AARP life insurance choices are flawed and will tend to be more expensive. When you go to AARP’s website for life insurance, all the options say “No Physical Exam”. That’s more expensive coverage. Actually you want to take a “physical”, called a paramedical exam, even if you’re in your 70’s or 80’s. It’s free, they come to your door, takes about 20 minutes and can save you lots of money. Here’s the proper order of choices for life insurance as a senior.
#1 option
Fully underwritten life insurance. Applications require a blood test and short paramedical exam. Carriers generally request your medical records, all at no charge to you. This way life underwriters can gage your risk classification and make you an offer for coverage. This will save you lots money over a no physical exam policy. Genworth and North American offer lifetime guaranteed permanent coverage, called no lapse universal life, starting at a $25,000 benefit, Penn Mutual starts at $50,000, and multiple carriers, including Lincoln National and Aviva, offer coverage of $100,000 and more for seniors. Unless you’re in really, really poor health, try this first. There is no cost to you to apply, and the worst they can do is offer you a higher rate or turn you down.
Plan B
If your health is marginal, or you want a smaller less expensive policy than $25,000 with Genworth or North American, the next step is simplified issue whole life. It has a full and immediate benefit. There is no physical exam. There are many, many carriers that want your business. Comparison quote with an independent broker. AARP offers this type of product but ask yourself, since both AARP and New York Life draw a profit from the policy, won’t going to directly to one carrier be less expensive? Here are some final expense simplified issue whole life carriers:
- Liberty Bankers Life
- Settlers Life
- Transamerica
- Foresters
- Royal Neighbors
- Columbian Life
- Philadelphia American
- American Continental
Plan C
Graded Benefit Life Insurance If your health is very poor, coverage is offered with a 2 or 3 year waiting period for full benefit. More expensive
Plan D
Guaranteed Issue Life Insurance No medical questions. Guaranteed approval. 2 or 3 year waiting period. Most Expensive.
Plan F
Term Insurance. F means fail here. Avoid term life insurance. AARP offers term for seniors, and that makes their offerings fundamentally flawed. Term may be less expensive, but you may outlive your term, or the rate will go up. Better to lock in a lifetime rate with permanent coverage: guaranteed universal life or whole life.
The exception to this is Genworth’s term. It is a level premium for the entire term. It has an automatic fixed premium conversion to permanent option. For example, in your 60’s pick up a $50,000 term policy and later on after paying off your mortgage or whatever, convert $25,000 or more into a permanent universal life with a fixed rate to age 105.