Ed Hinerman On Life Insurance

I’ve Got AARP On My Mind Again, And I’m Not Thinking Nice Thoughts!

February 19th, 2009

There’s something about one of those weeks when I get 10 pieces of mail from AARP touting all of their worn out, rip off products that just makes me want to talk about it. Since my Mom doesn’t care and my wife doesn’t want to hear it again, thanks for listening.

AARP in partnership with New York Life provides some of the worst life insurance products available in the United States today. It is safe to say that neither of these entities should be asking for any kind of bailout since they should be doing quite well from their pillaging of our nation’s elderly.

They offer 5 year term insurance. What that means is that the price goes up at ages 55, 60, 65 and so on. Using myself as an example at age 55, I can get $50,000 of insurance for $74.58 per month. At age 60 the price will go up to $108.25 per month, age 65 up to $143.96 per month, age 70 up to $207.25 per month, age 75 onward and upward to, well, they can’t even tell you. And none of that is even guaranteed. If AARP/NYL decide the cow isn’t fat enough they have the option to raise rates on everyone at any point. So, they have an overpriced product that becomes more overpriced every five years, it ends at age 80 (about the average mortality today), and they can’t even guarantee the rates will stay as bad as they are.

So, let’s compare AARP to real life. Using me as an example and making myself is kind of poor health I can buy $50,000 of permanent insurance, a universal life no lapse guarantee, with a guaranteed level premium (forever) for $78.14 a month through West Coast Life. So, let’s say I live to age 80. I will have paid in $23,442 and my policy will policy will stay in force for as long as I need it by continuing to pay $78.14 per month.

If on the other hand I take a stupid pill and buy AARP’s plan, we know that by age 75 I will have paid $32,041. Since we don’t know what the prices are when it renews at 75, assuming they stay the same as the age change at 70 (bad assumption by the way), I will have paid $44,476 into my $50,000 policy. If I’m still kicking and still need insurance and am stupid enough to get from AARP at age 80 I can convert my pathetic term policy to their pathetic whole life insurance for $462.58 a month. So, well before my 82nd birthday I will have paid more than my death benefit to New York Life and if I die they don’t give me the larger of the two numbers. And they don’t even guarantee that the $462.58 will stay level. The price could still go up.

And just to frost this inedible cake, just suppose you came to your senses and at age 80 you decide AARP stinks and you buy a guaranteed level premium (forever) life insurance policy from West Coast Life. Price? $329 a month. Not $462 non guaranteed. $329 fully guaranteed. By the way, if I had stuck with the original West Coast Life at $78.12 even at age 100 I would not have paid my own death benefit. If you stuck with New York Life and they didn’t have any rate increases you would have paid $154,800 on your $50,000 policy and the most your family would ever see from it is $50,000.

Bottom line. Saying “shame on you AARP and New York Life” just doesn’t seem quite adequate.
These guys suck and rip off old people like me, and my my Mom. They should have to stop and repay everyone.

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Entry Filed under: AARP, conversion, insurance, life insurance, term insurance, universal life, whole life