At United Life Group we specialize in burial insurance. Oftentimes people purchasing a senior life policy are looking specifically for burial insurance or final expense insurance. Many of our clients begin their search for insurance after receiving a postcard in the mail or seeing a television commercial.
One of the most popular policies people ask us about is AARP’s life insurance policy through New York Life Insurance. People may purchase this policy because AARP is such a trusted household name. However, they may not fully understand the terms of the policy. Often the quoted rates are less expensive than other insurance companies, and people believe the lower rate is due to their AARP membership.
We’re not saying that AARP’s burial insurance policy is a bad policy. However, buyers should be aware of the type of coverage they’re purchasing to ensure that it meets their needs. Let’s take a look at the three main types of senior life insurance policies offered by New York Life Insurance through AARP.
The first type of policy AARP offers through New York Life Insurance is known as level benefit term life insurance. This is probably their most popular option due to the monthly premium. This policy is less expensive than similar policies offered by other insurance companies for the same benefit amount. Two advantages of this type of policy are that it has no waiting period and it requires no medical exam.
However, there is a catch to the low premium. The term life insurance policy terminates when the insured reaches age 80. This can be a big problem when the policy is purchased for burial insurance or final expense insurance purposes, as most Americans will live beyond the age of 80. If the insured outlives the policy, it can be very difficult to find another company that will offer a policy at an affordable premium.
The other negative to this particular policy is that the monthly premium is not fixed for the life of the policy. The monthly premium increases in five-year increments based on age. If the insured purchased the policy at age 47, the monthly premium would most likely be 4 to 5 times higher during the last 5 years of the policy. This is a problem for seniors, as it eliminates the predictability needed to plan a monthly budget. The monthly premium continues to rise as the insured ages and income becomes tighter, which makes it difficult to afford.
The second type of policy AARP offers through New York Life Insurance is known as guaranteed acceptance life insurance. This policy is positive in that the monthly premium will not go up based on age, and the policy does not terminate at a specific age. It’s also positive in that it requires no medical exam and does not ask any health questions.
The drawback to this particular policy is that it has a two- to three-year waiting period before the full death benefit kicks in. If the insured passes away during the waiting period, the insurance company would simply pay back the monthly premiums that have been paid in plus interest. The policy does not fully kick in until it’s been in place for the waiting period.
While this policy may be a great fit for some, there’s a good possibility that other A-rated companies would offer the same type of policy at a cheaper rate and without the waiting period. They may require a few health questions in order to approve the policy. However, most seniors we deal with are eligible.
The third type of policy AARP offers through New York Life Insurance is a permanent life insurance policy. This type of policy is very similar to the coverage that we offer through other A-rated insurance companies. The application is simple, with only a few health questions. No medical exam is required. The policy does not have a waiting period. The monthly premiums do not increase based on age, and the policy has no set termination age. The only negative we encounter with this particular policy is the monthly premium typically is higher than policies offered by other top-rated companies.
As you can see, AARP offers a variety of policies through New York Life Insurance. It’s important for people to do their research in order to ensure they fully understand the type of policy being purchased.
If the policy is being purchased as burial insurance or final expense insurance, the purchaser should consider the following three questions. First, does the policy have a waiting period, or is it fully activated from day one? Second, are the monthly premiums fixed for the life of the policy, or will they increase based on the insured’s age? Third, does the policy terminate at a certain age, or will it cover the insured for life?
By considering these three questions first and then comparing the rates from policy to policy, you can ensure you’re purchasing the best policy for your situation. If you select a policy based simply on the price of the policy at the time of purchase, you may end up with a policy that does not fully meet your needs.
If you would like to compare your quote from AARP New York Life Insurance with other top-rated companies, feel free to contact one of our senior life insurance specialists at 866-699-1884. We are licensed in most states and would be glad to assist in any way that we can.