AARP life insurance review
AARP’s life insurance program through New York Life offers coverage to seniors that have pre-existing medical conditions or would have difficulty in getting life insurance elsewhere. None of AARP’s policies require a medical exam so, unless you have a significant medical condition, you are likely to find term and whole life insurance premiums elsewhere that are much lower.
If you are a senior specifically looking for no medical exam or guaranteed acceptance coverage, the AARP does provide reasonable quotes for whole life insurance. However, death benefits are limited to less than $50,000, so you would need to look elsewhere if your family needs additional financial protection.
AARP life insurance products
AARP and New York Life offer group term and whole life insurance policies for seniors, as well as whole life insurance coverage for minors. All of their policies are either simplified issue or guaranteed acceptance, meaning there are no medical exams and coverage is issued very quickly. The downside to this is that insurers assume applicants are at higher risk and, therefore, charge significantly more costly premiums.
You should also note that these policies are only available to AARP members (meaning you have to be at least 50 to qualify) and membership can cost between $12 to $16 per year, depending on your method of payment.
AARP level benefit term life insurance
Unless you have a significant pre-existing condition and doubt your ability to pass a medical exam, we would not recommend AARP’s level benefit term life insurance through New York Life. The premiums are incredibly high and increase over time (in contrast to "level term" policies, "level benefit" means the death benefit stays the same while rates rise), and coverage ends when you turn 80.
The AARP offers term life insurance coverag for members between the ages of 50 to 74 and policies can be converted into a permanent life insurance policy at any point during coverage. Term life insurance death benefits only range from $10,000 to $100,000, meaning you may not be able to cover larger financial obligations, such as a mortgage. The AARP’s term death benefits are limited, in part, because their policies don’t require a medical exam in order to get coverage.
AARP’s term life insurance policies from New York Life are 1-year annually renewable policies. While this offers flexibility, it has the downside of causing your premiums to increase as you get older. Your initial premiums are determined by what 5-year age bracket you fall into and, each time you enter a new age bracket, the rates increase.
To demonstrate, say you are a 60-year old male that wants $100,000 of coverage for 15 years. With New York Life AARP’s program, you would pay three different premiums over that 15-year period:
We compared this to quotes for a $100,000 15-year term policy from New York Life and five other top life insurance companies. As you can see below, whether you’re in great health, just average or even a smoker, AARP term life insurance from New York Life is significantly more costly.
Find Cheap Life Insurance in Your Area
While the AARP’s term life insurance rates are incredibly high, they are competitive to other no medical exam policies for some health profiles. However, you should still shop around and get multiple quotes. Depending on your age, height-to-weight ratio, tobacco use and health responses, no medical exam quotes for term life insurance can vary significantly. Using the example above, a $100,000 15-year no medical exam term policy for a 60-year old would cost:
Monthly rates for a 15-year term policy
|AARP/New York Life||$226||$226|
|New York Life||$311||$487|
Rates are for a $100,000 15-year no medical exam term policy for a 60-year-old.
AARP whole life insurance with no medical exam
Permanent life insurance policies, particularly those that have no medical insurance, consistently have higher premiums. Given this, we also would not recommend the AARP and New York Life’s simplified issue whole life insurance unless you have a pre-existing condition that would preclude you from passing a medical exam. However, if you’re a senior and have had a medical condition for over 2 years that’s well managed, such as diabetes, their whole life insurance policy is a strong option.
The AARP’s no medical exam whole life insurance policy is a form of final expense insurance (also called burial insurance), as the amount of coverage available is usually just sufficient to cover end-of-life expenses. AARP’s whole life insurance policy offers $5,000 to $50,000 as a death benefit and is available if you’re between the ages of 50 and 80. While this is certainly enough to cover a funeral and minor debts, it is likely not be a large enough death benefit to cover your mortgage. So, if you have large outstanding debts, you would want to consider other insurers.
As with other whole life insurance policies, AARP’s whole life coverage builds cash value over time. This is essentially the surrender value of the policy and can be borrowed against if, for example, you have an emergency medical expense. However, the AARP’s whole life insurance policy is relatively unique in that premium payments end when you turn 95. Relatively few people live to be 95, but the opportunity to stop making payments and continue to have coverage isn’t common among whole life insurance companies.
In addition, AARP’s whole life insurance comes with two riders that offer financial assistance in the case you become disabled or ill:
- Waiver of Premium If you face a disability or illness that requires you to stay in a nursing home, you won’t have to pay premiums for the entirety of your stay (or until you turn 80, whichever is sooner). Just note, premiums are only waived after you’ve stayed in the nursing home at least 6 months.
- Accelerated Death Benefit If you’re diagnosed with a terminal illness and the doctor believes you have less than 12 months to live, you can access up to 50% of the policy’s death benefit while still alive.
AARP program guaranteed acceptance whole life insurance
AARP and New York Life also offer guaranteed acceptance whole life insurance, though this option isn’t available in New Jersey or Washington. AARP’s guaranteed acceptance policy is similar to their no medical exam policy in that:
- It’s available if you’re between the ages of 50 and 80
- You no longer have to make premium payment once you turn 95, while coverage remains in force
- There’s no medical exam
- If you become terminally ill, you can receive up to 50% of the death benefit while still alive
A key difference is that their guaranteed acceptance policy only offers between $2,500 and $25,000 of coverage. In addition, if you pass away during the first two years of coverage due to a non-accident, your beneficiary won’t receive the full death benefit. Instead, they will receive 125% of the value of premiums you had paid until that point. Waiting periods are fairly standard for guaranteed acceptance coverage as insurers want to avoid large payments in the case terminally ill patients sign up.
While AARP’s guaranteed acceptance coverage offers competitive rates, if you aren’t already a member, you shouldn’t join the AARP to get access to this product. As you can see below, AARP’s quotes are on-par with those from competitor policies with nearly identical features that don’t require any sort of membership.
AARP child whole life insurance
AARP’s Young Start program allows you to purchase whole life insurance coverage for a child or grandchild that’s younger than 18. There’s no medical exam and the policy builds cash value, similar to their standard whole life policy, but there are only three levels of coverage:
Monthly cost of child whole life insurance
This type of policy is typically intended to shield parents and relatives from the costs associated with a child dying early. However, AARP’s policy is different from those offered by other insurers as coverage is not interrupted when the child comes of age (turning 21) and premiums are level for as long as the policy remains in force. This means that, while the policy’s cash value will grow very slowly, it can continue to grow for decades and is available if your child or grandchild ever wants to access it.
In addition, if you pass away, the child or grandchild won’t have to pay premiums to keep coverage in place until they turn 21. At that point, premium payments will continue to be set according to whatever amount of coverage was initially purchased.
AARP life insurance reviews and complaints
The AARP’s life insurance policies are underwritten and managed by New York Life, an insurer with an A++ (Superior) financial strength rating for life insurance companies from A.M. Best. However, New York Life’s program with the AARP receives a significant number of critical reviews with regards to claims handling.
When you pass away, your beneficiary will need to file a claim in order to receive your policy’s death benefit. This is normally a simple process unless you pass away during the first two years of coverage, as the insurer is able to investigate and contest the circumstances of your death (they may not have to pay if you die from suicide or a pre-existing condition you failed to disclose). Since AARP’s policies are sold to seniors, a large number of policyholders pass away during that 2-year period and reviews from beneficiaries indicate long and challenging investigations.
To reduce issues, make sure to carefully read all application questions from AARP and New York Life and answer them as honestly and completely as possible. You should also give your beneficiaries access to a copy of the policy and all payment records. Finally, let your beneficiaries know that they’ll be better served directly contacting the AARP if they have issues during the claims process with New York Life.
To compare AARP/New York Life insurance's cost with its competitors, our editors gathered sample rates for term and guaranteed acceptance whole life policies from AARP/New York Life, as well as top competitors in each category. We considered rates for seniors at a variety of ages and health levels, including whether or not the insured person smokes.
To evaluate the service from AARP/New York Life, ValuePenguin considered online customer reviews from around the web. We also considered A.M. Best's Financial Strength Rating, which describes the company's overall financial health and ability to pay claims.
Guaranteed acceptance quotes were collected directly from each insurer's website. Term life insurance quotes were pulled from Compulife, a software subscription.