Our Professional Opinion on the Corebridge Power Select AICO Annuity
The Corebridge Power Select AICO is a clever but gimmicky accumulation annuity. The five-year Additional Interest Credit Overlay can improve the contract value in flat, weak, or moderately positive markets. The tradeoff is an annual fee during the entire five-year period, a delayed benefit that is not calculated until the fifth anniversary, and no guarantee that an Overlay Credit will be paid in a strong market.
Corebridge is a good annuity company. Power Select AICO is issued by American General Life Insurance Company, which is rated A by AM Best and meets our minimum financial-strength standard.
The “200% multiplier” does not double your premium or the market return. It is used only in the overlay calculation. At the end of five years, Corebridge looks at the interest credited by the annuity, applies the multiplier subject to a maximum overlay amount, and determines whether an additional credit should be added to the contract value.
In a flat or weak market, the overlay can cover the effect of the annual fees and potentially increase the final value. In a moderately positive market, it can meaningfully boost the credited interest. In a strong market, the ordinary contract value can exceed the overlay maximum, which means no Overlay Credit is added even though the annual fee was charged for five years.
That asymmetry is the main problem. The consumer is guaranteed to pay the fee, but the consumer is not guaranteed to receive an Overlay Credit beyond the contract’s return-of-premium protections. The result also depends on the original index caps and participation rates, which can change at renewal.
We do like the five-year surrender period, the Guaranteed Return of Premium feature after the second anniversary, and the Return of Premium Death Benefit after the second anniversary. Those protections make AICO more defensible than many fee-based accumulation annuities.
We would still compare a straightforward cap-lock FIA first. A cap-lock product provides a clearer promise: the traditional-index cap is fixed for the surrender period. AICO requires the buyer to understand annual fees, cumulative interest, net premium, a multiplier, a maximum overlay value, and a delayed fifth-year calculation.
Bottom line: Power Select AICO can make sense for a buyer who wants a five-year FIA, expects modest market-linked credits, and values return-of-premium protection. We would not use it as the default accumulation strategy. For most consumers, a cap-lock FIA or competitive MYGA is easier to understand and compare.
What We Like
- Five-year surrender period: The commitment is shorter than many accumulation FIAs.
- Traditional S&P 500 and Nasdaq-100 options: The index menu includes familiar benchmarks in addition to engineered indexes.
- Annual point-to-point strategies: Every index option uses a one-year measurement term under the current design.
- Overlay can improve weak or moderate results: The fifth-year credit can increase the final contract value when the ordinary value is below the calculated overlay value.
- Guaranteed Return of Premium: The owner can generally receive at least net premium upon a qualifying full surrender beginning after the second anniversary.
- Return of Premium Death Benefit: Beneficiaries can receive at least net premium beginning after the applicable waiting period.
- First-year liquidity: The contract generally provides an annual free-withdrawal amount beginning in year one.
- Health-related access: Qualifying terminal illness or extended-care needs may waive withdrawal charges and the MVA.
- A-rated issuing company: American General Life meets our minimum financial-strength standard.
What We Don’t Like
- The annual fee is guaranteed to be charged: The fee applies for five years whether or not an Overlay Credit is ultimately added.
- The Overlay Credit is delayed: The benefit is not added to the contract value until the fifth anniversary.
- Strong markets can produce no overlay: The contract may pay the fee for five years and receive no additional credit when ordinary account growth exceeds the overlay maximum.
- “200% multiplier” is easy to misunderstand: It applies to credited interest in the overlay formula, not the premium or full market return.
- The overlay has a maximum: Once the limit is reached, additional interest does not create a larger overlay value.
- Renewal-rate risk remains: The S&P 500 cap, Nasdaq-100 cap, engineered-index participation rates, and fixed rate can change annually.
- Engineered indexes: Several choices use risk controls, multi-asset allocations, or a controlled Bitcoin component.
- Withdrawals reduce the overlay calculation: Net premium is reduced proportionally, which can lower the fifth-year benefit.
- Market Value Adjustment: Excess withdrawals during the first five years can be reduced by changes in market interest rates.
- No GLWB: Lifetime income is available through annuitization rather than a flexible guaranteed-lifetime-withdrawal rider.
What Is the Corebridge Power Select AICO Annuity?
Power Select AICO is a five-year fixed indexed annuity issued by American General Life Insurance Company. AICO stands for Additional Interest Credit Overlay.
The contract earns interest through a one-year fixed account and one-year index-linked strategies. At the end of the five-year surrender period, Corebridge calculates an Overlay Value using the contract’s net premium, cumulative credited interest, multiplier, and maximum overlay amount.
If the Overlay Value exceeds the ordinary contract value, the difference is added as an Overlay Credit. If the contract value is already equal to or greater than the Overlay Value, no Overlay Credit is added.
Power Select AICO Product Details
| Issuing company | American General Life Insurance Company |
|---|---|
| Product type | Five-year fixed indexed annuity with an Additional Interest Credit Overlay |
| Primary purpose | Protected accumulation |
| Withdrawal-charge period | Five years |
| Issue ages | Generally 18 through 85 |
| Minimum premium | Generally $25,000 |
| Additional premiums | Generally accepted only during the first 30 days |
| Overlay multiplier | Applies to cumulative credited interest, subject to the maximum established at issue |
| Annual fee | Charged during the first five contract years and ends on the fifth anniversary |
| Traditional indexes | S&P 500 and Nasdaq-100 |
| Free withdrawals | Up to 10% of premium in year one and up to 10% of the applicable prior-anniversary value thereafter |
| Market Value Adjustment | Applies to applicable excess withdrawals during the first five years |
| Guaranteed Return of Premium | Available under the contract’s rules after the second anniversary |
| Return of Premium Death Benefit | Available under the contract’s rules after the second anniversary |
| New York availability | Not available |
How the AICO Overlay Is Calculated
The overlay calculation is easier to understand when broken into steps.
- The annuity earns ordinary interest: Each one-year index or fixed strategy credits interest under its cap or participation-rate formula.
- The annual fee is deducted: The fee applies during the first five contract years and reduces the ordinary contract value.
- Cumulative credited interest is measured: Corebridge totals the interest earned during the five-year period.
- The multiplier is applied: The current design can multiply the cumulative credited interest by 200%, subject to the contract’s maximum overlay amount.
- The Overlay Value is determined: Net premium is increased by the lesser of the multiplied interest or the maximum overlay amount.
- The Overlay Credit is added only when needed: If the Overlay Value exceeds the ordinary contract value after fees, the difference is credited on the fifth anniversary.
The overlay does not retroactively change each annual credit. It is a fifth-anniversary calculation. Until then, the owner sees the ordinary contract value after credited interest, withdrawals, and fees.
What Happens in Different Markets?
| Market and Crediting Result | Likely AICO Effect | Main Tradeoff |
|---|---|---|
| Flat or down | The overlay can restore the contract to net premium and offset the effect of the fees under the contract formula. | The owner earned little or no index interest for five years. |
| Weak positive | The multiplier can meaningfully increase the final value above the ordinary contract value. | The result remains limited by the maximum overlay amount. |
| Moderately positive | The overlay may provide its strongest relative value. | The ordinary interest was already limited by caps and participation rates. |
| Strong positive | The ordinary contract value may exceed the Overlay Value, resulting in no additional Overlay Credit. | The annual fee was still charged for five years. |
AICO is therefore not a simple “double your return” product. It is designed to help most in low-to-moderate return environments. A strong market can make the overlay irrelevant while the fee remains real.
The Annual Fee
The annual fee is calculated from premium during the first contract year and from the applicable prior-anniversary contract value during later years. It is deducted for the first five contract years and terminates on the fifth anniversary along with the overlay feature.
The overlay can partially or fully offset those charges when a credit is applied. That reimbursement is not guaranteed in every market. In a strong market, the contract can exceed the overlay maximum and receive no Overlay Credit.
The correct comparison is the final net contract value after five years—not the multiplier and not the gross index interest before fees.
Traditional Index Choices
AICO includes the true S&P 500 and Nasdaq-100.
- S&P 500 cap strategy: Credits positive annual index performance up to a stated cap.
- S&P 500 participation-rate strategy: Multiplies positive annual index performance by the applicable participation rate.
- Nasdaq-100 cap strategy: Provides index-linked exposure to large growth and technology companies through a capped annual formula.
These are the easiest strategies to understand. Index dividends are generally excluded, and the annuity receives only the amount determined by the cap or participation-rate formula.
Engineered Index Choices
The engineered-index menu can include the Dimensional US Foundations Index, Invesco New Economy Index, ML Strategic Balanced Index, and PIMCO Global Optima Index.
These strategies use multi-asset allocations, risk controls, fixed-income exposure, or a controlled Bitcoin component. A high participation rate should not be interpreted as a high expected return.
We would begin with the S&P 500 or Nasdaq-100 unless the engineered index has a meaningful live history and a clear advantage after its methodology and embedded costs are considered.
Renewal-Rate Risk
The caps, participation rates, and fixed rate are set for one-year terms. Corebridge can reset them on each contract anniversary, subject to contractual minimums.
That renewal control affects both the ordinary contract value and the overlay because the multiplier applies only to the interest actually credited. Lower renewal terms can reduce the amount available to be multiplied.
Compare AICO with products designed to avoid renewal-rate drops, including the Oceanview CapLock FIA and Sagicor Sage Accumulator.
Guaranteed Return of Premium
The Guaranteed Return of Premium feature provides an important floor. Beginning after the second contract anniversary, a qualifying full surrender can return at least net premium under the contract’s rules, even when annual fees have reduced the ordinary contract value.
Net premium is the amount allocated to the contract after proportional reductions for prior withdrawals. It is not necessarily the original deposit after money has been taken out.
The feature does not turn AICO into a fully liquid account. A surrender can still end the contract, create taxable income, and give up the opportunity to receive the fifth-year overlay.
Return of Premium Death Benefit
Beginning after the second contract anniversary, the death benefit can protect at least net premium under the contract’s rules. This helps prevent annual fees and weak crediting from leaving beneficiaries with less than the adjusted premium amount.
The benefit does not create an enhanced legacy above the account and overlay value. Someone whose main objective is maximizing what remains for family should compare annuities with enhanced death benefits or separate life insurance.
Free Withdrawals, Surrender Charges, and the MVA
AICO generally permits up to 10% of premium to be withdrawn during the first contract year and up to 10% of the applicable prior-anniversary value in later years without normal withdrawal charges.
| Contract Year | Withdrawal Charge |
|---|---|
| 1 | 8% |
| 2 | 7% |
| 3 | 6% |
| 4 | 5% |
| 5 | 4% |
| 6+ | 0% |
An MVA can apply to applicable excess withdrawals during the first five years. It can increase or decrease the amount received based on changes in market interest rates.
Withdrawals also reduce net premium and can lower the maximum fifth-year overlay benefit. Someone expecting substantial access should compare annuities with stronger liquidity.
Terminal Illness and Extended-Care Waivers
Qualifying terminal illness or extended-care needs may allow access without normal withdrawal charges or an MVA. Waiting periods, medical definitions, issue-age limits, and state availability apply.
These waivers provide access to the existing contract value. They are not an additional care benefit and do not replace long-term care insurance.
Lifetime Income
AICO can be converted into an income stream through annuitization. Annuitization permanently exchanges the contract value for payments under the selected settlement option.
The product does not include a GLWB that preserves ordinary access to a remaining account value while guaranteeing lifetime withdrawals. Someone whose primary goal is retirement income should compare a dedicated income annuity instead of buying AICO for its accumulation overlay.
Tax Treatment
Interest and the Overlay Credit in a nonqualified annuity grow tax-deferred. Withdrawals are generally taxed as ordinary income to the extent of gain. A distribution before age 59½ may be subject to an additional federal tax penalty unless an exception applies.
An IRA already has tax-deferred treatment. AICO inside an IRA must be selected for its contractual protection, accumulation design, and liquidity—not for additional tax deferral. Coordinate the purchase with the household’s broader IRA and rollover strategy.
Who Should Consider Power Select AICO?
- A conservative saver seeking a five-year FIA rather than a 10-year commitment.
- Someone who expects modest rather than extremely strong index-linked credits.
- A buyer who values Guaranteed Return of Premium protection after the waiting period.
- Someone who understands the overlay, maximum, fee, and net-premium calculations.
- A buyer who intends to use the traditional S&P 500 or Nasdaq-100 strategies.
Who Should Avoid It?
- Someone who believes the 200% multiplier doubles the premium or full market return.
- A buyer who wants a simple accumulation product with no annual fee.
- Someone who expects a very strong market and does not want to pay for an overlay that may not be used.
- A consumer who wants caps or participation rates locked for all five years.
- Someone who may need substantial withdrawals before the fifth anniversary.
- A buyer seeking a guaranteed lifetime withdrawal benefit.
Other Insurance Coverage to Consider
- Long-term care insurance: Provides a separate pool of benefits rather than merely waiving annuity surrender charges.
- Life insurance: May create a larger income-tax-free legacy when beneficiary protection is the primary objective.
- Guaranteed lifetime-income annuity: Better when the main problem is creating a paycheck that continues for life.
Alternatives to Power Select AICO
A cap-lock FIA: Provides a simpler accumulation promise by locking a traditional-index cap for the surrender period.
A no-fee accumulation FIA: Avoids paying an annual charge while still providing principal protection and index-linked growth potential.
A MYGA: Better when the buyer wants a guaranteed fixed return rather than an overlay dependent on credited index interest. Compare current fixed annuity rates.
A broader accumulation comparison: Review the current best fixed indexed annuities before paying for the overlay.
Our Final Recommendation
We would not use Power Select AICO as our first-choice accumulation annuity. The overlay can add value in the market environment it was designed for, and the return-of-premium protections are real positives. The product is still more complicated than necessary, and the buyer pays the annual fee even when a strong market produces no Overlay Credit.
Use AICO only after comparing the guaranteed and projected five-year values with a cap-lock FIA, a no-fee FIA, and a MYGA. The decision should be based on the final net value—not the words “200% multiplier.”
Contact The Annuity Expert for free quotes and a no-obligation comparison of Corebridge Power Select AICO with cap-lock FIAs, no-fee accumulation annuities, and MYGAs from A- or better-rated insurers. We will compare the five-year net value, overlay formula, annual fee, traditional-index terms, renewal risk, return-of-premium protection, liquidity, death benefit, and insurer strength before you buy coverage.
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Frequently Asked Questions
Is Power Select AICO a good annuity?
It is a niche accumulation FIA. The five-year term, overlay, and return-of-premium protections are useful, but the fee and complexity keep it from being our first choice.
Does the 200% multiplier double my premium?
No. The multiplier applies to the cumulative interest credited under the annuity formulas and is subject to a maximum overlay amount.
When is the Overlay Credit added?
The Overlay Credit is calculated and, when applicable, added on the fifth contract anniversary. It is not credited annually.
Can I receive no Overlay Credit?
Yes. If the ordinary contract value after interest and fees is equal to or greater than the Overlay Value, no additional Overlay Credit is added.
Does AICO guarantee return of premium?
The contract provides a Guaranteed Return of Premium feature after the second anniversary, subject to its rules and adjustments for prior withdrawals. It is based on net premium rather than always returning the original deposit dollar for dollar.
Can the S&P 500 or Nasdaq cap change?
Yes. The index terms are generally set for one-year periods and can change at renewal, subject to contractual minimums.
Does AICO provide guaranteed lifetime withdrawals?
No GLWB is included. Lifetime income is available through annuitization, which generally converts the contract value permanently into a payment stream.
What is the better alternative?
For protected index-linked accumulation, we generally prefer a cap-lock FIA with a traditional index. For a fully guaranteed return, compare a competitive MYGA.