Posts filed under 'AARP'
I recently applied for and received an AARP Group term life policy underwritten by New York Life. In previous posts I believe I’ve clearly made the point that these AARP offerings are a rip off of the sleaziest form, claiming to be advocates of the elderly while fleecing them.
I actually applied for their term insurance policy and their whole life policy, $50,000 each. They never responded to the application for whole life insurance, but I see in the term policy where it states that the maximum I can have through AARP’s life insurance program is $50,000. So much for getting adequate coverage and diversifying in the process.
I received the new term insurance policy a few days ago and after reviewing it, had some questions. Attached is my policy.
my-aarp-group-term-policy
Note on page 4 where it says Premium, it explains that my premium will be going up each time I reach one of their 5 year thresholds. It also goes on to say that they can, of course, change my rates at any time as long as they change the rates of all policies in my class. A couple of questions came to mind. If my premium goes up every 5 years, how much does it go up? And, if my premium can be changed on a class basis, what defines a class?
Looking through the rest of the policy, the only reference I found to my premium level was on the copy of the application at the back of the policy. It is attached here.
aarp-life-insurance-application
In the upper left it breaks down the premiums depending on the size of policy and at the bottom of that box it says “Please refer to the rate chart for complete details”. There is no rate chart in the policy. There is nowhere in the policy that it spells out or illustrates what happens every 5 years.
I called the Colorado Division of Insurance and asked them if, even though this is a group policy, it should contain that type of information. Their answer was yes. The person I spoke to was very clear that if a policy doesn’t provide a table of maximum premiums, an illustration that shows how much they could potentially charge, it was not in compliance.
Taking them at their word I called New York Life to see if that information had been inadvertently left out of my policy. They assured me that the information was not there because it didn’t need to be there. When I pushed further about wanting something in my policy, per Colorado law, that shows what the rates increases could potentially be, Lucille from New York Life told me that she was willing to give them to me verbally over the phone, but that she couldn’t send them to me. She then explained that the rate increases were shown on the application, but that portion of the application is not included in the policy.
I then spoke to her supervisor Donald Ennis and reviewed all my concerns. He said that the illustration of rate changes is only contained in the master policy and that is held by AARP and that I should call AARP if I wanted a copy of that information. This morning I spent an hour in the quagmire that is the AARP phone system and was finally told that AARP doesn’t have a master policy and that they would refer my question back to New York Life.
Advocates for the elderly? I’m a 55 year old life insurance agent and I wouldn’t advise anyone to accept the AARP policy. The policy, the company and the organization backing it are all wholly inadequate at providing the information you should expect in order to put your trust in them. If I can’t put my faith in what they’ve provided and I can’t get the answers to questions I ask, how could the average person (non life insurance agent) hope to enter into one of these contracts with confidence. The answer appears to be that AARP and New York Life hope you will do it with blissful ignorance. “Trust us! We’ve been around for 160 years.”
Bottom line. Intentionally vague would be the only grade I could give to my AARP life insurance policy. It won’t go into force because it is overpriced, not guaranteed and missing key valuable information.
July 23rd, 2008
With each new magazine or bulletin, my love/hate relationship with AARP is souring. I’m having a hard time feeling the love these days.
I got their most recent bulletin (cheaper than a magazine advertising mode) today. An article caught my eye that had to do with a 2004 regulation passed by the Equal Employment Opportunity Commission that allows employers to reduce retirement health benefits when the retiree becomes eligible for Medicare or some other government health plan.
Senior AARP attorney Laurie McCann said, “This is very scary for the future. These retirees have relied on this coverage, and they’re not in a position to get other employment or other insurance. They’re also generally not in a position to alter their savings strategies for retirement.”
Well Ms McCann, I know your job probably isn’t to monitor the ethics of those folks that write your paycheck, but I just wonder how your statements about others treatment of group benefit programs would stack up in an analysis of AARP’s life insurance program. Underwritten by New York Life, I think it would be a monstrous understatement to say “This is very scary for the future….these retirees have relied on this coverage, etc.”
Just a quick overview of AARP’s New York Life portfolio is enough to give any independent agent who is current on their ethics for elder sales continuing education a real nauseous feeling.
Their TERM INSURANCE is overpriced, the non guaranteed rates (”Premiums are not guaranteed. However, your rates may change only if they are changed for all others in the same class of insureds under this group policy. For example, a class of insureds is a group of people with the same issue age and gender.”) WILL go up every 5 years unless they raise them sooner, and the product ENDS at age 80 when most of us are just going to be reaching that age when we should be glad we have the insurance. AARP’s beginning rate for me at age 55 for $50,000 of term insurance is $74.58 a month. Remember, that goes up every 5 years until you yell Uncle and even that is . If I bought the insurance on the open market I could get $50,000 with a premium GUARANTEED level for 20 years for under $40 a month. I could get it GUARANTEED for life for $74.35 per month.
Of course they do offer you a chance to convert it to their whole life plan. If you can afford to do that, you should consider self insuring. Their whole life product guarantees that you will pay to age 95. It doesn’t guarantee what the rates are, but compared to what’s available from other companies, it starts too high. At my age 55 their permanent plan is $187.67 per month for $50,000. If I had one of their term plans and converted it to a permanent plan at age 75 it would cost me $462.58 a month based on their current NON GUARANTEED (”Premiums are not guaranteed. However, your rates may change only if they are changed for all others in the same class of insureds under this group policy. For example, a class of insureds is a group of people with the same issue age and gender.”) rates. Remember, I could have $50,000 of a GUARANTEED no lapse universal life for $74.35 a month.
Bottom line. This is no small deal. AARP claims to be the biggest advocacy group for us seniors in the country and they are knowingly ripping us off. This isn’t just an oversight. They’ve had this far too cozy relationship with New York Life forever. And in today’s bulletin I see that there is now an AARP retirement annuity offered through New York Life. Like we have anything left to put into a retirement program after buying their life insurance?
July 7th, 2008
If it wasn’t just plain sick the way AARP treats it’s members, it might be laughable. AARP holds itself out as an advocate for just about everything for us seniors. In fact they are so excited about being able to be an advocate for you that they start working on you to join well before you reach your golden years (over 50).
Just when you think they are getting serious about offering valuable advice like their “No-guff guide to rude relatives” in their latest magazine issue, you open the magazine and run smack into a full page ad for their group life insurance. I’ve attached a copy so we can all be on the same page. Read the disclaimer right below their quotes and tell me about the warm fuzzy feeling it gives you.
aarp-rip-off
Let’s cut right to the chase. Unless you have some reason to want too little life insurance for too much money, some comparison shopping is in line. First, let’s come to grips with the fact that $10,000 or $20,000 worth of life insurance between ages 45 and 60 is simply unnecessary when we’re talking about term insurance. That is burial insurance amounts and people shouldn’t buy burial insurance with term unless they are planning to die fairly soon. So, while still not likely to be enough, we’ll do our comparison at $50,000.
AARP’s term insurance, underwritten by New York Life (they should be ashamed too) is a 5 year renewable term. That means that every 5 years the price is going to go up and while the first few times might not be too bad, when you get to 65 or 70, the prices will likely lead to you dropping the coverage. Even if you hang in there with the rapidly rising prices, the insurance ends at age 80. Of course we all know hardly anyone lives past 80, so that’s hardly even worth fussing about.
I will compare their products with the best standard rate (most will qualify for better than standard) guaranteed level 30 year term available. The prices I quote will also contain a conversion option that will allow coverage to go on to age 100 if you want. The conversion will be at a higher price, but remember that you don’t have that option with AARP and your premium will be level for 20 years, unlike AARP.
So, here are the $50,000 quotes (monthly rates) from their attached ad.
Age 45-49 female $28.67, male $41.08
Age 50-54 female $36.29, male $51.04
Age 55-59 female $55.92, male $74.58
Compared to the best standard rates on the market.
Age 49 female $17.94, male $23.76
Age 54 female $22.71, male $31.89
Age 59 female $34.91, male $52.02
So, what’s the difference? Well, to get the better rates you have to take an exam. That’s at no cost to you and can be done at your home or workplace. And remember, I quoted standard rates. Those quotes will generally be high for the age groups that AARP advertised. A person in good, not perfect but good, health could easily be looking at rates half of what I quoted.
Bottom line. If AARP really cared about their members they would be writing articles about how to get the best life insurance rates possible instead of telling you about rude relatives.
June 9th, 2008
