I have wished, for the dozen or so years that I have been writing about AARP/New York Life, that something would change in favor of the senior citizens that AARP claims to be the greatest advocate for. I have wished that New York Life, an otherwise respectable life insurance company, would step away from this outrageous partnership. As an agent I take continuing education every two years. For more than the dozen years I referred to, ethics and ethical treatment of seniors have been required courses. But the NAIC, the same governing authority that requires me to keep ethics at the forefront of my business, allows New York Life and AARP to dominate the senior market with some of the most unethical practices ever inflicted on seniors. To be blunt, AARP/New York Life products suck.
AARP offers term life insurance, a five year term where the price goes up every year with a 5 or a 0 in it. In other words if you buy a term life insurance policy at age 64, the price will go up at age 65. Are you having fun yet. At age 75 you can no longer renew your term life insurance and if you want to continue to have coverage you have to convert to a whole life policy. So let me bring that together with real numbers. At age 63, $50,000 of term insurance would cost $109 a month through AARP, but at age 65 it would increase to $144 a month. By age 70 it would have increase to $202 a month, but remember at age 75 you can no longer get term insurance so you have to convert to whole life. That same $50,000 would more than double with a premium to age 100 with anew price of $468 a month. And to top off the outrageous prices let me show you why AARP life insurance sucks.
To make this fair I’m not even going to use the best available rates. All of my quotes will be at standard rates, easily attained by most people at the ages I’m quoting. So let’s just skip the 5 year term and at age 63 you can get a 15 year guaranteed level premium term for $50,000 at a price of $61 a month. That takes you from AARP’s $109 a month through the rate change to $144 a month and through the age 70 rate change to $202 a month. So, that 12 year stretch from 63 to 75 would total $23,376 with AARP and that compares to a price of $8,784 through a traditional company. That right there is an unbelievable rip off of seniors and the fact that they cut off term insurance at age 75, right when the bulk of people are nearing their mortality is criminal. At age 63 you could actually get a 20 year term that would take you to age 83 for just $83 a month.
So at age 75 they have to go to whole life with AARP at $468 a month and that goes to age 100. For the comparison purpose let’s assume the insured lives to age 85. They would have paid AARP $46,800 for the whole life and with the term insurance the total would be $70,176, almost 1 1/2 times the death benefit. With traditional life insurance the permanent policy would have cost $29,400 for a total with the term life insurance of $38,184. No fuzzy math here. For those of you familiar with adverse selection, this is reverse adverse selection, a life insurance rip off. One of these is a good deal and the other isn’t.
Bottom line. This has been my source of soap box drama for some time. How can you tackle a brand name of almost unequaled proportions? The only thing a barely branded guy like me can do is to just keep hitting them and hoping that discerning life insurance purchasers will read before buying. If you have questions or would like a quote comparison on your life insurance, call or email me directly. My name is Ed Hinerman. Let’s talk.