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“Glossary of Insurance Terms”

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A quality life insurance program is an essential part of a successful financial plan. American General Life and Accident is committed to meeting the needs of our more than 4 million customers across the country. Our first and foremost commitment is personal service to our customers. Our products reflect our commitment to personal service and our effort at making insurance easier to understand.

In this section of the site, you will find descriptions of our insurance products. To assist you in understanding the various terms associated with insurance products, we have provided a glossary of terms below.


Contracts in which the buyer pays funds to a life insurance company for investment and, in return, the life insurance company agrees to pay the annuity owner periodic payments during his or her lifetime, typically for retirement purposes. During an annuity's accumulation phase, funds within the contract grow either at a fixed or variable rate, depending on the type of annuity chosen. In the payout phase, the insurance company makes a series of payments to the contract owner, usually at regular intervals, for a fixed period or for life. Most annuities are tax-deferred, meaning cash values accumulated are not taxed until the funds are paid out.

Asset Accumulation Cash value life insurance policies offer the ability to accumulate cash values on a tax-deferred basis (based on current federal income tax laws). Depending on the type of policy, the funds can grow at guaranteed fixed interest rates or at variable rates tied to the performance of selected investments. Assets that accumulate within a life insurance policy (net of loan and surrender provisions) may be available to the policyowner during his or her lifetime through policy loans and withdrawals and may also increase the death benefit available to the beneficiary.