Why is AIG bad?

I keep reading threads that say not to go with AIG for life insurance. One thing I liked about AIG (have been talking to companies about term life insurance) is that you can use it while alive if you become seriously ill or injured. Maybe there is a gimmick to this, I have not met with the AIG agent yet to talk about the fine print. I was just curious why everyone says not to go with AIG. Who would be some better options to go with for term insurance? I keep reading how New York Life is good (I am interested in hearing about their family protection term coverage and their 20 ylt) and understand they are good when it comes to whole life. Are they good for term coverage as well?

i can't comment on AIG (never looked into it...partially because they got a bad rap on this forum and others' advice as well) but i can comment on NYL since we just got a policy for my wife with them. the reason we chose NYL were that: 1) it was reputable (A++), 2) it is mutual (not important for Term but if you EVER want to consider converting the Term to Whole Life/permanent, then mutual companies like NYL, NWM, and Mass Mutual will pay dividends into your policy), and 3) it was convertible (can change into permanent without additional underwriting under certain circumstances). You can definitely find cheaper Term rates but you will have to make that decision based on what your budget can take, whether you ever (or never) want to convert the Term to permanent, and whether you think the company will be around in the event you actually need to use the policy. Just my two cents.

An offshoot question posed to the pros on this forum (not to sabotage the OP's original question) for me is: what are the major differences between the big three mutual companies: NYL, NWM, and Mass Mutual? or put another way, why would one want to choose one over the other?

as a consumer, i think you are served at the 100% level with either New York Life or with Mass Mutual. i would grade Northwestern Mutual at 99% (i'll explain in a bit). with virtually any other company i think you would be in the mid-80s at the highest. so, the point with NWM is that as a consumer, you are still light-years ahead of any other company and certainly on par with NYL and MM.

the only draw back to NWM as a consumer is that you pretty much end up only being offered their products. as i understand it you could theoretically be with either a NYL or MM advisor and be able to offer products from all three (and many other companies as well). while, working with a NWM advisor you could only offer their products.

i will tell you that i have been informed by others on this very forum that NWM folks can broker other companies too, but i have been told face to face from NWM management that this is not the case.

finally, i think even if you are looking for term, one of the big three is the way to go as well. you are "purchasing" a "promise (to pay)" when you buy any type of life insurance. in that case, i would only go with companies that have the HIGHEST claims paying abilities (and who rarely if ever jack around on payment). these big-3 mutual companies are the ONLY companies that have perfect ratings from every major ratings company and the fewest complaints from the national association of insurance commissioners.

to me, that speaks volumes!

Respectfully, I have never mentioned what company I am affiliated with, but I think I will break my code of silence to clear up this misconception.

I am with the Northwestern Mutual Financial Network, and I can definitively say that we are NOT captive agents--i.e., we can broker with NYL and MM to get a policy. However, NYL and MM agents can NOT broker with NMFN. I just had a LTC case declined with NM so I will shop outside NM to find a carrier that will cover him.

Additionally, I do believe that you will find NM's long term performance on their permanent products superior to that of NYL or MM--especially MM. There are other nuances and reasons that I affiliate myself with the Northwestern, but my wife just had our baby this weekend, and I am tired, so I won't write them. If you want to know more, just e-mail me.

-Joe

joe' to be fairer in my comment, I was informed that nwm would broker out to other companies. However, it was explained TO ME that NWM would decide to whom I would place the business without regard to my wishes. If you say otherwise, I defer to you (though I would then be irritated immensely at the lie of one person). Nonetheless, still NWM is a wonderful company and your personal reputation here is what I would expect from someone affiliated with NWM.

we can broker with NYL and MM to get a policy. However, NYL and MM agents can NOT broker with NMFN.
I know that MM will allow some approved broker business, but does NYL do this?

I assure you that NWM does NOT decide who I place MY clients with. The company has no time to invest in looking at each individual client to find which carrier is right for them. I cannot understand why someone would have told you what they did.

Now, MM (I am sure) allows brokerage business, but NML will not let a MM agent (or any other agent) broker with them. One of the "mystiques," if you will, of the Northwestern is that not everyone can offer it. In fact, there are only about 7500 people nationwide who CAN offer their products--myself proudly being one of them. On the flip side, (and correct me if I am wrong) any agent can get licensed with MM or NYL.

I do hope that this offers some clarification on this point.

Nonetheless, still NWM is a wonderful company and your personal reputation here is what I would expect from someone affiliated with NWM.

I proudly operate under the Northwestern's umbrella, and that flatters me more than you know. Thank you.

-Joe

MM (I am sure) allows brokerage business, but NML will not let a MM agent (or any other agent) broker with them. One of the "mystiques," if you will, of the Northwestern is that not everyone can offer it. On the flip side, (and correct me if I am wrong) any agent can get licensed with MM or NYL.
NYL is also exclusive. They do not broker their business and only affiliated reps can offer it. They share the same "mystique" that NWM does. I consider both companies to be premier.

One of the banks I once worked with, and am still a customer of, offers New York Life annuity contracts through its retail investment division, so I don't know if it's necessarily true that NYL doesn't broker their business. Nevertheless, they're a solid company.

I've offered my opinion on AIG before here...I'm not as negative on them as others are, however, with the recent news regarding credit ratings I am a little concerned. That said, customer service aside, AIG has always been one of the stronger companies out there. Just because an insurance company doesn't have the absolute highest ratings doesn't mean their products should be ignored - AIG or anyone else.

You're correct. There is a banking channel for annuity products. In fact, they are the highest utilized fixed annuity in the banking industry. I was speaking more about the individual life products, but a great observation nonetheless.

AARP also uses their guaranteed-issue whole life and several major group life plans are convertible to NYLife whole life, to include the very familiar SGLI/VGLI.

I noticed in comparing my WL policy with NWM (select 100 $500k DB) to a proposed NYL similar WL policy, that the NYL agent explained that in regards to policy loans, NYL does not apply "direct recognition" (DR) to the CV whereas NWM does. The way they explained this to me is that if i take a 6% loan on a NYL policy, this will not bear any impact on the dividends accruing on the CV in that policy (which effectively makes the loan a 0-2% loan so long as the dividends are making 4-6% that year). In contrast, the NWM policy (my loan rate is fixed at 8%) does use DR and so if i take a loan out, the dividends will be adversely affected until the loan is paid off thereby making the loan interest truly extra cost to bear.

is the experience of others in regards to these two companies and how they treat policy loans?