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A CFP®’s review of the
American General Life AIG X5 Advantage Annuity

By Scott Brooks, MBA, CFP® Editor
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An Independent Review of the AIG X5 Advantage from American General Life

If you are considering the AIG X5 Advantage, this might be the most important message you will read.

Why?

Because when it comes to index annuities, it’s not what you know that gets you into trouble. It’s what you know for sure; that just isn’t true.

So you want to do your homework before buying!

Our goal is to be brutally honest with you about what to expect.

We want you to have realistic expectations so you won’t be disappointed later.

The AIG X5 Advantage annuity is a fixed indexed annuity.

  • The AIG X5 Advantage is a fixed indexed annuity. They are for investors who like safety and security. Gains are linked to a positive change in a market index. You receive some of the upside but none of the downside.
  • They might be suitable if you like bonds, bank CDs, and other safe investments. Read our index annuity article to learn the truth about index annuities.
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10 Tips You Should Know If You Are
Considering The AIG X5 Advantage

  1. This product has a 10 Years term. Make sure you are comfortable with committing your money for this period. Do not invest money you might need to live on.
  2. You can lose money in two ways. You will be charged surrender charges if you take excess withdrawals before the term ends. The product’s surrender schedule is below. You also might be charged a market value adjustment on early withdrawals. Look for products with a short surrender period and no MVA if you might need access to the money.
  3. American General Life has the right to change the terms of their index annuity at any time. Participation rates, spreads, and crediting rates can be changed without your permission. Please choose your company wisely because they control the formula which determines the growth. Want our recommendation? Request a index annuity quote.
  4. The AIG X5 Advantage competes with bank CDs, bonds, and other fixed-income products. It does NOT compete with the stock market. You earn a fixed-income type of return, not market-like returns. Do not trust anyone that tells you otherwise.
  5. You might be better off in a MYGA with a pre-determined rate of return vs. an index annuity where you might earn 1-3% more per year. Studies have shown that MYGA’s and index annuities' returns are similar. Looking for the highest guaranteed returns? Check out the highest fixed annuity (MYGA) rates.
  6. Do not buy an annuity solely for the bonus. If a company pays a bonus, they typically take away some of the upside potential by lowering the cap. They also extend the term or lower the renewal rates.  You don’t get something for nothing!
  7. Has a company sent you a proposal that seems “too good to be true?” Hypothetical illustrations are often the best-case scenario. You should also request a proposal for the worst-case scenario. Know the worst and best-case scenarios because you will likely earn something in the middle.
  8. Some index annuities have caps that limit their gains. Uncapped annuities have spreads or participation rates that limit their upside potential. Know how the return is calculated. Book a 15-minute phone call with one of our specialists, and they can help.
  9. Income riders cost real money and lower your principal balance. The fees are taken out of your account value. If you don’t need income later, DO NOT pay for an income rider. If you are looking for the most retirement income, request an income later quote. We can rank 150+ income riders and show you which products guarantee the most retirement income.
  10. Be extremely careful with custom or proprietary indexes because you don't know the underlying holdings. These fancy new indexes have not been tested in the real world. Established indexes are safer and more likely to generate better returns. Diversify your index annuity into a variety of indexes. It’s also a good idea to lock in the indexes at different times. The indexes available for the product are listed below.
  11. Bonus Tip - Watch our video titled "The 7 Biggest Mistakes Consumers Make When Buying An Annuity & How To Avoid Them"

ANNUITY ADVERTISING TACTICS TO BE AWARE OF

  • “Earn a guaranteed 7-9% returns.” False. You don’t earn a guaranteed 7%-9% return when CDs, bonds, and fixed income earn less. The 7-9% refers to an income rider roll-up rate. It’s a fictional number that you can’t withdraw a lump sum, transfer out, or live on the interest. It’s NOT a real return. Your rate of return is calculated based on the accumulation value, not the income value. An agent might confuse you by discussing payout rates, withdrawal rates, or the income account value. Your accumulation value is what matters.
  • “You can earn market-like upside without the market downside.” This is a partial truth. You are not directly investing in the index. The annuity contract has a formula that decides how much of the gain of an index you receive. You receive some of the upside and none of the downside.
  • “I will show you a client’s statement who earned 14% without risk.” This is misleading because you will likely earn 2-6% per year over the product term. You could receive 15% for one year and 0% for two other years. Over time, the returns will average out to be in the 2-6% range. Spreads, caps, or participation rates limit how much of the return you receive. Index annuities are fixed annuities and generate fixed-income types of returns.
  • “Earn a 10-15% Bonus. It’s free money”. Here is the truth. If an insurance company gives you a bonus, they will reduce other contract benefits (ex., Cap rates, lower renewal rates, etc) and extend the term. You don’t get something for nothing. Do not buy an annuity solely for the bonus.

WHAT IS A REALISTIC RETURN FOR AN INDEX ANNUITY?

  1. In our opinion, you could earn slightly less than what fixed annuities pay to slightly more.
  2. Expect to earn 1-2% more than the average rate of a 1-year fixed annuity.
  3. This would be 2-6% in today’s market. I would not expect anything more than this over a more extended period. This assumes you find one of the better products on the market.
  4. Uncapped index annuities might earn 3-7% (1-2% more) than capped annuities. Uncapped annuities outperform when stock markets are strong. Capped annuities will likely outperform uncapped products when the stock market is weaker.
  5. Request a index annuity quote, and we will send you what we feel are the best capped and uncapped index annuities on the market today.
  6. If someone promises you significantly higher returns than we disclosed, it's a red flag. You’ve worked hard for your savings and need it to work hard for you.
  7. If you want the highest guaranteed returns, consider a multiple-year guarantee annuity (MYGA) because the rates are guaranteed for the entire term. Here's where you can find the fixed annuities (MYGAs) with the highest rates.

important information

term10 Years
surrender schedule
10%, 10%, 10%, 8.75%, 7.5%, 6.25%, 5%, 3.75%, 2.5%, 1.25%
MAXIMUM AGE75
MINIMUM INVESTMENT$ 25,000
MAXIMUM INVESTMENT$ 1,000,000
FREE LOOK PERIOD10 Days
RMDYes
market value adjustmentYes
agent commissionWe are paid from the insurance company general fund. It is not deducted from your account value. 100% of your money is working for you from day one. We could earn a higher commission based on sales volume and taking a more active role in the application process.

what we like

  • High Ratings
  • Percentage of Balance Withdrawals
  • RMD Friendly

what we don’t like

  • Possible market value adjustment on withdrawals
  • $25k min investment
  • 10 Year Term (make sure you don’t need access)
  • Single Premium (cannot add money to contract)

index options

The interest credited to the AIG X5 Advantage annuity is linked to the performance of the indexes you choose. You may choose a combination of the following indexes.

  • Morgan Stanley Expanded Horizons
  • PIMCO Global Elite Markets
  • S&P 500
  • Strategy Morgan Stanley Expanded Horizons
  • Strategy PIMCO Global Elite Markets

WHO SHOULD PURCHASE AN INDEX ANNUITY?

  • Do you like bank CDs, bonds, and other types of fixed income?
  • Are you a conservative investor who wants to protect your principal?
  • Is the pain of losing money greater than the pleasure of winning?
  • Are you looking for a conservative alternative to bonds?

Index annuities are an excellent fit for conservative investors looking for an alternative to bank CDs and bonds.

Other reasons to consider an indexed annuity:

  1. Tax-Deferred Growth - Your money grows faster due to the triple compounding of interest. This is because you earn interest on the money generally lost to taxes.
  2. Guaranteed Retirement Income - (via annuitization or an income rider).
  3. Reasonable Returns - Index annuities are an alternative to CD’s, MYGA’s, and bonds. They offer the potential for higher returns.
  4. Flexible Contributions - You can add money over time to most index annuities.
  5. Avoid Probate - Index annuities pass by beneficiary designation, not probate. In some states, probate can be costly and time-consuming.
  6. Creditor Protection - Many states offer creditor protection to assets inside an annuity.
  7. No fees unless you choose an income rider.
  8. Favorable tax treatments for retirement income if you annuitize.

How Does This Product Compare To The Best On The Market?

  • Would you like to know how the AIG X5 Advantage compares to the best Index annuities on the market? Request an index annuity proposal.
  • If you request an index annuity proposal, we will send you information on what we feel are the best products available. Don’t take a company's word for it. Get independent advice.

Company description

American General Life Insurance Company is a division of American International Group. American International Group is known as AIG. AIG is a global insurance company that does business in over 80 countries.

Surrender Charge Schedule

Surrender charges are a penalty charged to early withdrawals of annuity contract. They are a percentage of the withdrawal amount, decrease over time, and go to zero when the term ends.

percentage charged to withdrawal

Year
Percentage
1
10%
2
10%
3
10%
4
8.75%
5
7.5%
6
6.25%
7
5%
8
3.75%
9
2.5%
10
1.25%

market-value adjustment (MVA)

  • A market value adjustment is basically an additional charge or credit for taking money out early from an annuity.
  • They allow companies to pay a higher rate and make longer-term investments.
  • MVA’s only affect you if you withdraw funds early. If you own the contract to maturity, they do not apply.

Company information

company NameAmerican General Life
URLwww.aig.com/individual
phone number(800) 888-2452
LOGIN FORaig.com
am best ratingA Excellent (3rd of 13 ratings)
moody’s ratingA2 Good (6th of 21 ratings)
fitch ratingA+ Strong (5th of 21 ratings)
S&P ratingA+ Strong (5th of 21 ratings)

product information

Product
information

Index annuities are for conservative investors who like safety. They were introduced in 1995 to compete with bank CDs.

Index annuities are fixed annuities that deliver fixed income type of returns.

They don’t have the upside or downside of the market. They compete with bonds, CDs, and other safer investments.

They allow you to capture some of the growth of a market index while having 100% downside protection. Returns are linked to a positive performance in an external index.

You are not directly participating in the market. You are watching the market, and a formula decides how much gain of the index you receive.

Product nameAIG X5 Advantage
Product typeFixed Indexed
premium typeSingle Premium
account
types		Personal, Traditional IRA, Roth IRA, SEP-IRA, SIMPLE-IRA, 403(b).
not available inNY, PR, VI

other American General Life reviews

We have reviewed other products from American General Life. Here are some links if you would like to review them as well.

2 reviews

C
Carolee

what licensing does the author possess? While I understand a CFP can give financial planning advice, this is specific to a product. How is one to know if this is a reliable source without the ability to verify licenses? It is my understanding security licensing, annuity licensing and financial planning all require different types licensing. Furthermore, no one licensing is all-inclusive, meaning, a financial planning license does not provide a license to discuss specific annuities or specific securities, which require an insurance license and securities license. specific advice on securities or annuities would require a license for each.
Why are planners not required to provide their specific licensing as well as education? Attorneys and medical doctors who are not licensed, must state they do not practice which begs the question why are financial planners not required to do the same? All very confusing to consumers and seems misleading.
Can you please explain this?

07/01/2025
Reply
S
Scott

Our license information is listed at

https://www.annuityresources.com/press/our-licenses/

24/07/2025
Reply

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