Key terms and definitions
Your resource for understanding the X5 Advantage Annuity®
Key terms and definitions
You may purchase the X5 Advantage Annuity if you (or you and your spouse with joint life) are over age 40. The minimum premium is $25,000.
Increasing lifetime income
You may begin lifetime income any time on or after your 10th Contract Anniversary. Your lifetime income will be based on your Maximum Annual Withdrawal Percentage, which is determined by your age when you make your first withdrawal (or the younger age of you and your spouse with joint life) and the Income Base. Ask your Financial Professional or Agent for a Rate Sheet, which includes current Maximum Annual Withdrawal Percentages.
The Income Base is the value used to calculate your lifetime income and is initially equal to your premium. Thereafter, the Income Base is the greater of the Participating Income Base and the Income Base Floor. The Participating Income Base will be automatically increased by any applicable Income Credit. The Participating Income Base may increase by the Income Credit Percentage, which is 250% of the credited interest rate before activating lifetime income and 100% of the credited interest rate after activating lifetime income. The Income Base Floor on the 10th Contract Anniversary is equal to the applicable Income Base Floor percentage applied to your premium less all withdrawals that are not Lifetime Income Withdrawals. The Income Base is not the Contract Value and cannot be withdrawn partially or in a lump sum. Please refer to the Guaranteed Living Benefit Rate Sheet Flyer for the Income Base Floor applicable to your living benefit.
Daily Benefit Base
The Daily Benefit Base is a value used to track your potential future income. It is equal to your Income Base plus Income Credits that have not been credited to your Contract. When you begin lifetime income, you may choose to lock in your Income Base one time at activation using the optional Income Base Lock-In. If you choose this option, you will not have an income credit at the end of the current Strategy Term(s), though you may receive more initial lifetime income than if you did not elect the Income Base Lock-In. The Daily Benefit Base is not the Contract Value and cannot be withdrawn partially or in a lump sum.
Withdrawals before beginning lifetime income and withdrawals above the Maximum Annual Withdrawal Amount (that are not associated with the Enhanced Income Amount or applicable Required Minimum Distributions (RMDs)) after activating lifetime income will reduce the Participating Income Base in the same proportion by which the Contract Value is reduced by the excess withdrawal and reduce the Income Base Floor by the applicable Income Base Floor percentage applied to the amount of the withdrawal. Please refer to the Guaranteed Living Benefit Rate Sheet Flyer for the Income Base Floor applicable to your living benefit.
Benefits beyond income
Enhanced Income Amount
The Enhanced Income Amount is available if the annuitant is confined to a qualified care facility after activating lifetime income and the eligibility requirements are met. The benefit amount will continue until the earliest of five years, until confinement ends, at Maturity Date, or until the Contract Anniversary following the date when the Contract Value is reduced to zero at which time the income would return to the Maximum Annual Withdrawal Amount. This benefit is not Long-Term Care (LTC) insurance and is not a substitute for such coverage.
Standard Death Benefit and Income Rider Death Benefit
Should you pass away, your heir(s) have a choice of death benefits. The Standard Death Benefit may be paid as a lump sum (other payout options are available) and is the greater of the surrender value and the Daily Contract Value. The Income Rider Death Benefit is paid in monthly installments over five years.
When you purchase X5 Advantage®, you may allocate your premium among the available Crediting Strategies, and you may reallocate to a different Crediting Strategy at the end of each Strategy Term, subject to certain restrictions and limitations. Each X5 Crediting Strategy includes several components that are used when calculating the credited interest rate (together, the Crediting Strategy Components):
- Index: X5 Advantage offers a variety of index options selected to provide consistent long-term growth opportunities. Ask your Financial Professional or Agent for a Rate Sheet with the current available indices.
- Participation Rate: A percentage of the growth of the Index during the Index Term used when calculating interest. For example, for a Crediting Strategy with an 80% Participation Rate and 0% Spread, if the Index increases 5%, the captured performance would be 4%.
- Spread: An annualized percentage that is deducted from Crediting Strategy performance when calculating interest. For example, for a Crediting Strategy with a 100% Participation Rate, a 1-Year Index Term, and a 1% Spread, if the Index increases 5%, the captured performance would be 4%.
- Strategy Term: The 10-Year or 5-Year period when Crediting Strategy performance is tracked to determine any credited interest.
- Index Term: The 2-Year period (for 10-Year X5 Crediting Strategies) or 1-Year period (for 5-Year X5 Crediting Strategies) when Index Term performance is calculated and tracked.
- Index Term Floor: The minimum Index Term performance guaranteed for the Strategy Term is currently -5% (for 5-Year X5 Crediting Strategies) and -10% (for 10-Year X5 Crediting Strategies.
X5 Advantage also includes 1-Year Point-to-Point Crediting Strategies, which include an Index, Participation Rate, Spread, and 1-Year Strategy Term. Crediting Strategy performance is tracked daily and is included in the Daily Contract Value, which is your premium and any earned interest, if credited at the end of the Strategy Term, plus any uncredited interest during Index Terms. Interest is credited at the end of each Strategy Term, when a death benefit is payable, and on withdrawals. The Crediting Strategy Components are guaranteed for the first Strategy Term or Index Term and subject to change in each following term. The credited interest rate will never be less than zero.
Withdrawals can be taken at any time, subject to the conditions and charges outlined here and in the Owner Acknowledgment and Disclosure Statement. From year two to year 10, you may withdraw up to 10% of your premium each year as a Preferred Withdrawal. After year 10 until you begin lifetime income, you may withdraw up to 10% of your Contract Value at the beginning of the Contract year as a Preferred Withdrawal.Preferred Withdrawals receive full interest earnings to-date and are not subject to withdrawal charges and Market Value Adjustment (MVA) if applicable. All lifetime income withdrawals, and all withdrawals associated with Required Minimum Distributions (RMDs), are treated as Preferred Withdrawals. If taken, Preferred Withdrawals will lower your Contract Value and your Income Base.
Withdrawal Charges and Market Value Adjustment (MVA)
Amounts withdrawn each year greater than the Preferred Withdrawal amount may incur a Withdrawal Charge1 (in most states, the withdrawal charge schedule is 10%, 10%, 10%, 8.75%, 7.5%, 6.25%, 5%, 3.75%, 2.5%, 1.25%) and MVA. MVA is based on a formula designed to react to changes in interest rates at the time of a withdrawal compared to when the contract was issued and may increase or decrease the amount you receive. The MVA will not apply after the Withdrawal Charge period. Ask your Financial Professional or Agent for the Withdrawal Charge schedule for your state.
1 The Withdrawal Charge Schedule may vary by state. See the Owner Acknowledgment and Disclosure Statement for state variations.
This material was prepared to support the marketing of X5 Advantage Annuity. This information is general in nature, may be subject to change and does not constitute legal, tax or accounting advice from any company, its employees, financial professionals or other representatives. Applicable laws and regulations are complex and subject to change. For advice concerning your situation, consult your attorney, financial professional, tax advisor, or accountant.
Tax-qualified plans such as IRAs, 401(k)s or 403(b) plans are tax deferred regardless of whether or not they are funded with an annuity. If you use X5 Advantage to fund a tax-qualified plan, you should know that an annuity does not provide any additional tax-deferred treatment of interest beyond the treatment by the tax-qualified plan itself. You should only use an index annuity in a tax qualified plan if you want to benefit from features other than tax deferral. If you intend to take Required Minimum Distributions (RMDs), please consult with a tax advisor concerning your particular circumstances. X5 Advantage may not be appropriate if you plan to make ongoing contributions.
Indices are not a permanent part of the contract and may be removed due to circumstances beyond the control of American General Life Insurance Company. Such circumstances include, but are not limited to, the discontinuation of an index, a change in the composition or calculation of an index, the inability to license the use of an index and the inability to hedge risks associated with the index. Special rules govern how assets in an index account with a discontinued index may be reallocated. These rules may differ by state. Please see the Owner Acknowledgment and Disclosure Statement for more information.
Genesis Development Group, Inc. has patents and patents pending that may cover elements of the products discussed in this document. This document does not convey any license or other rights in these patents.
Annuities are issued by American General Life Insurance Company (AGL), 2727-A Allen Parkway, Houston, Texas 77019. X5 Advantage Single Premium Deferred Fixed Index Annuity, Contract Number AG-808 (07/19) (AG-808-ID (07/19) for Idaho residents). AGL is a member company of American International Group, Inc. (AIG). The underwriting risks, financial and contractual obligations and support functions associated with the annuities issued by AGL are its responsibility. Guarantees are backed by the claims-paying ability of AGL. AGL does not issue products in the state of New York. Annuities and riders may vary by state and are not available in all states.
Annexus is an independent product distribution firm that works with Independent Distribution Companies to distribute retirement products. Annexus is not affiliated with AIG or AGL.