Is AARP Life Insurance Right For You?
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If you are considering buying a life insurance policy from AARP, make sure you read this first. This article contains information from AARP’s website and application.
AARP markets a life insurance policy for New York Life that offers $10,000 – $100,000 dollars of coverage without a medical exam and just 3 health questions. The policy is available for purchase by anyone between the ages of 50-74, without a waiting period.
What most people don’t understand about a policy like this—or any term policy without a medical exam—is that your medical information will still be reviewed. There are 3 health questions that need to be answered, and if you answer all of the questions with, “No,” New York Life will mail you an approved policy. The questions are designed to eliminate anyone with any serious health issues, but they leave room for interpretation…
- 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, medication, or diagnostic tests of any type? (Note: You are not required to report negative AIDS or HIV tests.)
If you are taking any type of preventive medications like cholesterol or blood pressure medications, you will need to disclose them. Typically, with any new application, New York Life will want to run an Rx check, review APS reports, or access your MIB records.
If you are relatively healthy, the policy seems straightforward…but beware of the fine print!
Basic preventive medication is not typically an issue, but if the insurance company finds any treatments for issues like diabetes, heart problems, cancer, COPD, emphysema, sarcoidosis, etc. your application will be denied.
What exactly does this mean? AARP and New York Life have come under a lot of scrutiny for the structure of their rates. Most life insurance policies on the market offer some type of guaranteed period. In other words, most insurance companies will allow you to lock in the price of your life insurance so that it does not increase as you get older.
A guaranteed universal life policy will usually offer guaranteed rates to age 90 or later. Whole life rates can be guaranteed to age 100 or later, while term life can be guaranteed for 10 to 30 years.
The policy AARP offers does not work this way. The rates start low, but every five years, they increase. A lot of consumers are roped in by such a low starting price, but as you get older and life insurance becomes harder to pay for, your rates increase. In the life insurance industry, this is considered, “pricing you out of your policy.”
Typically, people will sign up for these polices a few years before they retire, and when they need the coverage the most, the rates start to skyrocket. This is a huge challenge for someone on a fixed income. How much do the rates increase? Currently the rates advertised for a 54-year-old male will QUADRUPLE by the age of 70.
People often call us after they have just turned 80 and realized that their life insurance has ended. Most people don’t realize that their life insurance policy with AARP actually stops on their 80th birthday. After age 80, finding affordable life insurance can be a real challenge, even if you are lucky enough to still be in good health.
Over the years, I have found that the vast majority of the clients I work with who purchase $100,000 of coverage or less after the age of 50 tend to want to keep their coverage to at least age 90.
Below is a graph that illustrates the policy we most often recommend for $50,000-$100,000 of coverage in comparison to the same level of coverage from AARP / New York Life to age 80. Please note that the renewal rates for ages 75-79 are not listed online; I had to call to get them.
*The RATES shown below are provided as an example only for educational purposes. To receive an official quote, call JRC at 855-247-9555.
Purchase age 54, fair health, non-smoker, male, $100,000 of coverage
The total cost for this $100,000 policy until the age of 80 is $80,430.12—a hefty sum considering that the odds of a 54-year-old male making it to age of 80 are greater than 50%.
The policy we recommend for our clients is below. The rates for this policy never change.
Purchase age 54, fair health, non-smoker “standard/standard plus,” rate class, male, $100,000 of coverage
As you can see, the AARP policy starts out less expensive than the cost of the policy we recommend. In fact, it looks like you’ll be saving almost $50 dollars per month by buying the AARP policy.
The problem is that within a few years, the rate for the AARP policy increases well beyond the cost of a guaranteed universal life policy from a top-rate life insurance company. By age 80, the cost of the AARP policy is actually $28,000+ more than a policy that will provide you with the same amount of coverage for 10 more years.
As an investment, it’s important to note that the odds of a male making it to age 90 are roughly 10%. That means the guaranteed universal life policy we recommend will actually pay out five times more often.
If you need to protect your estate or want to make sure the money you pay into your policy is not lost, you can extend coverage to age 95, 100, or longer, and you will still be able to buy the policy for less than the rates of the AARP policy that ends at age 80.
This rate may also be available to applicants with well-controlled diabetes, skin cancer, or any cancer after 2-7 years of treatment depending on the stage at diagnosis.
- If you currently smoke cigarettes, and you need more than $50,000 and less than $100,000 of coverage after the age of 50, AARP may be the most affordable option for you. The AARP application does not ask if you are a smoker. However, the policy will not cover you if you have had any complications from smoking, like COPD or emphysema.
- If you are medically disabled or are not currently working, we would typically recommend a policy from AARP. If you apply for a policy and you are collecting disability or social security before age 60, most life insurance companies will want to know the reason for your disability; this may keep you from qualifying. In addition, you need to financially qualify for the policies we offer, so AARP may be your best bet because they do not ask for current income.
- If you are extremely overweight or obese, The qualifying questions that New York Life / AARP asks, do not address this. If you are more than 80-100 pounds overweight the policy offered by AARP may be your best option. If you are less than 100 pounds overweight, you will probably save money by buying a traditional term policy or a Guaranteed Universal Life policy.
As an example if you are approximately 5’10” and 60 or older, some of the insurance companies will allow you to weight up 327 pounds and still approve you at a standard rate, saving you money over AARP.
- If you have been charged with a felony within the last five years, or if you are currently on probation or parole, AARP may be one of the only companies to offer you life insurance that will also protect your health. Other life insurance companies will typically review your criminal records
Give us a call today at 855-247-9555. Our independent agency represents 63 top-rated life insurance providers and our agents are experts that can provide you with unbiased information and quotes in just a few minutes.
We're experts at matching our clients with the best option available and we’ll be happy to discuss the options available to you. Our comparative shopping service is completely free and there is no cost to apply for life insurance. We've helped thousands of families and businesses, and we can help you too.
Managing Partner and Co-founder
Cliff is a licensed life insurance agent and one of the owners of JRC Insurance Group. He has helped thousands of families of businesses with their life insurance needs since 2012 and specializes with applicants who are less than perfect health. In his spare time he enjoys spending time with family, traveling, and the great outdoors.