AARP Life Insurance Review: The Best Option for Seniors?
If you’re looking for senior’s life insurance, you’ll know that it can be tough getting accepted.
Fortunately, life insurance companies like AARP offer ‘easy to qualify’ policies with viable coverage for seniors.
But the question is, is AARP the best option out there?
Find out my thoughts on the company, their policies, costs, other alternative policies, and more.
About The Company
The AARP life insurance program is offered by New York Life.
Developed only for AARP members and completely underwritten by New York Life, they offer seniors a no-medical exam life insurance policy in both whole and term life insurance options.
New York Life has a superior (A++) AM Best rating and an A+ rating with the Better Business Bureau.
Pros & Cons
No medical exams
AARP’s simplified whole life insurance policy is great for seniors who have managed medical conditions such as diabetes for two years or longer.
The absence of a medical exam enables seniors with chronic medical conditions to secure the coverage they otherwise wouldn’t get.
Premiums stop at age 95
Simplified whole life insurance premiums stop at age 95, but coverage continues. So, if you’re lucky enough to live past 95, it’s a nice benefit.
Whole life insurance for your child
AARP offers child whole life insurance allowing you to purchase a policy for your child or grandchild under the age of 18 with no medical exam.
The policy builds a cash value which the child can access as an adult. They may also keep the policy and pay level premiums for as long as they keep it.
Fast approval without waiting periods. You may apply for both term and whole life insurance online, completing the application in seconds.
If you choose simplified life insurance, you’ll answer a few medical questions, but neither require a medical exam or have waiting periods.
AARP membership fee
You must be a member of AARP. So on top of your life insurance premiums, you must pay the AARP membership fee.
Low coverage amounts
They offer low maximum coverage amounts.
Most policies only go up to $100,000 which is not enough to cover major debts or the cost of living, especially after paying final expenses, such as a funeral, burial, and medical costs.
The convenience of quick approvals and no medical exams tend to create higher premiums than you’d find in fully underwritten policies.
Term life insurance is only offered to people under 80
AARP’s term life insurance is only applicable to those under the age of 80. Most other companies offer policies up to age 85.
Level Benefit Term Life
AARP’s level benefit option is a term life insurance policy for seniors aged 50 – 74. It offers coverage amounts from $10,000 to $100,000, and is available in all 50 states.
Your coverage doesn’t change for as long as you carry the policy but your premiums will increase every five years based on your age band.
As long as you pay your premiums, your coverage will remain in place up until you turn 80, at which point it expires.
What is Level Benefit?
The name ‘level benefit’ seems strange, right? Most term life insurance policies call it ‘level term life insurance.’
AARP calls the policy Level Benefit because the benefit remains the same throughout the policy.
This isn’t unique for term life insurance policies though, so don’t let that throw you off. What you care about is the premiums and those don’t remain the same, as stated above.
Level benefit example
Joe takes out a life insurance policy of $50,000 at age 53, he pays $45 a month for the policy until he turns 55-years old.
At 55 his rate jumps to $65, at age 60 it jumps to $94, at 65 it jumps to $128, and at age 70 it jumps to $184. Joe’s premiums remain $184 until the policy ends at age 80.
AARP offers coverage in specific increments.
You may choose a term level benefit coverage of $10,000, $25,000, $50,000, or $100,000.
AARP Level Benefit Term Life Insurance is an annually renewable policy. Rather than choosing a term, such as 10 or 20 years, you renew annually.
As discussed above, your premiums remain the same within each age band but increase at the 5-year mark.
Costs and Premiums
The premiums vary based on two factors – your age and whether you smoke.
Let’s look at an example of premiums for a man and a woman, both non-smokers who are 60 and on a $100,000 policy.
- Ages 60 – 64 – $171
- Ages 65 – 69 – $236
- Ages 70 – 74 – $342
- Ages 60 -64 – $108
- Ages 65 – 69 – $154
- Ages 70 – 74 – $272
Downsides of Term Level Benefit Life Insurance
The fact that this policy expires when you’re 80 is risky. What do you do after 80 if you’re still alive?
If you’re lucky enough to have enough money saved for your final expenses, maybe you won’t care about the expiration.
But if you don’t, it’s tough to get another policy at 80-years old and even if you do find a policy, it’s likely to be very pricey. The other downside of this policy is its increasing premiums.
Term life insurance typically has level premiums and benefits but as you might have noticed above, the premiums on this policy can get pretty high and perhaps unaffordable for most.
Simplified Issue Whole Life
Simplified Issue Whole Life Insurance lasts your entire life. You don’t have to worry about an expiration at 80-years old or scrambling for another option if you’re still alive.
This policy lasts as long as you pay the premiums and like the term life insurance policy there’s no medical exam. Instead, you answer some detailed medical questions.
AARP/New York Life uses this information to determine your overall health and risk.
Certain medical conditions, such as terminal illnesses, heart disease, and diabetes preclude you from this coverage.
Who’s Simplified Issue Whole Life Good For?
Seniors with medical conditions, such as diabetes, heart trouble, kidney disease, or lung disease that was diagnosed over 2 years ago and have the condition under control are the best candidates.
You are the ‘in-between’ applicant that can’t get traditional life insurance (at least affordably) but shouldn’t pay the higher prices of guaranteed life insurance.
The Simplified Issue Life Insurance policy is ‘final expense’ insurance. You may opt for $5,000 to $50,000 in coverage which will be your death benefit.
Your premiums also carry enough to create a cash balance, which you may borrow against. This will be your policy’s surrender value should you choose to end your policy.
You may add two riders to AARP’s Simplified Issue Life Insurance:
- Waiver of premium – If you become ill or disabled and must live in a nursing home, AARP will waive your premiums after 180 days. You retain your coverage throughout this time.
- Accelerated death benefit – If a doctor diagnoses you with a terminal illness and less than 12 months to live, you may use up to 50 percent of your death benefit while you are alive.
Whole life insurance premiums remain the same for your entire policy. The main difference in premiums is your age when you apply and your gender.
Below are average rates for men and women at various ages and $25,000 coverage.
- Age 50 – $79
- Age 55 – $100
- Age 60 – $118
- Age 65 – $150
- Age 70 – $195
- Age 75 – $242
- Age 50 – $60
- Age 55 – $73
- Age 60 – $89
- Age 65 – $116
- Age 70 – $155
- Age 75 – $201
How to Qualify
Despite its name, there are a few obstacles you must pass to qualify for Simplified Whole Life Insurance. First, you must answer the following questions:
- Have you been diagnosed, had treatment, or taken medication for heart issues, cancer, lung disease, kidney disease, stroke, AIDS, or any immune disorder in the last 2 years?
- Have you been in a hospital or skilled nursing care for any illness in the last two years?
- Have you seen a doctor, had tests done, or received treatment for any illnesses in the last 3 months?
If you answered ‘yes’ to any of those questions, you won’t be eligible.
If you didn’t, New York Life will look at your Medical Information Bureau and prescription records to confirm the information you provided.
Guaranteed Issue Whole Life
Guaranteed Issue Whole Life Insurance offers ‘guaranteed’ coverage. You don’t answer any questions and AARP/New York Life doesn’t turn applicants down.
The trade-off, however, is the lower coverage and higher premiums for ‘Easy Acceptance’.
AARP offers a no-medical exam/no questions policy with limited benefits for the first two years. As long as you are ‘of age’ and are an AARP member, you qualify (unless you have a terminal illness).
However, there is a 2-year waiting period for benefits, and if you pass within two years of taking the policy, your beneficiaries will receive 125 percent of the premiums you paid until that point.
The only exception to the rule is if your death is accidental. In that case, AARP would pay your beneficiaries the full death benefit.
The guaranteed issue whole life policy offers coverage from $2,500 – $25,000, which helps cover your final expenses.
This policy lasts for your lifetime, the death benefit never decreases and the policy doesn’t expire at a specific age.
Guaranteed life insurance policies have much higher premiums because of the risk insurance companies take. AARP’s rates on a $20,000 policy for men and women are below:
- Age 50 – $88
- Age 55 – $101
- Age 60 – $119
- Age 65 – $140
- Age 70 – $168
- Age 75 – $201
- Age 50 – $74
- Age 55 – $86
- Age 60 – $103
- Age 65 – $124
- Age 70 – $150
- Age 75 – $182
Child Whole Life Insurance
AARP offers a unique Child Whole Life Insurance policy for parents and grandparents that want to buy a policy for children under the age of 18.
The premiums range from $5 – $10 per month for coverage of $10,000 – $20,000.
The policy protects parents should a child die prematurely and also accumulates a cash value. Furthermore, the premiums will remain the same for the life of the policy.
While it won’t accumulate a lot of cash, if you leave it for decades, it can become a sizeable account for your children or grandchildren.
What Customers Are Saying
While premiums are on the high end, most customers are satisfied with AARP’s customer service, claims process, and policy offerings.
Guaranteed or simplified life insurance premiums are higher no matter where you shop, so knowing AARP takes care of its customers is reassuring for seniors that need coverage.
Other Alternative Policies
Gerber Guaranteed Life Insurance
Gerber offers senior life insurance coverage of $5,000 to $25,000 for seniors in the age range of 50 to 80 and doesn’t require a medical exam or answers to health questions.
They accept everyone as long as they can afford the premiums.
AIG Life Insurance
Like most guaranteed life insurance policies, AIG offers coverage of $5,000 to $25,000. They also don’t turn anyone down and approvals happen fairly quickly.
However, AIG has a 2-year waiting period and if you pass away within that time your beneficiaries will receive 110% of the premiums paid.
Colonial Penn offers guaranteed life insurance in much smaller coverage amounts ($4,000 – $17,000). They don’t require any medical exams or ask any health questions.
Colonial Penn also offers a 30-day money-back guarantee.
MetLife Simplified Insurance
MetLife asks a few simple questions and runs your Medical Information Bureau report to make sure you qualify for the policy, still the process is quick and convenient.
As long as you don’t have a chronic or terminal illness, you could even qualify for a policy that offers coverage up to $100,000.
Mutual Of Omaha- Term Life Express
Mutual of Omaha’s Term Life Express is a simplified life insurance policy. While you don’t need a medical exam, you must go through a phone interview with a specialist.
Term Life Express policies are available with cover from $25,000 to $300,000.
Fidelity Life Insurance- RapiDecision Life
Fidelity’s RapiDecision Life insurance provides fast approvals, for people that are aged 18 to 65.
Coverage begins immediately and coverage options range from $25,000 to $100,000.
Should You Choose AARP?
If you have medical issues, AARP life insurance may be a good option. Especially if you have any issues that prevent you from applying for the simplified life insurance policy.
As with any insurance though, be sure to shop around and examine your choices, weighing not only the premiums but the coverage options too.