There is little doubt you have heard about the AARP Life Insurance Program, especially if you’re a senior. Whether or not you’re an AARP member, you could have been made aware of their products from mail, e-mail, television and more, yet it’s exclusive to members of AARP for purchases.
Our AARP Life Insurance Program Review For 2017
The AARP (originally the American Association for Retired Persons) Life Insurance Program has been the focus of several life insurance related debates, both for and against. There are obvious pros and cons when you take an in depth look at what is being offered. As with any life insurance purchase, you may just need to take a step back to analyze whether or not it’s a fit for you.
The AARP Life Insurance Program is underwritten by New York Life Insurance Company, which is on our list as one of the 10 best life insurance companies in the United States. If nothing else, the AARP Program comes with the safety and security equal to that of New York Life, so one could rest assured knowing who they are doing business with.
The AARP Program Details
But there is more than meets the eye with the AARP life insurance product line. Let’s go over the three basic types they offer, how they’re different, and what you need to consider before making a purchase.
|Level Benefit Term||Permanent Life||Guaranteed Acceptance|
|Protection that lasts for a set time period||Protection that can last a lifetime||Guaranteed acceptance for protection that can last a lifetime|
|Up to $100,000 in protection||Up to $50,000 in protection||Up to $15,000 in protection;|
Limited benefit for first 2 years
|Can last to age 80||Can provide lifetime coverage||Can provide lifetime coverage|
|Lower initial premiums that increase|
|Affordable premiums won’t go up just because you get older||Affordable premiums won’t go up just because you get older|
|No physical exam||No physical exam||No physical exam|
|Acceptance is based on answers to three health questions and other information you provide or give us permission to obtain||Acceptance based on answers to three health questions||No health questions;|
Includes extra mortality
The first thing which seems to grabs every consumers eye is no requirement for any type of physical, no matter the product chosen. While this sounds great, especially for those who don’t care for needles, EKG’s, and other medical exams, there are undisclosed drawbacks. The pricing structure for any product without a medical exam will be higher than a policy where a medical is completed.
The less detail you give an insurance company, the higher risk you pose. The higher risk you pose, the more you can expect to pay.
Next, we’ll focus solely on the Level Benefit Term product.
- It has the highest amount of coverage available, but in order to get it, you’ll have to answer the most questions and give up the most information. This is a fair trade off.
- However, the ‘level’ term is a term to 80, meaning once you attain this age, this policy will no longer be in effect.
- In addition, you’re rates will increase every 5 years (or when you reach the next age band), and will continue to do so the life of the policy. Despite the name, only the coverage will be level, not the premiums.
In the middle column is the Permanent Life solution. Let’s break it down:
- It has half the available death benefit when compared to the Level Benefit Term product, but it has no limit on age. With life insurance, a policy which lasts a lifetime can be very beneficial.
- There is also no change in premium, unlike the Term, and both the policy benefit and cost of coverage will not change as long as you keep the policy in force.
- However, as good as just three health questions sounds, it means more premium. Not only will this increase costs due to higher risk, but the permanent nature of the insurance product also makes it proportionally higher.
In the final column, the Guaranteed Acceptance life insurance policy details are listed. They feature:
- Permanent coverage, just like the Permanent Life solution, but with a maximum benefit of $15,000. This payout is also not available in the first couple years of the policy.
- Also like the Permanent Life plan, coverage will never go down and premiums will never rise for as long as you maintain the policy in good standing.
- But as the chart states, there are zero health questions and extra fees because of it. While this is great for someone in poor health who wouldn’t otherwise qualify, this means the highest cost per thousand of any type of life insurance in the market.
Are AARP Life Insurance Plans Worth Buying?
As with any purchase of life insurance, you truly have to look what you need. However, when really looking at the AARP program and its competitors for each product, only its branding is competitive.
New York Life and AARP have excellent brand names which millions of people recognize, but the policy benefits and prices aren’t comparable to other companies within the market.
Gerber Life, for example, has a far superior guaranteed life insurance product. Tons of companies have much more competitive prices for term life insurance, since that is not a specialty of New York Life. In the graded market, companies like Fidelity are far superior with just a few more health questions.
Talking to an agent who can use many different companies to suit your needs will more than likely yield you a better product with lower prices. There may be a few exceptions to this, but overall, AARP is more or less utilizing their name to access additional markets.