is a managed product (i.e. your funds are ‘managed’) you’ll be charged a management fee that averages between 0.72% and 1.48% for each serious that you choose within your annuity product. The annual contract maintenance charge is $50, but this is waived for all contracts worth $75,000 or more. The insurance company also charges an annual base fee of 1.30% annually. The early access rider goes for .40% additional charge for the first 4 contract years.

To sum it up, the total operating expenses for your portfolio averages can go up to 2.20%.

Transfers Between Variable Portfolios

AIG offers 15 free transfers between portfolios each contract year with its Polaris Platinum III product. Thereafter, each transfer is charged $25.

Withdrawal Charges

AIG offers free withdrawals for greater than 10% of purchase payments that were not yet withdrawn each year, or the maximum annual withdrawal value if an income protection option was elected.

There’s a 7-year declining withdrawal charge period (8-7-6-5-4-3-2-0%). After the 7 years, withdrawal charges are no longer applicable.

Nursing Home Waiver

Withdrawal charges are waived for certain payments.

Income Protection

The income protection feature of the AIG Polaris III variable annuity product, which is paid for separately, gives you a guaranteed return rate of about 6%. If what you really need from your contract is a guaranteed income during retirement or whenever else you need it, and are okay paying premium for this assurance, then the income protection feature is a great addition!

You can choose from any of the following income protection features:

  1. Polaris Income Plus Daily – this income protection rider gives you the opportunity to earn more retirement for your retirement, as well as lock the highest possible daily value to your income base. There are three separate options within this income protection feature, which determine your maximum yearly withdrawal value. You’ll have to pay 1.25% (of your income base) fee to add the Single Life Option Polaris Income Plus Daily protection to your contract. For the Joint Life alternative, the fee is 1.45% of your income base. The minimum issue age for this protection feature is 45 years, with the maximum age being 80 years.
  2. Polaris Income Plus – makes it possible to ‘lock in’ the greater of your investment gains, or a yearly 6% income credit each contract anniversary over a period of 12 contract years. This 6% is only available in the years when withdrawals aren’t taken. If the investor does not take any withdrawal within these 12 years, the income based will be guaranteed to be minimum 200% of their initial purchase. Income credits are no longer available after the first 12th contract anniversary. Guarantees annual withdrawals of benefits for older owners. The withdrawal percentage is computed based on the age of the owner. For instance, owners within the 45-64 age bracket have a withdrawal percentage of 4.5%, which owners 65+ years old have an effective rate of 5.2%. The Single Life option for this income protection feature goes for 1.10% of your income base, while the Joint Life alternative goes for 1.35%. The minimum issue age for this protection feature is 45 years, with the maximum age being 80 years.
  3. Polaris Income Builder – for investors over 64 years old, the Polaris Income Builder protection from AIG allows them to ‘lock in’ the greater of your investment gains, or a yearly 6% income credit each contract anniversary over a period of 12 contract years. This 6% is only available in the years when withdrawals aren’t taken. If the investor does not take any withdrawal within these 12 years, the income based will be guaranteed to be minimum 200% of their initial purchase. After the first 12 years, the investor’s investment gains continue to increase on contract anniversaries. This is the main difference between this income protection feature and the one above (Income Protection Plus). You can get the Single Life option at 1.10%, or the Joint Life option at 1.35% of your income base. The minimum issue age is 65 years, and the maximum issue age for this Polaris income protection feature is 80 years.
  4. Family Protection – if you want a death benefit, this must be elected at the time of purchase.
  5. Return of Purchase Payment Death Benefit – available to contract owners maximum age 85 years, and allows return the greater of contract value adjusted for withdrawals. Included in the 1.30% separate account charge.
  6. Contract Value Death Benefit – just like the Return of Purchase Payment Death benefit above, only that it allows return of Contract Value only, and fees are reduced by 0.15% to 1.15%.
  7. Maximum Anniversary Value Death Benefit – this allows return of greatest of contract value on any contract anniversary before the 83rd birthday adjusted for withdrawals. The fee is 1.55%.

Other Conditions

Annuitization must occur by the 95th birthday.

All payments that cause the sum total of contracts issued to the same owners to exceed $1 million need prior approval.

Potential Benefits

a)      Growth Potential

Polaris Platinum III Variable annuity from AIG offers a significant potential for growth. Portfolios are managed by reputable money managers who’ve got a long-standing track record.

From what we’ve heard from agents out there, this annuity is able to earn you a minimum of 6% in annual returns, with a possibility of raking in 10% or more if the market goes up quite well. But based on our own practical research, you can realistically expect to get between 2% and 5% in annual returns.

b)      Income Protection

With AIG’s Polaris Platinum III variable annuity, you can choose to have income protection features in your contract. Although such features are available at an additional annual fee, they’re a great way to ensure that the income you get guaranteed income that’s adequate enough to provide for your needs when you need it.

Potential Drawbacks

Given the maintenance fees, and the cost of income protection and other features, this contract might be more expensive than many others.

Important

­­­Variable annuities are only sold by prospectus, which contains lots of information including investment objectives, fees, risks, charges, expenses, etc. All this information should be carefully considered. If you’re not well versed in all the nooks and crannies of purchasing a variable annuity, contact one of our financial advisers here. You will also obtain the prospectus from your financial advisor.

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AIG’s American Pathway Fixed 5 and Fixed 7 Annuities

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