AARP Life Insurance Review
Our expert take on AARP life insurance
AARP offers term life, whole life and guaranteed acceptance life insurance from New York Life. J.D. Power rated New York Life above average for customer satisfaction for individual life insurance—ranking it eighth out of 23 insurers—and our analysis places it among the best whole life insurance companies.
Only members are eligible for AARP life insurance, but you can sign up for membership and apply for insurance simultaneously on the AARP website. The membership fee starts at $20 per year. Life insurance is available to AARP members at least 50 years old and their spouses or partners who are at least age 45.
There’s no life insurance medical exam for AARP policies, but for some policies you must answer a series of health-related questions, such as whether you’ve been diagnosed with cancer or a heart condition. New York Life will likely gather additional information about you from your healthcare providers, a prescription-drug database and other sources.
Coverage limits for AARP life insurance are low compared to many other life insurance options—$150,000 for term coverage and $100,000 for whole life. You can contact New York Life if you’re looking for higher coverage amounts, but in that case you should shop around more broadly. AARP policies don’t offer many riders.
AARP’s whole life and guaranteed acceptance rates won’t increase over time, like similar policies from other companies. Our analysis of guaranteed issue rates found that AARP’s rates are below average.
Its term life rates, however, rise every five years. AARP bases term rates on five-year age bands—such as 60 to 64 and 65 to 69—with your initial premium determined by how old you are when the policy is issued. As you get older and move into subsequent age bands, your cost increases, based on rates set at that time. The last age band is 75 to 79 years old and coverage ends at age 80 unless you convert to a whole life policy via AARP.
We generally don’t advise buying a term life policy for which future rates are unknown. Typical term life insurance policies have a level term period, such as 20 years, during which your rates are locked in, so you can avoid surprises.
AARP insurance products offered
AARP sells three types of insurance: term life, whole life and guaranteed acceptance.
Term life insurance
AARP sells term life coverage from $10,000 to $150,000 to members ages 50 to 74 and their spouses and partners ages 45 to 74. You can apply online in most states. There’s no medical exam—you only answer a series of health questions.
While most term life insurance policies have a level premium, AARP prices its term life policies based on five-year age bands, such as 60 to 64 and 65 to 69. Your initial premium is based on your age when you buy your policy. As you get older, your rates increase as you enter subsequent five-year bands. However, the AARP site doesn’t state how much your rates will increase with each band.
You can exchange a term life policy for a whole life policy any time before coverage ends at age 80—without having to undergo a medical exam or answer health questions. Your new rates will be based on your age.
Whole life insurance
AARP also markets whole life insurance from New York Life. While AARP calls it permanent life insurance on its website, it is a simplified issue whole life insurance policy that doesn’t require a medical exam.
These policies have a savings feature, called cash value. The life insurance cash value grows tax-deferred, and you can borrow or withdraw a portion of it for any reason. However, money you take from the cash value reduces the death benefit if it’s not paid back.
AARP members between ages 50 and 80 and their spouses or partners ages 45 to 80 can apply online for up to $100,000 in whole life coverage. Rates stay fixed over time. When you turn 95 (or, in some cases, before), this coverage is considered paid up and you no longer have to pay premiums.
There’s also a version called permanent life insurance with living benefits, which gives you the option to receive half of your own death benefit while you’re living if you develop a chronic condition and can’t perform two of the six “activities of daily living,” such as toileting and dressing.
Guaranteed acceptance life insurance
Guaranteed acceptance, or guaranteed issue, life insurance is generally a whole life insurance policy offering lifetime coverage as long as your premiums are paid. You can apply online for a guaranteed acceptance policy without answering any health questions and without taking a medical exam—and you can’t be turned down. But guaranteed issue policies often have low limits and are generally considered the most expensive way to buy life insurance.
AARP members between ages 50 and 80, as well as spouses and partners ages 45 to 85, can buy up to $30,000 in guaranteed issue coverage. However, age limits and coverage amounts can vary by state.
This AARP policy has a graded death benefit. That means if you die during the first two years after buying the policy, your beneficiaries won’t get the death benefit in many cases. Instead, the company will refund your beneficiaries what you paid in premiums plus 10% interest if you die of a nonaccidental cause, such as illness. However, the policy will pay the full death benefit from day one in the case of an accidental death.
How much does AARP term insurance cost?
Because term life insurance policy rates from AARP increase every five years, and those increases are unknown, we were unable to do a cost comparison with other term life companies. How much you pay for AARP life insurance depends on the type of policy you choose, your age and other factors, such as your sex.
