Chances are, you’re familiar with AARP and its membership-based benefits for seniors.
The organization is no stranger to television, email, radio, and snail-mail marketing, making it a familiar name in millions of households.
Chief among their products is a seemingly impressive lineup of life insurance policies.
If you and your spouse have reached senior status, you may be wondering if AARP’s coverage lives up to the hype.
In this review, we’ll take a look at AARP’s history, financial strength, and the details of their life insurance policies to help you out.
Our AARP Life Insurance Program Review
AARP, originally the American Association for Retired Persons, is one of the most well-known companies targeting seniors.
The company was launched in 1958 by a retired educator by the name of Ethel Percy Andrus, in partnership with Leonard Davis, the founder of Colonial Penn.
Dr. Andrus was one of a handful of women to graduate from a four-year university at the turn of the 20th century and served as the first female high-school principal in California.
After her notable tenure as an educator, Andrus dedicated her efforts to improving the quality of life of senior citizens, giving them the financial footing they need to thrive in life.
Out of that passion, AARP was born.
Today, the AARP Life Insurance Program is underwritten by New York Life Insurance Company, one of the highest-rated life insurance companies in the United States.
AARP provides membership to senior citizens with countless benefits including discounts, money management tools, and health and life insurance, to name a few.
AARP continues to live out its founder’s motto, “To serve, not to be served,” both through its client services and charitable activities.
In addition to giving millions of dollars to organizations in need, AARP’s Create the Good program helps to match members looking to volunteer with nonprofits who pair well with their passions and skills.
Along with AARP’s rich history and growth up to today, it’s important to take a look at the company’s future.
Financial Strength and Ratings
Before you partner with AARP or any other provider for a purchase as important as life insurance, you need to do a checkup on the company’s financial health.
AARP had over $382 million in total assets in 2018, doing business with over 38 million members.
Based solely on the fact that AARP’s policies are underwritten by New York Life, you can rest assured knowing you’re doing business with a reputable carrier.
We can also look to New York Life’s credit ratings, scores which assess a company’s likelihood of meeting its financial obligations, to assess its strength.
The industry giant touts impressive ratings across the board. Take a look:
Combined, these scores give New York Life a Comdex score of 100, the best possible rating.
Additionally, BBB ratings can shed some light on the company’s performance and relationship with customers.
AARP holds an “A+” rating from the Better Business Bureau, as does New York Life.
Based on their financial performance and ratings, you can depend on AARP and New York Life for your family’s life insurance needs.
Next on the agenda are the life insurance products themselves.
Let’s go over the basic types of coverage AARP provides, how they’re different, and what you need to consider before making a purchase.
|Level Benefit Term||Permanent Life||Guaranteed Acceptance|
|Protection lasting a set time period||Protection lasting a lifetime||Protection lasting a lifetime|
|Up to $100,000||Up to $50,000||Up to $15,000; Limited benefit first 2 years|
|Can last to age 80||Can provide lifetime coverage||Can provide lifetime coverage|
|Lower initial premiums that increase over time||Affordable premiums won’t go up as you age||Affordable premiums won’t go up as you age|
|No physical exam||No physical exam||No physical exam|
|Acceptance based on three health questions and other information you provide or give permission to obtain||Acceptance based on answers to three health questions||No health questions; Includes extra mortality risk charge|
Here’s a closer look at each policy.
Level Benefit Term
Here are a few key takeaways on AARP’s 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, a fair trade-off for the coverage offered.
- However, the ‘level’ term only lasts to age 80, meaning once you reach this age, the policy will no longer be in effect.
- In addition, your rates will increase every 5 years (or when you reach the next age band) and will continue to do so for 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 compared to the Level Benefit Term product, but it has no limit on age. A policy which lasts a lifetime can be very beneficial.
- There is also no change in premiums, unlike the term product, 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 higher premiums. Not only will this increase costs due to the higher risk, but the permanent nature of the insurance product also makes it proportionally higher.
In the final column is the Guaranteed Acceptance life insurance policy.
Here’s a rundown of its feature:
- The plan offers permanent coverage with a maximum benefit of $15,000. Note: the payout is not available in the first couple years of the policy.
- Like the permanent life plan, coverage will never go down and premiums will never rise, as long as you keep the policy in good standing.
- There are zero health questions or extra fees. 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.
In addition to the policies featured above, AARP allows members to purchase Young Start life insurance for their children or grandchildren.
Here are a few key takeaways:
- Up to $20,000 of permanent coverage can be purchased for children from 0-17, lasting for the entirety of their lives as long as payments are made faithfully.
- Low rates attained in childhood are guaranteed to remain intact, no matter how the insured individual’s health changes later in life.
- The coverage comes with a simplified application and no medical exam requirement. You simply have to answer three health-related questions on the application.
When you shop for life insurance, you should always explore multiple options.
Whether you’re an AARP member or considering becoming one to secure coverage, you should consider the following alternatives in your search for the right provider.
- Gerber Life: If you’re looking for guaranteed coverage, Gerber Life has a superior guaranteed life insurance product which is more affordably priced than AARP’s product.
- Fidelity: For graded coverage, you may want to consider a company like Fidelity. The coverage offered is far more competitive, with just a few more health questions.
- Haven Life: If you like the sound of no exam term life insurance, take a look at industry leader Haven Life. You can get an instant decision on up to $3 million of coverage online.
There are plenty of benefits to buying life insurance from AARP.
Consider some of the best reasons to partner with the organization for your life insurance needs:
- Reputation: AARP has a stellar reputation, as does New York Life, with the latter receiving excellent marks from each of the major credit rating agencies.
- Senior-focus: AARP’s targeted approach means their policies are tailored to fit your changing financial needs later in life.
- Membership benefits: AARP comes with a whole host of perks for its members and allows you to house a number of policies and financial accounts in one place.
- No exam coverage: Whether you hate needles or your health might hinder you from getting coverage, you can find no exam coverage with a simplified application from AARP.
Though there are advantages to working with AARP, the organization’s life insurance policies come with some downsides.
Keep the following in mind as you consider AARP:
- Limited market: If you aren’t 50 or older, you won’t be able to benefit from AARP membership, and consequently, its life insurance policies.
- Limited policies: If you’re looking for expansive coverage, you won’t find it here. AARP’s term policies max out at $100,000, with even lower face values for permanent policies.
- Cost: AARP’s life insurance policies are not competitively priced. You’re highly likely to find lower rates (and higher amounts of coverage) elsewhere.
Are AARP Life Insurance Plans Worth Buying?
As far as life insurance is concerned, it appears AARP’s branding may be its most competitive feature.
New York Life and AARP have excellent brand names which millions of people recognize, but the policy benefits and prices aren’t really comparable to other leading companies within the market.
The best way to determine whether AARP has the best rates, though, is to compare quotes.
With a few moments of your time and some quick details about the policy features you’re looking for, you could get connected with the perfect provider to meet your needs.