AARP Life Insurance: What you need to know!

Written by Rob Pinner

AARP Life Insurance: Is it Right for You?

For over 20 years, AARP has offered life insurance to its members through an unique arrangement with New York Life. New York Life is on of the nations oldest mutual life insurance company while compiling the top rankings from the rating agencies as seen below.

New York Life Ratings.png

Seniors are offered a variety of policies that require no medical exam to qualify for their programs. The maximum amount of coverage for AARP’s level benefit term policy is $100,000, provided you are in good health.

If you are not in good health, AARP has policies for those consumers with pre-existing conditions. AARP’s permanent life/whole life and guaranteed acceptance insurance policy are great choices for members with medical conditions.

AARP Life Insurance Policy Options

If you decide to go with AARP’s life insurance, you will have three options to choose from. Your acceptance is based on answers to medical questions and other info obtained through their underwriting process, but no medical exam is required.

The three types are:

  1. AARP Term Life
  2. AARP Permanent Life Insurance (Whole Life)
  3. AARP Guaranteed Acceptance Whole Life (Guaranteed Issue)

AARP Term Life Insurance

AARP’s term life policy is a no medical exam group term life policy with death benefits ranging from $10,000 to $100,000.

Issue ages for AARP term life policy is 50-74 for members and you can cover spouses age 45-74. These policies terminate at age 80 and their is no waiting period before benefits are paid.

Premiums are based on age at the time of application, but the premiums do increase as you get older. They increase on a 5 year table, meaning if you purchase a policy at age 51, your premium increases would be at age 55, 60, 65, 70, and 75 before terminating at age 80. Below are rates for a $50,000 policy and how the rates increase.

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AARP Permanent Life Insurance/Whole Life

AARP permanent life insurance is a whole life policy with coverage that lasts for your entire life. These policies also have a cash value component which can be borrowed from in the future if needed.

Pros of AARP’s Permanent Life Policy

  • No waiting period for death benefit
  • When you turn 85 years old, an automatic increase in coverage of 30% with no increase in premium
  • Death Benefits as low as $2,500 up to $50,000

Unlike AARP term life policy, premiums remain level for the entire contract. In other words:

NO PREMIUM INCREASES

At age 95, premium payments are discontinued and your coverage remains until death. The chart below illustrates some sample rates:

AARP Permanent Life Sample Rates.png

AARP Guaranteed Acceptance

This policy is AARP’s guaranteed issue life insurance product. This is a guaranteed issue policy, no matter  your health condition. These policies tend to have lower death benefits and higher premiums than similar ones offered by other carriers.

Issue ages for AARP guaranteed acceptance policy is 50-80, with spousal coverage from age 45-80. The death benefits start at $2,500 with a maximum of $25,000.

Premiums will never increase, but how the death benefit is paid out is different than the two policies above. This is how:

  • Their is a waiting period of 2 years if death is caused by an illness. Only premiums paid in plus interest will be paid out if death from illness occurs in the first 2 years.
  • If death is by accident the first 2 years, the full death benefit is paid.
  • After 2 years, death benefits are paid in full whether death is by illness or accident.

Just like AARP’s permanent policy, you will not pay another premium after age 95 while getting to keep your coverage till you pass away.

AARP Guaranteed Acceptance Sample Rates.png

AARP vs. The Competition

If you shop around, which we highly recommend when purchasing life insurance, you will find out real quick that AARP premium rates are high compared to the competition.

For example:

Term Rates Compared:

$50,000 Death Benefit, Age 60, 20 year term, Male

These policies are no-medical exam life insurance and as you can see, AARP’s term life is significantly more expensive. Also remember AARP’s term life increases every 5 years.

Permanent Life Rates Compared:

$50,000 Death Benefit, Age 60, Male

Guaranteed Acceptance Life Rates Compared:

$15,000 Death Benefit, Age 50, Male

  • AARP: $66.17/mo
  • AIG: $76.89/mo
  • Gerber: $65.68/mo
  • Mutual of Omaha: $53.50/mo

As you can see, AARP is much more competitive with this policy than the 2 listed above.

How is Their Customer Service?

While rates are important when you are looking into purchasing a life insurance policy, but so is the reputation the company has when it comes to filing claims and getting questions answered in a timely manner.

Unfortunately, AARP falls short in the area of customer support, with J.D. Power giving them 3 out of 5 stars. AARP does offer their members an informative Learning Center where their are articles about policy management and insurance planning.

However, AARP does have a simple claims settlement, but is not the fastest. They start by offering a downloadable claims packet on their website, but it typically takes between 45-90 days to process.

Other FAQ

When my term runs out at age 80, is there any other way to be insured?

Yes, you can switch your AARP term life policy for AARP permanent life at anytime before you reach the age of 80. You are not required to take an exam or answer medical questions. Premiums are based on your age at the time.

Does coverage end at a certain age for the AARP permanent life insurance or the AARP guaranteed acceptance?

No, both of these policies last your entire life. Premiums remain level until age 95 when they are discontinued. You still keep your insurance after age 95.

When is AARP’s life insurance a right fit?

  • When looking for $100,000 death benefit or less
  • Want to avoid a medical exam
  • Seeking a simplified application process
  • Wanting to avoid an agent
  • A member of AARP between the ages of 50-80 (74 for Term Life)

What is the Next Step?

Are you are looking to purchase life insurance but not sure which policy best fits your need?

Give us a call, we work with all the top carriers in America. We will be able to help you find the right product that fits your needs, whether that is term or permanent. We can guarantee to find you the lowest rate without compromising customer service. If you have any questions or comments please give us a call.

Rob Pinner
Rob Pinner

At Easy Quotes 4 You we aim to make your life insurance buying process a smooth and stress free transaction.  We are independent life insurance agents servicing all 50 states. I have over 15 years of experience and have focused solely on life insurance for the past 5 years. If you have any questions or comments please don’t hesitate to give us a call.

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