Does AARP offer Affordable Life Insurance for Seniors?

Lenny Robbins
Aug 15, 2018 12:26:30 PM

AARP-life-insurance-is-expensive-2018
The American Association of Retired Persons, commonly known as AARP provides many services for senior citizens. They advocate for seniors in congress and other political arenas. They offer seniors advice in their publications. If you are a member there are various discounts, including hotels, and other travel expenses. But when it comes to affordable life insurance for seniors, I don't think it's in your best interests. Let's dig in deeper.

AARP's Term Life Insurance

These policies are written through New York Life Insurance Company, a highly rated carrier. The term life insurance coverage offered by AARP are non-medical policies. That means you only need to answer some medical questions to apply. There is no exam needed. This type of coverage is more expensive than comparable coverage with an exam. The difference in cost can be significant.

The first thing to know is that although AARP this a level benefit term life insurance policy, the premiums are not level. They increase every 5 years. Additionally, AARP rates are NOT GUARANTEED. That means if the product has a rate increase, your premium will go up. You really don't know how much your insurance will cost when you buy. See the chart below for current rates for 10 year term policies for non-smoking males.

AARP 10 Year Term Life Insurance Current Pricing for Non-Tobacco Males (August 2018)
Age of Insured $50,000 face amount $100,000 face amount
  AARP Premium Underwritten Premium AARP Premium Underwritten Premium
45-49 $ 41 $ 14 $ 58 $ 24
50-54 $ 51 $ 26 $ 73 $ 34
55-59 $ 74 $ 39 $ 107 $ 51
60-64 $ 107 $ 59 $ 156 $ 87
65-69 $ 142 $ 77 $ 208 $ 147
70-74 $ 204 $ 137 $ 300 $ 268
If rates increase, current policy owners will also have their rates adjusted up. For the comparison rates, we used the highest age in the bracket, standard rating and rounded up.


Depending on your age when you buy this insurance, you can go up two premium bands. If you buy at age 49, you have one year of $41 per month, five years of $51 per month and four years of $74 per month. $74 per month is an 80% increase in premium for the last four years. This is a significant monthly increase.

AARP's life insurance term policies end at age 80. Additionally, if you haven't read the small print you don't know the premium increases every time you hit a new age band, and the coverage only lasts until age 80. Depending on your age, and your goals, a permanent policy may be more suited to your needs. For example, if you are looking for a policy to pay for your final expenses.

You can convert to AARP's permanent policy up to age 80 no matter how healthy or unhealthy you are (this benefit is available on all term policies with every company having slightly different options). With AARP you only have two choices to convert into. Many other carriers offer multiple policies for conversion. The least expensive of these is a guaranteed premium universal life policy where you set the policy so that it does not have cash value.

Even without talking about conversion, let's just look at the pricing for a short half hour of you time (for a medical exam). Let's use age 55 and a $50,000 ten-year term policy for example. At AARP your cost for those 10 years would be $10,860. With another carrier it would be $4,680 (and this price is based on age 59 not 55!). Do you think 30 minutes of your time is worth $6,180? I do!! The big difference is that other companies don't increase their premiums during the level term of the policy. 

If we use age 59 and a $50,000 ten year policy the difference is even greater. AARP would cost $14,124 and other carriers would be $4,680. The difference is $9,444. So, a few minutes of inconvenience seems worth it!

AARP allows you to purchase a 10 year term policy. However, with other companies you can purchase a 20 year policy. During the entire 20 years, the face amount and the premium remain the same. Let's see the difference here.

At age 55, a level 20 year term policy for $50,000 at a standard rating is $ 43.47 per month. The cost for all 20 years is $10,432. This is essentially the SAME as AARP's cost for 10 years! Imagine 10 years free for taking a 30 minute exam and having your blood drawn. 

At age 59, a level term policy for 20 years for $50,000 is $63.41 per month. The total cost is $15,218. The cost of a 10 year AARP policy is $14,124, so for an additional $1,024 over 20 years, you can have coverage for an additional 10 years.

The older you are when you first apply, the greater the savings if you get a fully underwritten policy. For example: a 72 year old non-smoking male will be $204 per month for $50,000 of life insurance. A fully underwritten policy (with a medical exam) will be $106 per month if you are rated standard. The AARP policy will only last until age 80. The total cost is $19,584. For the underwritten policy, the cost for all 10 years (up to age 82) is $12,720. Another significant difference. Once you are over 80, you cannot get any new coverage through AARP. 

You can get new coverage through an independent agent after age 80. Policies are available with and without medical exams. Non-medical policies are always more expensive that those with full underwriting. The more information an insurance company has, the less expensive your coverage will be. 

I think we have shown that AARP is quite expensive compare to fully underwritten coverage. Although AARP gets an 8 out of 10 rating in most categories, Consumers Advocate (.org) says their term policies are restrictive in comparison to similar products offered by competitors.

If you are looking for the best life insurance for seniors over 60, we can help. Learn about the different types of policies available. We will educate you so you, understand exactly what you are purchasing. 

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Term Insurance or Permanent Coverage

One of the decisions you need to make is do you need term or permanent insurance? Your reasons for getting coverage will help determine which of these makes the most sense. If you determine you need permanent coverage, a fully underwritten universal policy will cost much less than your AARP options.

For example, at age 59, an AARP ten year term for $50,000 will cost about $118 per month when you average out the various premiums. If you are rated standard, a permanent policy for the same amount will be $125 per month for the rest of your life. 

The Bottom Line

As you can imagine, an independent agent has many different affordable options for senior life insurance. Your independent life insurance agent will help you determine how to get the coverage you need, at the most affordable price. Limiting yourself to one company gives you limited options!!

You can get new coverage through an independent agent after age 80. Policies are available with and without medical exams. Non-medical policies are always more expensive that those with full underwriting. The more information an insurance company has, the less expensive your coverage will be. 

So, before you go and sign up for an AARP life insurance policy, see what else is available. You will most likely find coverage that will cost you less and/or last longer. Don't go it alone, talk to an agent and make an informed decision.

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