Is AARP Term Life Insurance A Good Deal?

The answer is no, AARP Term Life insurance is not a good deal. All of the AARP term rates are overpriced compared to other term life insurance policies available to seniors.

AARP’s lowest price life insurance plan is a five year increasing premium term plan, meaning the rate that you pay increases at five year intervals and will terminate at age 80. 

Below are AARP’s $50,000- 5 year term monthly rates for men age 50 to 74: 

Issue Age     $50,000
50-54               $51.04
55-59               $74.58
60-64               $108.25
65-69               $143.96
70-74               $207.25

If you are age 54 when you purchase the plan above, you’ll pay $51.04 per month this year. Next year your rate will increase to $74.58 per month, and you will then pay this same rate until you turn age 60. At age 60, the rate you pay will then increase to $108.25 per month. At age 65, your rate will increase to $143.96 per month, and at age 70 it will increase to $207.25 per month. 

The AARP life insurance website does not show the age 75-79 monthly rates, but I suspect they are unaffordable for most people.   

As long as you are an AARP member, you only need to answer some medical questions to be able to qualify for the above rates.

Directly below are the best “no exam” $50,000- 10, 15, 20, 25, and 30 year guaranteed level term monthly rates available to men in average health (not good, but not bad) from ages 50 to 70:

Issue Age       10 Year          15 Year          20 Year          25 Year          30 Year
      50                  $23.03              $25.44             $29.59              $37.27               $51.11
      55                  $31.84               $34.30             $42.68             $56.04               n/a
      60                  $47.17               $56.38            $71.19               $85.66                n/a
      65                  $72.71               $90.20            $114.97                n/a                   n/a
      70                 $131.77              $155.14               n/a                    n/a                   n/a

All of the rates above are guaranteed to remain level for the time frame shown. The 10 year rate is guaranteed to remain level for 10 years, the 15 year rate is guaranteed to remain level for 15 years, the 20 year is guaranteed level for 20 years, and so on.

If you are age 50 and you purchase the 25 year rate above of $37.27 per month, this rate is guaranteed to remain level until you turn age 75. This 25 year guaranteed level rate will save you $23,923.80 over 25 years compared to paying the AARP rate from age 50 to 75. Those are huge savings!   

If your health is good, you may even qualify for better 10-30 year “no exam” rates than I’ve shown above. Furthermore, if your health is good and you’d be willing to have a free insurance exam, the rates could be significantly better than the 10-30 year rates I’ve shown above.

If your health is not good, then there is a good chance that you won’t qualify for either the AARP rates above or the 10-30 year guaranteed level rates above. If this were the case, there are many higher 10–30 year term rates available to you, but the AARP life insurance program would not be able to offer you other types of term life insurance.  

This makes me wonder if the AARP even knows how bad their term life insurance program is, or maybe it makes so much money for the AARP that they just don’t care. I guess what it comes down to is that they are a business, and like any business, their goal is to make money.   

According to Wikipedia, the AARP “was paid $652,000,000 in royalties from insurance companies that sold products referred by AARP.” That’s a LOT of money, and they certainly are not helping seniors save money on their term life insurance!

AARP does also offer Whole Life insurance to people who qualify, and they offer a guaranteed acceptance plan. I’ll review those products in a future blog.