If you’ve reached senior or retirement age, you now qualify for AARP life insurance.
However, it’s important to consider whether or not AARP is the right choice for you. Fortunately, there is plenty of information out there to help you make your decision.
Before you decide, it’s helpful to learn about the history of AARP, what products they offer, and what the pros and cons of their insurance options are.
Let’s take a look so you can make an informed decision about AARP in 2019.
What Is AARP?
The AARP was founded in the U.S. in 1958. It’s a nonprofit with close to 40 million members, making it a very powerful group for lobbying American lawmakers.
The AARP was designed to help meet the needs of retired and elderly people. It joined forces with the National Retired Teachers Association (NRTA) in 1982, coming together under the AARP umbrella.
Before the AARP, aging Americans had little or no access to private health insurance options. Medicare, which provides health insurance to people over 65, did not start until 1965.
Because of the size of the organization, it offers quite a range of services. Let’s look at some of the things the AARP offers.
What Does the AARP Provide?
The AARP includes many different branches operating under the organization’s name.
The AARP Foundation is a charity that helps economically struggling people over 50. A section of this nonprofit, the AARP Experience Corps, helps members who want to enrich their lives by mentoring children. Charitable funds to the AARP are held in the AARP Institute, another section of the AARP Foundation.
A for-profit aspect of the AARP is the AARP Services Inc., which does research. Real estate is held in the AARP Financial Services Corporation, which is also for profit.
The Legal Counsel for the Elderly is another nonprofit segment that helps retired and elderly members in Washington, D.C. find legal help.
Lastly, the AARP Insurance Plan holds life insurance policies for members. These insurance policies are provided not by AARP itself, but by New York Life Insurance Co.
New York Life is among the world’s largest insurance companies. It provides several different AARP life insurance options.
Life Insurance Types
Term life insurance can be purchased at age 50 and last until one turns 80. Before one turns 80, it can be changed to permanent life insurance. For every new age band of five years, the premium will increase.
Whole life insurance has a flat premium which ends at age 95. This option can provide up to $50,000 in coverage.
Guaranteed acceptance whole life insurance is guaranteed for AARP applicants, who can be between the ages of 50 and 80. This option features up to $25,000 of benefit. One caveat is that only part of the death benefit is paid out if the cause of death is natural in the first two years after the policy begins.
Whole life insurance for children allows AARP members to buy life insurance policies for their children and grandchildren. This is provided through AARP’s Young Start program. Up to $20,000 in coverage is given.
With this option, the child will become the policy owner when they turn 21. At that time, they can name a beneficiary.
Is AARP Life Insurance Right for You?
AARP insurance may be the right choice for some individuals, but not everybody. There are pros and cons to being insured by the AARP. We’ll take a look at some of the positives and negatives, based on experiences from actual AARP members.
Easy to Find Coverage
If you have health concerns that make it difficult to find insurance, AARP life insurance may be right for you.
It can cover people that some insurance companies might turn down due to pre-existing conditions and health concerns. No health exam is required for AARP life insurance policies.
The AARP can help make the process of getting life insurance look easy. However, there are many other companies that can also help simplify the process of getting you health insurance.
It is very common for retired Americans to overpay for their AARP life insurance.
AARP actually doesn’t provide the insurance themselves. Instead, they provide a source through which you can get insurance from other companies.
They can help make the process of getting insurance look simple and streamlined. However, the AARP is ultimately aiming to make a profit off the insurance sales so they can continue to fund operations.
This means that when you buy life insurance through the AARP, you may be paying more than you need to.
Some people may choose AARP because there is no medical exam required. However, those who are in good health end up paying more than they would anywhere else. You are paying more for the guarantee that you will be given insurance since no exam is required.
AARP can have lower death benefits compared to other insurance companies. The company places a fairly low cap on their coverage amounts for most plans.
AARP members must pay $16 a year, and be 50 or older, to buy AARP life insurance. This limits who can access the health insurance.
As the insured person ages, their premium for term life insurance goes up. This is an added challenge to the already-strict budgets many retired people live with.
Many people get AARP life insurance because it is a recognizable name. The sheer size of the organization means it can afford to do a lot of advertising, putting its name out there and making AARP appear to be the easiest choice.
The AARP’s advertising provides a look at the positives of the organization, and it is a great organization in many ways. But when it comes to life insurance, there are many other considerations to take into account.
It is worth your time to compare quotes from other life insurance companies before making your decision, especially if you are healthy and on a budget.
If you don’t want to be limited by membership, don’t feel the need to pay extra for your life insurance, and want to avoid rising premiums, another insurance company may be right for you.