AARP Has A Policy for You! (or maybe not). The American Association of Retired Persons (AARP) is America’s largest nonprofit organization with millions of members. The AARP is in the news for its lobbying efforts on behalf of senior citizens, advocating legislation to make their lives easier and their healthcare more affordable.
Many people do not know that AARP is the source of numerous discounts for its members. These can be travel, entertainment, healthcare, and insurance. We want to take this opportunity to discuss and explain the last benefit of AARP membership.
Now, AARP Final Expense Insurance or burial insurance policy is available for its members. It should be no surprise because the members are older citizens, and burial insurance is something many think about. One problem we notice is that too often, people will allow an organization’s name and reputation to influence their decisions regarding insurance. That can be a problem because the status of a nonprofit organization does not mean that its products are above investigation or criticism.
Life Insurance Products by AARP
The AARP does not sell its insurance policies. It was never an insurance company, and it does not pretend to be one. The insurance products it recommends to its membership are offered by New York Life Insurance, which has the rights to underwrite any AARP burial insurance contract.
The carrier offers whole life and group term policies for seniors along with whole life coverage for children. The policies are guaranteed acceptance or simplified issue that needs no medical exam. However, the premiums may be high. Also, the policies are available only for AARP members.
Let’s look at these burial insurance AARP products:
AARP Guaranteed Life Insurance
This is an AARP whole life insurance policy available in all states except Washington and New Jersey. It is open to anyone who is an AARP member and between 50 and 80 years old.
Pros and Cons of This Policy
We admit that there are some attractions to AARP Guaranteed Life Insurance.
- No matter what your age is, this policy is not going to expire
- The death benefit is not going to decrease
- The premium paid is set for the life of the policy
- No health questions are asked. This is extremely appealing to any senior citizen who has some health issues.
It is all well and good, but there’s one other feature to the AARP whole life insurance policy that you ought to stop and think about.
There will be no death benefit except for accidental death during the first 24 months that the policy is in effect. The amount your beneficiaries will receive is 125% of the premium you already paid.
We want to point out that any guaranteed acceptance policy offered by an insurance company will have a 24-month waiting period before death benefits are paid out. It reduces the insurer’s risk, and anyone buying a guaranteed acceptance life insurance policy must keep that in mind. If you are as healthy as a horse, there is no problem.
Are Any Riders Available with this Policy?
Like any other product, the coverage for AARP whole life insurance will build cash value with time. It helps to borrow against the surrender value for emergencies. Also, AARP life insurance offers two riders to help you if you become ill or disabled. These riders are:
1. Premium Waiver– If you have an illness or disability for which you need a nursing home facility, you don’t have to make premium payments for the entirety of stay, or 80 years whichever comes first. It applies only if you stay at a nursing home for a minimum of 6 months.
2. Accelerated Death Benefit– If diagnosed with a terminal sickness that can reduce your life expectancy to less than 12 months, AARP offers 50% of your plan’s death benefits during your lifetime.
What Are the AARP Life Insurance Quotes for This Policy?
Now, what is the big difference between what AARP whole life insurance and some other insurance companies?
The New York Life Insurance policy is more expensive than similar burial insurance policies offered by other companies. You are paying more for a product that costs less elsewhere.
This is why it is so important to do a little shopping for that burial insurance policy. You can find another guaranteed whole life insurance policy, with the same type of benefits, at a lower price.
Here are the price quotes for AARP whole life insurance policy:
Simplified Issue Whole Life Insurance Policy
This AARP burial insurance policy has a face benefit of up to $50,000. AARP members can apply for a policy if they are between the ages of 50 and 80 years of age, and it is available in all states. The monthly premium will not increase, the death benefit never decreases, the policy will never expire whatever the age of the insured and the coverage will go into effect on the first day.
As you guessed, this sounds very simple and doesn’t appear to have any difficulties. There is a catch to this insurance. It is with the health questions that are asked.
Pros and Cons of This Policy
The best advantages of this AARP burial insurance policy are the lack of a waiting period and competitive pricing. It is quite comparable to other whole life insurance carriers. Since the prices won’t increase throughout the term, the policy never expires, and you always have the death benefits. It’s an excellent choice if you are healthy or smoke cigarettes.
The biggest drawbacks of AARP simplified whole life policies are pricing and stringent underwriting due to which most of the applicants don’t even qualify. The company will ask health questions to check if you have any of these diseases:
- Lung diseases like emphysema, COPD, and asthma
- Diabetes or diabetic complications
- Heart issues like blood thinners, Afib, or coronary artery disease
- Seizure, Parkinson’s, systemic lupus
- Kidney or liver diseases
How to Qualify for This Policy?
Anyone who applies for simplified AARP burial insurance will be asked if they have been diagnosed with having heart trouble, cancer, stroke, diabetes that needs insulin, and immune system disorders, among other conditions. The applicant will be asked if the diagnosis or any treatment took place in the prior 24 months.
You will also be asked if, in the past 24 months, you were admitted to a hospital or other healthcare facility for any medical condition. A final question will be whether or not in the past 90 days, a person had treatment, diagnostic tests, or medication of any type. The individual’s medication history and MIB file will also be investigated.
What this all means at the bottom is that most senior citizens cannot qualify to get a simplified AARP burial insurance policy due to their medical conditions. That may not be such a bad thing because this whole life insurance policy is rather expensive.
What Are AARP Life Insurance Quotes for This Policy?
Whether you take tobacco or not, AAPR has the same rate, unlike most insurance companies offering different rates for tobacco and non-tobacco users.
Level Death Benefit Term Life
This life insurance policy is the crown jewel of the AARP offerings. It can have a face amount of up to $100,000, and it is available to AARP members in all states. You need to be between the ages of 50 and 74 years, and spouses can also apply if they are between 45 and 74 years of age. The AARP Level Benefit Term Life Insurance Policy is prominently featured in AARP advertising. Is there any problem with this coverage? Yes, there is.
|Age 60 to 64||$109|
|Age 65 to 69||$144|
|Age 70 to 74||$208|
Pros and Cons of the Policy
It is a term life insurance policy, and this means the coverage has a termination age. That might not seem to be a problem until you find out that the termination age is 80. Coverage ends when you celebrate your 80th birthday, and you do not get back any of the premium dollars paid. The only way to get AARP burial insurance at that point is to buy a whole life policy. It is going to be rather expensive because of your age.
The amount of the policy is almost irresistible for senior citizens. The possibility of having up to $100,000 of coverage for burial insurance seems virtually irresistible. When you consider that increasingly more people live into their 90s, this policy has a very low termination age.
There is a little bit of deception practiced in advertising AARP Level Benefit Term Life Insurance. The AARP and New York Life Insurance clearly state the policy coverage cannot be canceled without your consent if you pay the premiums; your health is not a reason for cancellation. They will mention the termination age at the end of the promotion. It is assumed by that time you are already willing to buy the policy.
Another problem is the expense of the premium. The premium increases in five-year increments; you are buying a policy that will increase in cost, and the benefit will vanish when you reach 80. There are other reasons why this insurance policy is not a very good idea.
How to Qualify for AARP Level Benefit Term Life Insurance?
You need to answer the following health questions to qualify for this policy.
- Have you received diagnosis, advice, or treatment in the last two years for stroke, cancer, heart trouble, diabetes, lung disease, AIDS, immune system disorder, or kidney disease?
- Have you been treated or admitted to a nursing facility or hospital in the last two years for extended care?
- Have you consulted a doctor, taken medications, or diagnosed for any disease in the last three months?
Apart from these, the company will also look into your MIB file and prescription history.
How Does the Term Life Rates Compare with Other Carriers?
When compared to other top insurers, you will find that AARP Level Benefit Term Life Insurance is quite expensive. Here is a comparison chart that shows how AARP stands against its competitors.
|Health Profile||AARP/New York Life||New York Life||MetLife|
|Non-Smoker||$226 per month||$311 per month||$91 per month|
|Smoker||$226 per month||$487 per month||$399 per month|
The Rates Aren’t Level in This AARP Funeral Insurance. Then, Why Name It Level Benefit?
AARP uses a little sly marketing in the title of this policy. It is called AARP Level Benefit Term Life Insurance, and it suggests that the amount of the benefit paid to survivors will never change. That is true for practically all term life insurance policies; the amount of the final benefit does not change for the policy’s life.
The insurance industry will customarily use the word “level” to show that the premium is fixed for the policy’s entire life. That is not true with the AARP/New York Life Insurance product. We already mentioned that the level death benefit term life insurance policy’s premiums would go up over time.
AARP Child Whole Life Policy
With the Young Start program, you can purchase a whole life policy for any child below 18 years. It helps build cash value with three levels of coverage and no medical exam.
|Death Benefit||Monthly Premium|
This policy aims to shield the parents or relatives against the costs of a child’s early death. However, AARP is different since the coverage remains the same when the child turns 21 years and premiums are also level throughout the tenure. Even if you pass away, the child won’t need to pay premiums.
Is AARP the Right Insurance Provider for You?
It’s not that New York Life isn’t a good company, they are, and it’s just that they outsource the insurance they sell.
AARP is nothing more than a marketing agency. Someone in their high offices must have thought years ago that we have all of these older Americans we mail to, let’s sell them Life Insurance. For them, it was a very smart idea.
And from what many understand, millions have taken them up on the offer over the years. They are one of the most successful resellers of life insurance for burial on the planet.
The TWO big problems with some of the AARP burial insurance policies
- Every five years, the rate you pay goes up leading to higher and higher life insurance payments
- The life insurance can expire at age 80
Those are two VERY BAD things if you think of how many folks you know over 80. Then, think that they could have been making life insurance payments into their AARP policy for up to 30 years and collected or their loved ones will collect nothing.
The AARP and the New York Life Insurance Company are not doing anything illegal. What they are doing, instead, is employing some rather ingenious advertising. We are recommending that folks look beyond the words.
It is the reputation of an organization that happens to be the primary selling point of all these policies. AARP offers its members all kinds of great discounts on other services and products. We suspect that many AARP members do not shop around for insurance because AARP is endorsing the New York Life Insurance policies. Granted, there are many advantages to being a member of AARP, but it doesn’t by itself guarantee you are getting the best insurance policy for the money you will pay.
Burial insurance is a very sensitive topic for many people. Older customers want something that will help their beneficiaries pay off any funeral expenses, but, at the same time, the whole process reminds them of their mortality. That time on earth is growing short. AARP is a trusted organization, and many people who are AARP members think it is easier to buy an AARP endorsed policy than trying to hunt down something better.
Company Background and Financials
New York Life Insurance Company is not a minor player in the insurance industry. The company has an A.M Best rating of A++ and has been selling insurance products since 1845. It is registered to sell insurance in every state, and the partnership they have with AARP is like the relationships New York Life has with other organizations.
We point this out to assure you there is no need to worry about New York Life Insurance not paying out a benefit.
The concern we have is with the products offered to AARP members (like you may be) must be a dues-paying member of the AARP to apply for the burial insurance policy.) We believe that too many people purchase insurance products because of AARP’s overall reputation. They are not doing the proper due diligence a consumer must perform. The buyers are not investigating the policies carefully.
We agree that it is not easy for someone who is not an insurance professional to find similar policies and make a comparison. A consumer is better off having an insurance agency do the heavy lifting. A reputable agency represents several insurance companies and can do the search needed. The same agency is ethically bound to tell a person if they can offer a policy that is better and/or cost less than what AARP is recommending.
Insurance for Final Expense represents several insurance companies that offer burial or final expense, insurance. These companies can provide the kind of coverage they are looking for a reasonable price. Some of these premiums provide the same amount of benefit as the AARP burial insurance policies. The difference is that they will cost you less. The terms of the policies are also transparent. We choose to work with insurance providers who rely more on a product’s quality than turning a phrase in marketing.
Gary P. Cubeta
(Serving Americans In All 50 States)