AARP Life Insurance Review

So, how did AARP Life Insurance come about? Let me quickly share with you their story.

The American Association of Retired Persons, more commonly known as AARP, was founded in 1958 by Dr. Ethel Percy Andrus with a vision to help retired teachers get life insurance. She went on to build benefit programs, mail-order pharmacy services that provided discounts, and a network that aims to assist aging professionals as they approach retirement.

The American Association of Retired Persons, more commonly known as AARP, was founded in 1958 by Dr. Ethel Percy Andrus with a vision to help retired teachers get life insurance. She went on to build benefit programs, mail-order pharmacy services that provided discounts, and a network that aims to assist aging professionals as they approach retirement.

Members of AARP get a host of benefits ranging from health and wellness, travel, automotive, and even discounts for cruises and hotel accommodations. However, members will agree that the most availed benefit is access to life insurance.

In partnership with New York Life, AARP’s Life Insurance program is one of the top reasons why people want to sign up and become a member. Currently, AARP has a membership base of 37 million and anyone aged 50 or higher can easily join.

The main draw that entices members to sign-up for a life insurance policy is their “no-medical exam required” offer. As we all know, the older we are the more difficult it is getting life insurance. So, having an option such as AARP’s offering becomes a good chance of getting protection.

Right now, AARP offers 3 life insurance products. They have term, whole life, and guaranteed life insurance. Note, though, that the benefit packages are smaller compared to most offerings out there. So, if you’re looking for coverage that goes beyond $100,000—better look elsewhere.

AARP Life Insurance Financial Strength

Let’s be clear: AARP is not an insurance company. The AARP Life Insurance Program is essentially a life insurance product lineup offered by New York Life. Here’s the blurb from their site

“New York Life Insurance Company pays royalty fees to AARP for the use of its intellectual property. These fees are used for the general purposes of AARP. AARP and its affiliates are not insurers and do not employ or endorse agents, producers, or brokers. AARP has established the AARP Life Insurance Trust to hold group life insurance policies for the benefit of AARP members.”

And that’s a good thing if we’re talking about financial stability. A life insurance company’s financial strength is perhaps the most important metric by which they get measured and rated. As a potential customer, it absolutely makes sense to choose an insurer with a strong track record when it comes to paying its beneficiaries.

How financially stable is New York Life, you ask? Let’s just say they’re considered as one of the biggest and best when it comes to paying claims.

As of April 2019, New York Life has been given the following rating from these independent ranking services:

  • AM Best: A++ (Superior)
  • Fitch: AAA (Exceptionally Strong)
  • Standard & Poor: AA+ (Very Strong)
  • Moody’s: AAA (Highest Quality)
AARP Life Insurance Review

AARP Life Insurance Products

AARP’s life insurance offering under NY Life is composed of 4 types of policies. These are Level Benefit Term, Permanent, Guaranteed Issue, and Young Start Life Insurance.

AARP Life Insurance Features

No Waiting Period

Applies to: All AARP Products –The first day the coverage takes effect, you will receive protection for the full benefit amount.

Level Benefits

Applies to: AARP Permanent Life Insurance, Term Life insurance, Guaranteed Benefit –Regardless of your health condition, you will receive the full benefits of your policy.

Do note that for Term life insurance, premiums change and are set in 5-year bands. Every time a new band begins, an increase in premiums will apply. Only Permanent and Guaranteed Benefit products enjoy level benefits with true fixed premium rates.

Lock-in premium rates

Applies to: AARP Permanent Life Insurance and Guaranteed Life insurance –The rates of your premium are based on your age during application. Regardless of your age or your health, later on, the amount you pay for premiums will never change.

Applies to: AARP Permanent and Guaranteed Life insurance –When you reach 95 years old, your premium payments will stop but you will still continue to be covered.

Insurance coverage up to 80 years old

Applies to: Term Life Insurance –Regardless of your health, your policy will never get canceled without your approval. As long as you pay your premiums, the policy will remain intact and be guaranteed up to age 80.

Lifetime Protection

Applies to: AARP Permanent Life Insurance and Guaranteed Life insurance –Your policy will never expire and you’ll remain covered for the rest of your life regardless of your health condition. Note that if you have Guaranteed Life insurance, you have to make sure you won’t miss your premium payments otherwise this feature will not apply.

Accelerated Benefit

Applies to: AARP Permanent Life Insurance, Term Life insurance, Guaranteed Benefit –In cases when the policyholder is diagnosed with a terminal illness with only 24 months of life expectancy, he or she can access 50% of the policy benefit and use it for any purpose. When you utilize this feature, the premiums will be reduced.

Guaranteed Exchange Privilege

Applies to: AARP Permanent Life Insurance –When the policyholder reaches the end of the coverage at 80 years old, they have the option to convert it to permanent life insurance. You won’t be required to take a medical exam.

30-Day Guarantee

Applies to: All AARP Products –You won’t be asked to commit fully for the first 30 days upon issuance of the policy. If for any reason you decide that it isn’t for you, you can request a refund within the 30-day window.

Waiver of Premium for Certain Qualified Nursing Home Confinements

Applies to: AARP Permanent Life Insurance, Term Life insurance –If the policyholder is ordered by the doctor to be confined for more than 180 days, no premium will be required starting day 181 as long as the patient/policy remains confined. Your coverage won’t be interrupted during this time.

Limited Benefit Period

Applies to: AARP Guaranteed Life –If the policyholder dies within the first two years of the policy (due to natural causes), the beneficiaries will only receive a portion of the full death benefit (only 125% of the premiums paid). If death was caused by an accident, even after day 1 of policy, the full benefit will be provided.

AARP Level Benefit Term Life Insurance

AARP members looking to have up to $100,000 worth of protection for their beneficiaries should look at AARP’s Term Life offering. With that amount, you can make loan or mortgage payments, provide some financial cushion for loved ones, and ensure coverage for your final expenses.

  • Protection of up to $100,000
  • Protection up to 80 years old
  • No waiting period
  • Lower initial premiums that increase over time
  • No Medical Exam required (acceptance is based on answering questionnaires)
  • Guaranteed Exchange Privilege (allows you to convert your term policy into permanent life insurance without having to take a medical exam.
AARP Life Insurance Review

Sample Rates for Level Benefit Term (Men & Women)

Your initial premium is based on your age when the policy is issued. Premiums will increase as you enter each new 5-year age band based on the rates at that time.

AARP Life Insurance Review
AARP Life Insurance Review

Which is better for older individuals: Term or Whole Life?

It depends. If you are in decent health, you will have a safer bet in term policy simply because it’s much cheaper which means it will be easier to maintain. Whole life is, of course, better if you’re looking for actual coverage length (it lasts a lifetime). However, it’s significantly more expensive than term. Other options include Guaranteed Life and Final expense insurance, depending on your situation and needs.

AARP Permanent Life Insurance

AARP members aged 50-80 can get up to $50,000 worth of coverage without the need to undergo a medical exam. With this amount, you can ensure your loved ones will have the financial cushion to pay for your final expenses and/or use it for other needs.

  • Coverage of up to $50,000
  • Coverage that lasts for the policyholder’s lifetime
  • Guaranteed rates that are locked in (no increase over time)
  • No Medical Exam (acceptance is based on answering questionnaires)

Is AARP whole life insurance worth it?

Here’s the straight answer: If you think you’ll need more than $50,000 coverage, then better look elsewhere as that’s the max amount AARP offers for their permanent life insurance.

However, if getting a $50k benefit that lasts a lifetime without having to undergo a medical exam sounds great to you, then AARP’s offering can be a good choice.

Just keep in mind that premiums for whole life usually cost around 5-10 times more than regular term insurance, as you’re also paying for the cash value portion.

AARP Guaranteed Acceptance Life Insurance

AARP members aged 50-80 years old can sign up. It provides coverage of up to $25,000 which can be used for final expenses, such as medical and funeral bills.

  • Coverage of up to $25,000 (limited benefit for the first 2 years)
  • Acceptance is guaranteed (no medical exam or health questions)
  • Guaranteed rates that are locked in (will not increase over time)
  • You can receive up to 50% of the death benefit while you’re still alive if you become terminally ill.

What are the Cons of AARP Life Insurance?

No life insurance is perfect. There will always be some disadvantages to consider and think about. Here are some of the cons of signing up for AARP life insurance.

  • The premiums of their term life insurance increase over time. These happen every 5 years until the coverage ends when the policyholder reaches 80.
  • Some benefits are not available in all areas. For example, their Guaranteed Acceptance is not offered in Washington and New Jersey. Massachusetts and Washington don’t have the accelerated benefits feature too.
  • The limited benefit condition for their guaranteed acceptance means if the policyholder dies due to natural causes, beneficiaries won’t be able to get the full death benefit.
  • Some states don’t have the option to apply for a policy online.

AARP Young Start Life Insurance

AARP members wanting to provide up to a $20,000 death benefit coverage to their child or grandchild can sign up for an AARP Young Start Life insurance policy.

  • Coverage of up to $20,000
  • The beneficiary can keep the permanent life insurance for his or her entire lifetime
  • Low childhood rates and a child can never be singled out for a rate increase
  • No Medical Exam (acceptance is based on answering questionnaires)

What are the 3 questions asked by AARP?

One of the main draws of AARP’s life insurance offerings is their no-medical-exam-required feature.

So what do they use then to qualify their applicants? Simple: They have them answer 3 questions (applies to all their products except Guaranteed Acceptance since you can’t be turned down).

Note that these questions are not verbatim to what AARP uses but contain the same core questioning.

  • Have you consulted a doctor within the last three months? In addition, have you been treated or diagnosed for any health issues?
  • In the past 2 years, did you undergo any medication, treatment, or have you been diagnosed with any of the following diseases/risks: cancer, diabetes, lung disease, kidney disease, heart issues, AIDS, and immune system disorder?
  • During the same time frame, have you spent time in any of the following?
    • Hospital
    • Nursing home
    • Sanitarium
    • Health facilities and the like

Verdict: Is AARP Life Insurance for you?

When looking for life insurance for seniors over 75, the agent you pick is just as important as the carrier. Any AARP member looking for an easy way to get life insurance protection should definitely consider AARP’s life insurance offerings. Here are the main reasons:

  • You’re not required to take a medical exam
  • They have a simple enrollment process (only asks 3 questions)
  • Zero waiting period
  • Backed by a financially-strong insurer

However, as enticing as no-exam life insurance might sound (especially to those with existing health issues), it’s simply not your best bet if you’re looking for competitive prices. Insurance companies enforce a higher premium when no exam is required simply because they are taking significantly more risk in insuring you.

Their biggest draw? Having New York Life Insurance Company as their underwriter. Thanks to the company’s stable and strong financial background, you’ll have the peace of mind throughout the years of the policy knowing your money is on steady ground.

But if you are not a member of AARP, perhaps it’s best to look elsewhere if you’re looking for more competitive rates and bigger benefits. Better yet, speak with one of our agents or get an online quote, completely free—by clicking here.