American Income Life Insurance Review
AM Best Rating
American Income Life Insurance is a subsidiary of Globe life insurance and a member of the Torchmark Corporation. Torchmark is a holding company that owns multiple life insurance companies including some larger name brands like Globe Life Insurance and Liberty National.
Financial ratings provided for Torchmark take into account their entire portfolio of subsidiary insurance companies owned by the brand. This is perhaps why A.M. Best has for two consecutive years announced a negative financial outlook for the holding company. This is an indicator that the company’s available capital on hand leaves little room for a financial stress or an overage of claims made.
Continue reading for an in-depth look at American Income Life, its history, its financial ratings, the range of policies it offers, as well as its strengths and shortcomings.
We would be reluctant to recommend a company given a negative financial outlook since life insurance is a long-term plan for protection. There are a number of other life insurance companies which offer a varied range of policies – including and especially term life policies. If you are patient enough to compare the wide range of choices available, you might be able to find products which are cheaper and much better suited for your needs.
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About American Income Life Insurance Company
In 1951, Harold Goodman and Bernard Rapoport established American Income in Indianapolis, Indiana. The company started its operations by selling affordably priced hospital insurance plans. Within two years, the company managed to achieve a milestone - $1 million in premiums.(1)
In 1954, the company went from being a mutual reserve company to a stock company under a new name – American Income Life (AIL).
In 1956, under the leadership of Bernard Rapoport, AIL expanded its presence across 13 states. In 1958, the company moved to Waco, Texas, where it is still headquartered.
In 1961, AIL started selling its insurance products to labor unions and credit unions. The company managed to earn the trust of working class people by offering a wide range of benefits.
- Waiving policy premiums during authorized, lawful strikes.
- Scholarship program exclusively for the children of union members.
- Monetary contributions to the strike fund of unions engaged in authorized, lawful strikes.
In 1973, thanks to its continued support of union members and their families, AIL received an official ‘Union Label’ from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).
In 1994, AIL was acquired by Torchmark Corporation for $563 million. Today, the company functions as a wholly owned subsidiary of Torchmark Corporation, which is an S&P 500 company based in McKinney, Texas.
In 2000, National Income Life Insurance Company (NILICO), which is a fully owned subsidiary of AIL, started its operations in New York.
Now that we have a good idea of AIL’s history and background, let us take a look at its financial ratings.
- A.M. Best: A+
- Fitch: A+
- Standard & Poor’s: AA–
Based on these ratings, it is safe to conclude that AIL is in a financially stable position. It is one of the few companies in the life insurance industry that have managed to receive an ‘A’ rating from all the major credit-rating agencies.
AIL has assets worth $4.4 billion and has more than $63 billion of life insurance in force as of December 2018(2), making it one of the larger insurers in the country.
Why Financial Rating Matters
Financial rating – to put it plainly – is an indicator of a life insurance company’s ability to pay its customers' claims. An ‘A’ rating or above is a sign that the company has sufficient assets and cash reserves and is capable of meeting its financial commitments to its policyholders.
On the other hand, a low rating (anything lower than B) means the company is not backed with sufficient assets and is in a vulnerable position. While it might be performing well now, it might struggle to stay afloat in the event of a stock market crash or a major recession.
In other words, a financially stable company can not only survive downturns, crashes, and recessions, but also limit its losses during such times. An unstable company, on the contrary, might not survive a major crash or a recession.
This is why it is important to check out a life insurance provider’s financial ratings before you decide to buy a policy from them.
Now, let us turn our attention to the policies offered by American Income Life.
Life Insurance Products Offered by American Income Life
AIL offers two types of life insurance products – term life and whole life – through labor unions, credit unions, and a number of other associations and organizations.
Term Life Insurance
AIL’s term life plan provides you with coverage for a limited period – it could be 10, 20, or 30 years, depending on your preference.
The term life plan comes with a guaranteed death benefit, which does not increase or decrease during the course of your policy.
Depending on your income level and financial needs, you can choose your coverage amount. In case you pass away while your policy is still active, your family will receive the entire amount without any deductions.
Like any traditional term life plan, this one too is a level-premium plan. What you pay at the start of the policy’s term is also what you pay when it ends. This is a huge advantage for two reasons.
- Your premium payment remains exactly the same throughout the coverage period. It makes budgeting a lot easier, since you do not have to worry about your monthly or yearly commitment to your policy increasing at any point in time.
- If you buy a term life policy at a young age (25 to 30), you can qualify for a low risk class, which in turn allows you to get a substantial amount of coverage at very low costs. Once the policy is in effect, the rates are locked in for the entire term of the policy.
In many cases, your monthly contribution could be as low as $10 to $12 a month. By contributing such a small amount, you can ensure that your family’s financial needs are taken care of if you pass away during your prime earning years. This is an excellent bargain any which way you look at it.
Extended Coverage Period
In some cases, you might need insurance even after the end of the initial coverage period. In such cases, AIL allows you to extend your coverage period by renewing your policy on a yearly basis. You will be, however, charged a higher premium by the company due to your age and your increased risk of mortality.
Whole Life Insurance
AIL’s whole life plan covers you for a lifetime. The policy is set to expire only in the event of your death. The only requirement is that the premium should be paid in a timely manner.
There is a guaranteed death benefit, which means your family is assured of a large sum of money in the event of your death. This is important, especially if you have debts – credit cards, business loan, personal loan, outstanding bills, or even estate taxes.
The policy has what they call ‘guaranteed level premium’, which means the premium amount is set at the start of the coverage period and does not increase for any reason.
AIL’s whole life plan accumulates cash value throughout the coverage period. It is similar to a savings account. A particular amount is credited to your cash value account on a monthly or yearly basis (a portion of your premium payments).
The money in your account – commonly referred to as cash value – accrues interest throughout the entire coverage period.
The rate of interest is set by the insurance company at the start of your policy’s coverage period and it remains unchanged until your policy expires.
The accumulated cash value can be accessed in case of an emergency. You can borrow against it and repay the loan amount with interest. Now, here is an important caveat – in case you fail to repay the loan amount, it will be deducted from your policy’s death benefit. If you pass away, your family will receive the remaining amount.
This is why it is recommended that you access the cash value only for emergency purposes. And even if you do, you should make sure that you pay it back with interest. It is the only way to make sure that your policy’s death benefit remains untouched.
Terminal Illness Rider
AIL offers a terminal illness rider, which you can add to your term life or whole life policy completely free of cost. If you develop a terminal illness at any point during the coverage period – and if you only have 12 months to live (24 months if you live in Massachusetts, Illinois, or Washington) – you can receive 50% of the death benefit to pay for your medical expenses.
Once the terminal illness benefit is paid out, the premium remains unchanged until the death of the policyholder. After the policyholder’s death, the remaining 50% of the death benefit is paid out to the beneficiary.
Supplemental Health Insurance
AIL offers a number of supplemental health insurance policies which are designed to offer you enhanced protection, especially in the event of an illness or an injury.
- Accidental Protection – Pays for injuries sustained in an accident.
- Hospital Indemnity – Covers your hospitalization expenses in case of an illness or injury.
- Cancer Protection – Pays you in case you are diagnosed with cancer.
- Critical Illness – Pays you in case you are diagnosed with a critical illness.
Pros and Cons of Choosing American Income Life As Your Insurance Provider
AIL’s financial ratings are top notch, which must be reassuring for anyone who is looking to buy a policy from the company.
With assets worth over $4 billion, the company is in a solid position. Moreover, it is owned by Torchmark Corporation, which is one of the largest business enterprises in the country today. So, AIL is as good as they come in terms of financial stability.
Free Terminal Illness Rider
The terminal illness rider, also called an accelerated death benefit rider, offered by AIL is an excellent feature and is available completely free of cost to term life as well as whole life policyholders.
It pays you 50% of the death benefit in case you are terminally ill and only have 12 months to live. The payout can help you take care of your medical expenses without having to spend your entire family’s life savings.
Extended Term Life Coverage
AIL’s term life policy can be renewed after the initial term period for extended coverage. In case you need to be covered for a brief period of time – one or two years – you can simply renew your existing term life policy, instead of buying a brand new term life policy or a whole life policy.
No Universal Life Insurance
AIL does not offer any universal life policy, which is a big downside in our opinion. Many people prefer a universal life policy over a whole life policy for two reasons.
The potential to get higher returns with an indexed universal life policy or a variable universal life policy.
Flexible premium option which allows you to increase or decrease the amount of premium you pay.
The traditional whole life policy offered by AIL is no match for a universal life policy – either in terms of returns or in terms of flexibility.
Like any other insurer, AIL has its fair share of negative reviews on the web. The most common complaints include the company’s reps being too pushy, the approval process being too long, and the customer service not being up to expectations.
To give credit where it is due, AIL does respond to most of these reviews and addresses the issues as and when it can. The company also has an A+ rating from the Better Business Bureau, which means it has an established record of resolving complaints in a timely manner.
Final Thoughts on American Income Life
AIL is an excellent choice if you are represented by a labor union, credit union, or any other association. The company’s products are tailored to meet the needs of working class people. If you are an individual, there are a number of other options available for you.