QoL Index Plus II. Protection + Accumulation + Distinctive Living Benefits

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1 QoL Index Plus II Protection + Accumulation + Distinctive Living Benefits

2 Introducing a breakthrough approach to financial security, QoL Index Plus II. We are reinventing life insurance to respond to the needs of families and businesses now and in the future. Now, with a single product, have the opportunity to achieve: Affordable death protection with extended guarantees to enhance the financial security of your family or business. The potential for cash accumulation based in part on the movement of a major market index, with protection from losses solely due to market downturns. Valuable living benefits that can help provide needed cash should you suffer a qualifying illness or condition. Access to cash during the policy s first five years, thanks to the protected money feature that allows withdrawal of any payments that were made above a required minimum. (Certain policy restrictions may apply.) Plus, the ability to apply for discounted term life insurance for yourself, your spouse or your children as new needs or opportunities arise.* * Subject to company rules. 2 We re changing the ways Americans think about, purchase and use life insurance!

3 QoL Index Plus II can help deliver the long-term financial protection you re looking for. Life insurance can be a key component of your family or business financial plan. The death benefit is usually income tax-free and can be used to help provide income for a surviving spouse, pay off the mortgage, fund college educations, or for any other purpose. It can also be used to help ensure the survival of a business or fund a succession strategy. With QoL Index Plus II, the death benefit can be guaranteed for the lesser of 25 years or to age 80, so long as you pay the affordable premium specified in your policy. After the guarantee period, the death benefit may continue on a non-guaranteed basis, based on current assumed charges, interest crediting and premium payments. The policy also includes provisions that will allow you to apply for additional, discounted term life coverage for yourself, your spouse or your children (subject to the Company s current underwriting rules). Think of it as a financial foundation you can build on as your needs change or new opportunities arise. If you re looking for peace of mind and long-term financial protection through a versatile life insurance product, consider QoL Index Plus II. 3

4 QoL Index Plus II creates the potential for attractive cash accumulation. While index universal life insurance is not an investment, it does provide you with the potential to earn index interest crediting based in part on an underlying index while providing downside market protection. It offers the potential to build cash value on a tax-deferred basis, which is available to you through withdrawals or loans from your policy. Interest crediting is based in part on the performance of the S&P 500, subject to an annual minimum of 0.25 percent (regardless of index performance) and an annual index cap rate or participation rate. QoL Index Plus II offers three interest crediting strategies. You may choose a single strategy, or allocate your funds to a combination of two or all three. Index Cap Account Interest crediting is based in part on changes in the value of the S&P 500 over the duration period of an index interest account, subject to a maximum cap. Even when S&P 500 values decline, your policy is protected by a guaranteed interest rate minimum of 0.25 percent. In other words, your policy values can increase, but they will never go down solely as a result of market downturns. Participation Rate Account This account provides another way to participate in potential upward movement of the S&P 500 over time. Interest is credited based on a percentage (Participation Rate) of the change in value of the S&P 500 over the duration period of an index interest account which is declared by the company. As with the Index Cap Account, your policy value can increase, but will never go down solely due to market downturns. The minimum annual interest rate is 0.25 percent. Declared Interest Account Interest crediting is declared by the company and credited monthly. The guaranteed minimum is 2.00 percent, but the declared rate may be higher. 4

5 Downside protection is a powerful advantage. If you choose one or more index interest crediting strategies, your policy is protected from negative performance of the S&P 500 When the S&P 500 rises over the course of a year, index interest crediting can cause your policy value to increase based on your allocations. S&P 500 S&P 500 Policy Value Policy Value Market Upswings Market Upswings When the value of the S&P 500 falls from the beginning to end of the index year, your policy value is protected by minimum interest rate guarantees Policy Value Policy Value S&P 500 Market Downswings S&P 500 Market Downswings 5

6 How Different Accounts May Credit Interest Bethany, Clark and Margo each purchase a QoL Index Plus II policy with a $10,000 net annual premium. Bethany decides to place all of her money in the Participation Rate Account, because she thinks the S&P 500 has the potential to go up and wants the opportunity to maximize index interest crediting. Clark chooses to place all of his money in the Index Cap Account because he feels more confident in the possibility of a steady gain each year. Margo is the most conservative, so she is most comfortable placing her entire Net Premium in the Declared Account. Let s see how each hypothetical policy owner s initial $10,000 Net Premium may earn interest over a five-year period. * For example purposes, let s assume the following: Current Declared interest rate: Index Cap: Participation Rate: 4.75% (2% guaranteed) 10% maximum rate (0.25% guaranteed) 60% (0.25% guaranteed) YEAR 1 S&P 500 = 1,100 S&P 500 = 1,000 YEAR 2 S&P 500 = 1,120 Bethany: Participation Rate Account $10,000 net premium + $600 interest crediting $10,600 account value Clark: Index Cap Account $10,000 net premium + $1,000 interest crediting $11,000 account value Margo: Declared Account $10,000 net premium + $475 interest crediting $10,475 account value Bethany: Participation Rate Account $10,600 account value + $116 interest crediting $10,716 account value Clark: Index Cap Account $11,000 account value + $200 interest crediting $11,200 account value Margo: Declared Account $10,475 account value + $498 interest crediting $10,973 account value 6 * For illustrative purposes only. Individual results may vary.

7 Bethany: Participation Rate Account $10,743 account value + $3,021 interest crediting $13,764 account value Clark: Index Cap Account $11,228 account value + $1,123 interest crediting $12,351 account value Margo: Declared Account $11,494 account value + $546 interest crediting $12,040 account value YEAR 5 S&P 500 = 1,600 YEAR 4 S&P 500 = 1,410 Bethany: Participation Rate Account $13,764 account value + $1,113 interest crediting $14,877 account value YEAR 3 S&P 500 = 960 Bethany: Participation Rate Account $10,716 account value + $27 interest crediting $10,743 account value Clark: Index Cap Account $12,351 account value + $1,235 interest crediting $13,586 account value Margo: Declared Account $12,040 account value + $572 interest crediting $12,612 account value Clark: Index Cap Account $11,200 account value + $28 interest crediting $11,228 account value Margo: Declared Account $10,973 account value + $521 interest crediting $11,494 account value The examples shown above illustrate interest only and do not take into account any monthly deductions or charges which could, in some cases, offset any gains in interest and could actually result in a decrease in policy value. 7

8 Use Protected Money to accumulate extra savings for any purpose! When you fund the policy above the required Benchmark Premium, the additional money deemed is Protected Money. During the policy s first 5 years, Protected Money is not subject to surrender charges or any other fees, and is available in various ways (certain policy restrictions may apply). Think of Protected Money as a potential way to help supplement your retirement savings, assist with your children s college education, or provide an emergency fund during tough financial times. While life insurance policies typically take some time to begin accumulating cash value, Protected Money in your QoL Index Plus II policy is available to you immediately. Take comfort in benefits you can use while you re still living. At no additional charge, QoL Index Plus II includes living benefits provisions that are among the most respected in the industry. If you have a qualifying critical, chronic or terminal illness, you can apply to receive a portion of your life insurance benefit now, before your death. The money may be used for any purpose including supplemental income, medical expenses or long-term care. Your coverage is reduced by the amount of death benefit accelerated, which may also reduce the amount of premiums required to keep any remaining benefit in force. See pages 10 and 11 for more details. NOTE: The Benchmark Premium is a level annual premium which is intended to carry your policy to or close to maturity on a current (non-guaranteed) assumption basis assuming 1) a 6% illustrated rate and 2) that premiums have been paid on time at the beginning of each policy year. Based on current federal tax law, partial withdrawals are reportable to the policy owner and may be taxable. Limitations apply. 8 For more information about accelerated benefits and how they work, including important consumer disclosures, please refer to our Quality of Life Insurance brochure or visit

9 For the first 5 policy years, apply for term life coverage with a premium discount for yourself, your spouse or your children. Your QoL Index Plus II policy entitles you to save on the purchase of additional term life coverage as new needs or opportunities arise. The savings may result from discounts to policy fees, aggregation discounts, or both, through our QoL Advantage program. Add term life coverage for your spouse. Buy a policy up to your QoL Index Plus II Associated Term coverage amount. The fee and volume discounts can make this coverage more affordable. Add tactical term life coverage for any purpose and any time span. Cover the cost of your mortgage for 22 years. Protect the cost of a college education for Billy in 13 years, Susie in 11 years and your new baby in 18 years. You pick the term. You pick the purpose. You pick the amount. And we ll bundle it in with all the discounts applicable to you.* Other Benefits and Riders: Children s Term Insurance Rider Term life coverage for children is inexpensive. Coverage from $5,000 to $25,000 is available for each child, and policies are guaranteed convertible to permanent coverage up to age 25. *Subject to company rules. 9

10 QoL Accelerated Benefit Riders Chronic Illness Accelerated Death Benefit Rider* This rider allows the owner to accelerate some or all of the Insured Person s base life insurance benefit in the event the insured is certified as having a chronic illness, as defined under the rider. The Chronic Illness Accelerated Benefit Rider is included on every Quality of Life Insurance policy. Accelerated benefits payable under this rider only may be received as a lump sum, as annual payments for a fixed period of time (not to exceed 24 months), or as monthly payments for a fixed period of time (not to exceed 24 months). To qualify for benefits under this rider, the insured must be diagnosed with a chronic illness. A chronic illness is an illness or physical condition that was initially certified by a licensed health care practitioner within the past 12 months and affects the insured person so that he or she: Is unable to perform at least two of the six Activities of Daily Living (ADLs); or Requires substantial supervision by another person to protect the Insured Person from threats to health and safety due to severe cognitive impairment. ADLs: Bathing, Dressing, Toileting, Transferring, Continence, Eating Critical Illness Accelerated Benefit Rider* This rider allows the owner to accelerate some or all of the Insured Person s base life insurance benefit in the event the insured is diagnosed with a critical illness or condition. The Critical Illness Accelerated Benefit Rider is included on every Quality of Life Insurance policy. The following critical illnesses or conditions are defined in the rider: Heart Attack Major Organ Transplant Stroke Invasive Cancer Blindness End Stage Renal Failure Paralysis Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig s disease) If a benefit is paid under the Critical Illness Accelerated Benefit Rider, the Company will not provide a later opportunity to elect an Accelerated Benefit under a Policy as to the same Critical Illness. Terminal Illness Accelerated Benefit Rider* This rider allows the owner to accelerate some or all of the Insured Person s base life insurance benefit in the event the insured is diagnosed with a terminal illness or condition. The Terminal Illness Accelerated Benefit Rider is included on every Quality of Life Insurance policy. A terminal illness is defined as an illness or physical condition that is certified by a physician to be reasonably expected to result in the insured s death within 24 months from the date of certification. Note: If a benefit under a Critical Illness Accelerated Benefit Rider is payable and the Owner elects to receive such benefit, the Company will not provide a later opportunity to elect an Accelerated Benefit under a policy as to the same Critical Illness. Under certain circumstances where an insured s mortality (i.e., our expectation of the insured s life expectancy) is not significantly changed by a Critical Illness or Chronic Illness, the accelerated benefit may be zero. 10 * Rider names, benefits and definitions may vary in some states and/or not be available in all states. The maximum amount of life insurance benefit that may be accelerated is subject to the Maximum Elected Death Benefit, which is the lesser of the current life insurance benefit or a lifetime maximum amount of $1,500,000. Benefit eligibility is subject to limitations and/or Waiting Period, Elimination Period and exclusion requirements. Please read the rider carefully for a complete definition of benefits and the conditions applying to each rider.

11 Important Notice to Policy Owner Regarding One or More Accelerated Benefit Riders When filing a claim for Critical Illness under a Critical Illness Accelerated Benefit Rider, Terminal Illness under a Terminal Illness Accelerated Benefit Rider, or Chronic Illness under a Chronic Illness Accelerated Death Benefit Rider, the claimant, except as otherwise provided in the applicable rider, must provide to the Company a completed claim form which must be received at its Administrative Center within the time frame specified in the rider, if any. For a claimant to be able to elect an Accelerated Benefit under the Chronic Illness Accelerated Death Benefit Rider, such claimant must have been certified as Chronically Ill within the past twelve (12) months by a Licensed Health Care Practitioner. Where an Accelerated Benefit under such a rider is paid periodically, such written certification must be renewed by a Licensed Health Care Practitioner every 12 months. If a benefit under a Critical Illness Accelerated Benefit Rider or a Terminal Illness Accelerated Benefit Rider is payable and the Owner elects to receive such benefit, the Owner must complete an election form and return it to the Company within 60 days of receipt of the election form. The Company will not provide a later opportunity to elect an Accelerated Benefit under a Policy as to the same Critical Illness. Under certain circumstances where an insured s mortality (i.e., our expectation of the insured s life expectancy) is not significantly changed by a Critical Illness or Chronic Illness, the accelerated benefit may be zero. The failure to provide a required claim form and a required election form (with the requested attachments) within the periods set forth for each in a Policy, if any, may preclude payment of a benefit. Benefits payable under an accelerated benefit rider may be taxable. Neither American General Life Insurance Company nor any agent representing it is authorized to give legal or tax advice. Please consult a qualified legal or tax advisor regarding questions concerning the information and concepts contained in this material. Generally, we will send you an IRS Form 1099-LTC if you receive an accelerated death benefit on account of a Chronic Illness or a Terminal Illness. We will send you an IRS Form 1099-R if you receive an accelerated death benefit on account of a Critical Illness. The sum that will be included in Box 2 (Accelerated death benefits paid) of IRS Form LTC or in Box 1 (Gross distribution) of IRS Form 1099-R will be the actual sum you received by check or otherwise minus any refund of premium and/or loan interest included with our benefit payment plus any unpaid but due policy premium, if applicable, and/or pro rata amount of any loan balance. The maximum amount of life insurance death benefits that may be accelerated as to an Insured Person under all accelerated benefit riders is the lesser of the existing amount of such death benefits or a lifetime maximum of $1,500,000. See your policy for details. 11

12 Important Notice Regarding the Chronic Illness Accelerated Death Benefit Rider There are no restrictions or limitations on the use of the accelerated death benefit proceeds under the Chronic Illness Accelerated Death Benefit Rider. Benefits under this rider are intended to receive favorable tax treatment under Section 101(g) of the Internal Revenue Code. Such benefits may be taxable, so you should seek assistance from a qualified tax advisor. However, it is important to note the following: This is a life insurance benefit that also gives you the option to accelerate some or all of the death benefit in the event that you meet the criteria for a qualifying event described in the policy. This policy does not provide long-term care insurance subject to California long-term care insurance law. This policy is not a California Partnership for Long-Term Care program policy. This policy or certificate is not a Medicare supplement policy. An accelerated death benefit such as the Chronic Illness Accelerated Benefit Rider and long-term care insurance provide very different kinds of benefits: Generally, an accelerated death benefit is a rider to or other provision in a life insurance policy that permits the policy owner to accelerate some or potentially all of the death benefit of a life insurance policy if the insured meets the definition of having a chronic illness as defined in the rider or policy provision. Acceleration of death benefits and payments under such an accelerated death benefit will reduce the death benefit of the policy and reduce other policy values as well, potentially to zero. If the entirety of the insurance amount is accelerated, the policy terminates. A Long Term Care insurance policy is any insurance policy, certificate, or rider providing coverage for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services that are provided in a setting other than an acute care unit of a hospital. Long-term care insurance includes all products containing any of the following benefit types: coverage for institutional care including care in a nursing home, convalescent facility, extended care facility, custodial care facility, skilled nursing facility, or personal care home; home care coverage including home health care, personal care, homemaker services, hospice, or respite care; or community-based coverage including adult day care, hospice, or respite care. Long-term care insurance includes disability based long-term care policies but does not include insurance designed primarily to provide Medicare supplement or major medical expense coverage. If you are interested in long-term care, nursing home or home care insurance, you should consult with an insurance agent licensed to sell that insurance, inquire with the insurance company offering the accelerated death benefits, or visit the California Department of Insurance Internet Web site ( section regarding long-term care insurance. If you choose to accelerate a portion of your death benefit, doing so will reduce the amount that your beneficiary will receive upon your death. Receipt of accelerated death benefits may affect eligibility for public assistance programs, such as Medi-Cal or Medicaid. Prior to electing to receive the accelerated death benefit, you should consult with the appropriate social services agency concerning how receipt of accelerated death benefits may affect that eligibility. If the policy terminates, the Chronic Illness Accelerated Death Benefit Rider will terminate also. 12

13 How Does Acceleration Work? Accelerate means to receive a portion of the base life insurance benefit early, while the Insured is still alive, in the event of a covered illness or condition. There are several factors to consider before deciding whether acceleration is right for you: Acceleration will reduce (or eliminate) the Insured Person s base life insurance benefit and policy values, if any. Depending on the amount you accelerate, there will be less (or no) benefit paid when the Insured dies. The actual payment received will be less than the portion of the base life insurance benefit accelerated. This means you will not get the full amount you accelerate because 1) it is paid prior to death, 2) it is subject to an actuarial discount, administrative charge and payment of any unpaid but due policy premiums. The amount of an accelerated benefit rider benefit that may be offered is determined by the company after a claim is submitted and, when accepted, is payable to the owner in a lump sum. The amount of an offered benefit will, in significant part, be dependent upon any change in mortality of the Insured Person in question between the time the applicable life insurance policy with accelerated benefit riders was underwritten and the time any particular Accelerated Benefit Rider claim is filed and considered. Changes in health and other factors will have varying effects on the mortality of different Insured Persons. Circumstances will vary among individual Insured Persons. Coverage under an accelerated benefit rider terminates on the date coverage under the policy or any covered riders terminates. We encourage you to read your policy and advise you to consider your options carefully before ever allowing your policy to lapse for any reason, including the non-payment of premium, especially while an ABR claim is pending. If you are eligible, you will be offered the opportunity, when you receive your benefit election form, to purchase coverage to replace the amount accelerated. However, the costs of that coverage may be significantly higher. 13

14 Please note: The life insurance offered with accelerated benefit riders is not stand-alone long term care insurance, disability income insurance or other insurance designed to cover specific costs associated with an illness or condition. Receiving benefits under any rider will reduce the base life insurance benefit and the amounts available for future acceleration under it and any other accelerated benefit rider attached to the policy. It will also reduce the base life insurance benefit. In some cases, such reduction can result in policy termination. The benefits paid under the riders may be less than what is needed to cover all of the costs associated with an illness or condition. Your American General Life agent can provide you with details. Accelerate means to receive a portion of the base life insurance benefit early, while the Insured is still alive, in the event of a covered illness or condition. There are several factors to consider before deciding whether acceleration is right for you: Acceleration will reduce or eliminate the Insured Person s base life insurance benefit and policy values, if any. This means there will be less or no benefit paid when the Insured dies. The actual payment received will be less than the portion of the base life insurance benefit accelerated. This means you will not get the full amount you accelerate because 1) it is paid prior to death 2) it is subject to an actuarial discount, administrative charge and payment of any unpaid but due policy premiums. The amount of an accelerated benefit rider benefit that may be available is determined by the company when a claim is submitted and, when accepted, is payable to the owner in a lump sum or as otherwise provided in the applicable rider. The amount of an accelerated benefit will, in significant part, be dependent upon our determination of any change in mortality of the Insured Person in question between the time the applicable life insurance policy with accelerated benefit riders was underwritten and the time any particular accelerated benefit rider claim is filed and considered. Changes in health and other factors will have varying effects on the mortality of different Insured Persons. Circumstances will vary among individual Insured Persons. If you are eligible, you will be offered the opportunity, when you receive your benefit election form, to purchase coverage to replace the amount accelerated. However, the costs of that coverage may be significantly higher. Your policy contract will have more information regarding how payment of benefits under an accelerated benefit rider can impact your policy values. Please read it carefully. 14

15 The S&P 500 Index is a product of S&P Dow Jones Indices LLC ( SPDJI ), and has been licensed for use by American General Life (AGL). Standard & Poor s, S&P and S&P 500 are registered trademarks of Standard & Poor s Financial Services LLC ( S&P ); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by AGL. QoL Index Plus II is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, S&P Dow Jones Indices ). S&P Dow Jones Indices makes no representation or warranty, express or implied, to the owners of QoL Index Plus II or any member of the public regarding the advisability paying premiums for AGL s policies generally or for QoL Index Plus II particularly or the ability of the S&P 500 Index to track general market performance. S&P Dow Jones Indices only relationship to AGL with respect to the S&P 500 Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices or its licensors. The S&P 500 Index is determined, composed and calculated by S&P Dow Jones Indices without regard to AGL or QoL Index Plus II. S&P Dow Jones Indices have no obligation to take the needs of AGL or the owners of QoL Index Plus II into consideration in determining, composing or calculating the S&P 500 Index. S&P Dow Jones Indices is not responsible for and has not participated in the determination of the prices, and amount of QoL Index Plus II or the timing of the issuance or sale of QoL Index Plus II or in the determination or calculation of the equation by which QoL Index Plus II is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of QoL Index Plus II. There is no assurance that products based on the S&P 500 Index will accurately track index performance or provide positive index interest crediting returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice. S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY AGL, OWNERS OF QOL INDEX PLUS II, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBLITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND AGL, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES. 15

16 Policies issued by American General Life Insurance Company (AGL). Issuing company AGL is responsible for financial obligations of insurance products and is a member of American International Group, Inc. (AIG). Guarantees are backed by the claims-paying ability of the issuing insurance company. AGL does not solicit business in the state of New York. Products may not be available in all states and product features may vary by state. Please refer to your policy. For Policy Forms ICC , 14888, ICC , ICC , ICC , AGLA 05AHC, AGLA EMD-DB, 14306, ICC , AGLA 09MGP, ICC11, AGLA ICIIAR, ICC11 AGLA PRIIAR, ICC10 AGLA ABR, AGLA ABR, AGLA 04CHIR, AGLA 04CRIR, AGLA 04TIR and state variations AIG. All rights reserved. 8532IUL2 (0415)