As the largest nonprofit organization in the United States, the American Association of Retired Persons (AARP) charges its members a monthly fee of $16. In exchange, you receive discounts on restaurants, travel, even healthcare providers.
AARP also provides life insurance through a 3rd party. It’s important to note that you must be an active member in order to be eligible for their life insurance plans.
Two things you need to know about AARP
The first thing you need to know before buying life insurance from AARP is that they do not write their own policies.
- All of AARP’s life insurance policies are written by New York Life.
It’s worth noting that New York Life is a reputable company in the world of insurance. In addition, they are the third largest life insurance company in the United States and boast an A+ BBB rating. (Although they are not currently accredited by the BBB at the time of publication.)
- AARP’s New York Life policies are all sold as exclusives for their members.
Their offerings do carry a lot of positives. It’s worth noting though that they tend to be more expensive than many other options available on the market. So, it pays for you to understand their offerings and do some shopping around on your own.
If you’re considering buying a life insurance policy from AARP, you should dig into what they’re really offering. Here’s a helpful breakdown of all the policies they are offering:
The four AARP life insurance plans
1. AARP Level Term Benefit Life Insurance
- Basic term policy offering, which carries a level death benefit and lasts until the insured turns 80. Their term policy ranges from
- Coverage amounts of $10,000 to $100,000 of coverage
- Doesn’t require a medical exam. As another benefit
- There are only three yes or no qualifying questions
The three qualifying questions:
- In the past 2 years, have you had treatment or medication for or been diagnosed by a doctor as having heart trouble, stroke, cancer, lung disease or disorder, diabetes, liver or kidney disease, AIDS, AIDS-related complex, or immune system disorder?
- In the past 2 years, for any condition, have you been admitted to or confined in a hospital, sanitarium, nursing home, extended care, or special treatment facility?
- In the past 3 months, have you consulted a doctor or had treatment or diagnostic tests of any type?
What you need to be careful about with these policies are the premiums.
At first, they are affordable but they slowly rise every five years over the policy’s lifespan.
While it doesn’t require a medical exam, it also means that the policy will be more expensive than what is available from other providers.
|No medical exams||More expensive to get more coverage|
|Only three easy questions to answer||Premiums slowly increase every five years|
|Premiums stay level based on the applicant’s initial age||Term length expires at age 80|
2. AARP Permanent Life Insurance
- Offers up to $50,000 in permanent coverage.
- No medical exam is required.
- Premiums are level and never increase over the policy’s lifespan.
- The policy stays in force as long as the insured is alive.
- Monthly premium payments cease at age 95.
- Grows a cash value that the insured can borrow against.
Unfortunately, the biggest hang up with their permanent policy is more expensive than many other permanent offerings on the market. Meaning, AARP’s policies might not be the most affordable option if price is at the forefront of your search.
|No medical exam required||More expensive than other options|
|Guaranteed permanent coverage||Cash value growth is slower than many comparable policies|
|Grows cash value|
3. AARP Guaranteed Acceptance Life Insurance
- Carries a maximum permanent benefit of $25,000
- No medical exams required.
- No health questions to answer.
- Graded death benefits for the first two years.
With a guaranteed acceptance coverage insureds run the risk of outliving their policy. In other words, insureds may wind up paying more in premiums than their death benefit is actually worth.
Here’s a helpful formula to see how long until it will take to outlive your policy:
Death Benefit/(Monthly Premium x 12) = How Many Years Until You Outlive Your Policy
If you don’t want to run the risk of outliving your policy, you may want to consider other coverage options instead.
|Guaranteed coverage||More expensive coverage|
|Easy application||Limited benefits for the first two years|
|Grows cash value||Insured runs the risk of outliving policy|
4. AARP Young Start Life Insurance
- Provided for children or grandchildren of AARP members.
- Carries a maximum coverage amount of $25,000.
- Does not require a medical exam.
- Only requires answers to general health questions.
- Stays in force after the parent passes away, as long as:
- The policy has been in force for more than 2 years.
- The child is under 21.
- The child becomes the policy’s beneficiary after age 21.
|Low rates for children||Premiums will vary based on the child and their response to medical questions|
|No medical exam|
|Rates won’t increase for the child|
It pays to compare life insurance rates
If you are an active AARP member and you enjoy the benefits you receive, getting life insurance through them may seem like an obvious choice.
However, it doesn’t cost anything to run a quote and compare other providers. Instead, you could save hundreds of dollars a year, for the same coverage, with the same benefits.