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AARP Life Insurance Review [2020 Update]

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About AARP Life Insurance

The American Association of Retired Persons was formed in 1958 by a retired public-school principal.  Now called simply “AARP,” the organization is a well-known name in final expense life insurance, despite not itself being a life insurance company.

Instead, AARP licenses the right to market life insurance under the AARP name to insurers (currently New York Life).

Access to AARP’s 38-million-member network and considerable brand recognition is a valuable commodity, and, by all accounts, the licensing fee has been a good investment for partnering insurance companies.

AARP policies are generally lower-priced than comparable policies purchased directly from New York Life and are only open to members of the organization.

However, AARP membership (and its many concomitant benefits) is no longer limited to individuals aged 50 and older—any adult willing to pay the monthly fee can join AARP.

AARP policies are available to members in every state, except that the guaranteed-issue final expense policy is not issued in Washington and New Jersey.

The current underwriter of AARP policies, New York Life, is the largest mutual insurance company in the U.S.  Over its nearly 180-year history, New York Life has earned a reputation for nearly unparalleled financial strength and stability.

AARP Life Insurance (New York Life) Financial Ratings

A.M. Best: A++
Fitch: AAA
Moody’s: Aaa
S&P Global: AA+
Comdex Ranking: 100

As one of the highest rated insurance companies in the U.S. , New York Life maxes out all of the major rating services’ scoring systems and likewise earns a 100 out of 100 ranking from Comdex.

As long as AARP policies are underwritten by New York Life, policyholders can rest assured that the insurer’s policy obligations will be satisfied.

AARP’s life insurance program currently has an A+ rating from the Better Business Bureau, suggesting that customer complaints are generally addressed promptly.

New York Life scores above average (but not great) in JD Power’s customer satisfaction ratings.

Products Offered by AARP Life Insurance:

  • Term Life Insurance
  • Whole Life Insurance
  • Whole Life for Children
  • Final Expense Insurance
  • Annuities

Life Insurance Policies Offered by AARP Life Insurance

Level Benefit Term Life:

The AARP term policy provides simplified-issue term coverage in benefit amounts starting at $10,000 and going up to $100,000.

Applicants must be AARP members and must be between ages 50 and 74 (or a member’s spouse from 45 to 74).

Policies do not have an initial term with level premiums.  Instead, policies can be renewed annually through age 80, and premiums increase every five years.

Once an insured reaches age 80, coverage lapses.

However, the AARP term policy includes a conversion option allowing policyholders to convert the term coverage into whole life if the option is exercised while the policy remains effective.

Policies are simplified-issue, requiring a health history questionnaire and prescription check but not a medical examination.

Major medical issues like heart attack, stroke, lung disease, diabetes, liver or kidney problems, and HIV/AIDS are disqualifying.

Simplified Issue Whole Life:

The AARP cash value whole life policy is available in coverage amounts of between $5,000 and $50,000 and is open to members between ages 50 and 80 (or spouses 45-80).

As whole life coverage, the policy features fixed premiums, guaranteed-for-life coverage, and cash-value accrual.

Whole life insurance rates are scheduled so that policies are fully paid-up—with no additional payments required—when the insured reaches age 95

The simplified-issue application process is similar to the term policy, with written screening but no medical exam needed.

Compared to similar simplified-issue final expense policies, AARP’s whole life offering has more stringent underwriting standards so that only applicants who are in relatively good health will qualify.

The policy is somewhat unique, though, in that it does not charge higher premiums for tobacco users.

Guaranteed Issue Whole Life:

AARP’s Guaranteed Issue Whole Life insurance is intended as final expense or funeral insurance for older applicants not able to qualify for coverage that requires health screening.

Because no medical exam or written screening is necessary, any AARP member from age 50 through 85 (and spouses beginning at age 45) will be eligible for coverage.

Due to the lax underwriting, death benefit amounts only go as high as $25,000, and policies have a two-year waiting period.

If the insured dies during the first two years after the policy is issued, the death benefit is equal to 125% of the total premiums paid into the policy to date.

Like with most waiting periods, the full death benefit pays out if the insured’s death results from an “accident” or occurs after the initial two-year period.

AARP Young Start Children’s Whole Life Insurance: 

AARP’s whole life insurance for children allows members between ages 50 and 80 to purchase $10,000, $15,000, or $20,000 in permanent coverage for children and grandchildren up to 17 years old.  Insured children are not required to undergo a medical exam.

Upon reaching age 21, the insured child becomes the owner of the policy and has low-rate coverage locked in for life and/or access to the policy’s accrued cash value.

If the member who purchases the policy dies prior to the insured child’s 21st birthday, premiums are waived until the child reaches 21.

Available Life Insurance Riders

Nursing Home Waiver of Premium:

If the insured’s health condition requires confinement in a nursing home, and the confinement lasts at least six months, premium obligations will be waived until the earlier of the insured’s 80th birthday or the conclusion of the insured’s stay at the facility.

Terminal Illness: 

If the insured is diagnosed by a medical professional as having less than 12 months to live, up to half of the policy’s death benefit can be accelerated, at the policyholder’s option.

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