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?