FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Understanding Policy Loans Presented by, Trevor Keeble Director of Product Training Policies issued by American General Life Insurance Company ("AGL“)

2 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Disclaimer The information presented herein is not a comprehensive analysis of the topic presented, and the viewer should consult tax and legal advisors to understand all the ramifications of the topics discussed. No representation or warranty, express or implied, is made by AGL or its affiliates as to the completeness of the information provided. All companies mentioned, their employees, financial professionals and other representatives are not authorized to give legal, tax or accounting advice. Applicable laws and regulations are subject to change and individuals should consult an attorney, tax advisor or accountant. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. To ensure compliance with requirements imposed by U.S. Treasury Regulations, we inform you that any tax advice contained in this presentation (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

3 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION The S&P 500(R) (“Index”) is a product of S&P Dow Jones Indices LLC and has been licensed for use by American General Life Insurance Company (AGL). The product is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or their respective third party licensors. Neither S&P Dow Jones Indices nor its third party licensors make any representation or warranty, express or implied, to the owners of the product or any member of the public regarding the advisability of investing in securities generally, in this product particularly, or the ability of the Index to track general stock market performance. S&P Dow Jones Indices and its third party licensors’ only relationship to AGL with respect to the Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its third party licensors. The Index is determined, composed and calculated by S&P Dow Jones Indices or its third party licensors without regard to AGL or the product. S&P Dow Jones Indices and its third party licensors have no obligation to take the needs of AGL or the owners of the product into consideration in determining, composing or calculating the Index. Neither S&P Dow Jones Indices nor its third party licensors are responsible for and have not participated in the determination of the prices, and amount of the product or the timing of the issuance or sale of the product or in the determination or calculation of the equation by which the product is to be cash surrendered. S&P Dow Jones Indices and its third party licensors have no obligation or liability in connection with the administration, marketing or trading of the product. There is no assurance that insurance products based on the Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within 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 Disclaimer

4 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 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. 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 , 14579, ICC10 AGL ABR, AGL ABR, ICC ,14012 ICC , 14018, ICC , 14390, AGL 05AHC, AGL EMD-DB, ICC , 14002, and state variations. © 2014 American International Group, Inc. (AIG). All rights reserved. (1) When filing a claim for Qualifying Critical Illness, Qualifying Terminal Illness or Qualifying Chronic Illness under an Accelerated Benefit Rider, the claimant must provide to the Company a completed claim form (with Certification attached in the case of a Qualifying Chronic Illness) which must be received at its Administrative Center within the time frame specified in the Rider, if any. (2) If a benefit under an Accelerated Benefit Rider is payable and the Owner elects to receive such benefit, the Company will provide the Owner with one (1) opportunity to elect a Flexible Accelerated Benefit and/or a Defined Accelerated Benefit, if applicable, under the Policy as to such Qualifying Event. To make such an election, the Owner must complete an election form and return it to AGL within 60 days of receipt of the election form. The Company will not provide a later opportunity to elect a Flexible Accelerated Benefit and/or a Defined Accelerated Benefit, if applicable, under a Policy as to the same Qualifying Critical Illness or Qualifying Chronic 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 Qualifying Critical Illness or Qualifying Chronic Illness, the accelerated benefit may be zero. (3) 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 may preclude payment of a benefit. (4) 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. (5) 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 1099-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. (6) See your policy for details. Important: Prior to soliciting business, be certain that you are appropriately licensed and appointed with the insurer and that the product has been approved for sale by the insurer in That state. If uncertain, contact your American General Life Companies representative for assistance. Important Information

5 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Policy Loans or Withdrawals? Loans and withdrawals each have differentiated characteristics and impact the policy in different ways The portion of a withdrawal that is greater than premiums paid into the policy is subject to income tax. Policy loans are not taxed since the policyholder is required to pay back the loan balance either out of pocket for via the policy’s death benefit.* *Assuming policy is not a Modified Endowment Contract and does not lapse

6 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Withdrawals  Reduce account value  Reduce death benefit  Potential taxable income  Lower interest earning power since cash values are reduced

7 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Benefits of Policy Loans Fast access to cash when needed No repayment plan required Tax-free income* Potential for positive interest earnings on loaned money *Assuming policy is not a MEC and does not lapse

8 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION  Fixed Rate – Known in Advance  Available in any policy year as long as there is positive cash surrender value  Loaned amounts are removed from the index, declared interest, and interim accounts on a pro-rata basis  6% Net Loan Rate Policy Loan Types Standard Loan

9 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION  Work the same as Standard Loans, BUT: Policy Loan Types Preferred Standard Loan Available in policy years 11+ 0% Net Cost

10 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Policy Loan Types Choice Loan  Available beginning in 4 th policy year  Fixed 6% loan rate  Cannot be changed once policy is issued  Loaned amounts are NOT removed from accounts and are still eligible for index or excess interest  Participate in index returns = potential for positive arbitrage  Participate in index returns = potential for negative arbitrage

11 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION How It Works Preferred Standard Loan $100,000 Cash Surrender Value $20,000 Loan 7% Remaining Cash Value $80,000 2% Charged $20,000 Loan 2% Credited Removed from cash value

12 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION How It Works Choice Loan 7% $100,000 Cash Surrender Value $20,000 Loan 6% Charged Full cash value remains 7% Credited Rate 6% Loan Rate 1% Positive Arbitrage

13 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION ABC Hypothetical Index Interest Credited Current Loan Interest Charged Spread = A-B 1%6%-5% Loss 6% 0% 8%6%2% Gain 11%6%5% Gain Choice Loan Example

14 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Loan Comparison Preferred Standard Loan Participating Fixed Loan Guaranteed Loan Rate Provides tax-free income Unpaid loan deducted from death benefit Potential for loan arbitrage Loaned amounts removed from account value

15 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION  Less expensive  Withdraw to basis and then loan provides greater cash flow Expect Market to be Flat or Down? Standard Loan

16 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION  Arbitrage possible  Could be greater cash value in the long run  Generally illustrates more cash flow than fixed  100% Choice loan illustrates greater income stream Expect Market to be Growing? Choice Loan

17 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Additional Information  Loan option is chosen at time of request, not issue  Only one loan type is available at a time  Client has the ability to switch from a Standard Loan to a Choice Loan, or vice versa  Switch a maximum of 3 times during the life of the contract  Entire loan balance switches

18 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION In Summary  Policy loans are received income tax-free*  Standard Loans do not participate in index earnings, if any  Preferred Standard Loans are available after the 10 th policy year  Choice Loans have the potential for positive arbitrage  Choice Loan rate is fixed at policy issue and will NOT change  Client can switch loan types 3 times during the life of the contract  Choice loans illustrate greatest income stream *Assuming policy is not a MEC and does not lapse

American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries.. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange. Additional information about AIG can be found at | YouTube: | | LinkedIn: AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries, and coverage is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds. AGLC109209