AARP life insurance simply much more expensive

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I first posted about AARP’s high priced life insurance program two years ago. Has there been any reform to that profit mill taking advantage of seniors?  No.  AARP member options are only among the most expensive.

AARP now promotes “The AARP Life Insurance From New York Life” on a separate website.  It’s “exclusively for AARP members.” Their mission statement: “To help make it simpler for AARP members to apply for affordable life insurance protection, AARP selected New York Life to provide a life insurance program just for its members.”  (italics mine)

simple = more expensive

The AARP New York Life insurance web page has three choices, all of them no physical exam, i.e. paramed exam.  Simple.  Higher priced simplicity.

Are you in good, average or even slightly below average health?  Focus on fully underwritten life insurance requiring a paramed exam. It’s free, at home or wherever you choose at your convenience, takes about 20 minutes and saves you a considerable amount of money.

Best value in rapidly descending order:

  1. full underwriting:      paramed exam
  2. simplified issue:      no paramed exam
  3. guaranteed issue:   no health questions

Unsure if qualified for fully underwritten coverage?  Find out. You’d be surprised. Type 2 diabetics with good control can get standard rates. Always check first before applying. Even if a simplified issue product is advisable, shop around for the lowest prices. There are much better deals than those offered through AARP.

Doubly more expensive permanent

For example, $25,000 permanent coverage female 66 years old, monthly premiums

$70.00     Transamerica at preferred non-tobacco, GUL*, age 121
$74.00     Transamerica at standard non-tobacco, GUL*, age 121
$127.52    AARP Life Insurance program from New York Life, age 121

Why would an organization, supposedly acting in its members best interest, not promote fully underwritten life insurance options?  How about: ease of issue, faster turn around, lower labor costs, higher premiums, higher profits.

Term:  At your age?

Term is to replace lost income or to cover a debt like a mortgage. If there is a shorter duration need, term life insurance might be suitable, but generally retirees should get permanent life insurance for estate planning and final expenses, not term.  Outlive the term period, and there’s zero benefit.  If for some reason term is needed, get fully underwritten coverage. No physical exam term is much more expensive. The AARP program term rates are five-year age bands: e.g., 65-69, 70-74.  Tiered rate term insurance is an inferior product and much more expensive. Level premium term is the best. The rate is the same for the entire term period.

 

 

Please contact me for a free and confidential quote.  Many more options available.

sean's profile picLicensed Agent:  Sean Drummey
phone: (910) 328-0447
email: spdrummey@gmail.com

 

* Guaranteed Universal Life (GUL), also called no-lapse Guaranteed Universal Life, look for lifetime no-lapse guarantee level premium to age 120 or age 121; three major life carriers have GUL products starting at $25,000.

Product and carrier details:
Transamerica Life Insurance Company: “TransACE”
Genworth Life Insurance Company: “Colony Term”

quotes 6/14/2013, rates subject to change

Mail offers from United of Omaha for whole life insurance: why you should not return

Like everyone else I get mail pitching life insurance. United of Omaha last week mailed me an offer for “Easy Way” whole life insurance. Coverage is up to $10,000. No health exams.  Guaranteed acceptance. It took me a few minutes to find the key term tucked into the brochure as the last of 10 benefits. That’s the place where they got around to mentioning it was a graded death benefit.

 

During the first two policy years, if you die from natural causes (and cause other then accidental), your beneficiaries will received all premiums paid, plus 10%.  After two years, the full benefit is paid for death due to all causes.

 

Note: there is no life insurance benefit for 2 years, only money back plus interest, unless it’s an accidental death.

Easy acceptance is not the best life insurance. It’s the most expensive. Find your best option:

  • 1st choice:  Life insurance that requires a blood test.   Saves lots of money.  Called fully underwritten life insurance
  • 2nd choice:  Full and immediate benefit life insurance called simplified issue whole life
  • 3rd and last choice:  graded benefit life insurance, guaranteed issue

 

Guaranteed issue is only suitable when in extremely poor health, terminally ill or uninsurable because of a condition like AIDS.

 

Check first to see if you qualify for better coverage. Even if guaranteed issue is the only option, shop for the best premium.  There are many companies that offer graded benefit coverage besides United of Omaha.

 

Please contact me for a free and confidential quote.

sean's profile pic
Licensed Agent:  Sean Drummey
phone:  (910) 328-0447
email:    spdrummey@gmail.com

 

 

 

Carrier:
United of Omaha Life Insurance Company
a Mutual of Omaha Company

 

Life insurance after a major health problem: Modified Whole Life

 

Final Expense Options
Individuals, mostly seniors, looking for final expense coverage have four choices.  Their desirability is in descending order:

  1. fully underwritten Guaranteed Universal Life (GUL)
  2. simplified issue whole life
  3. modified benefit whole life
  4. guaranteed issue whole life,  also called graded death benefit whole life

Regrettably, profit and volume driven marketers, including AARP, not acting in their client’s best interest, skip over option #1 to concentrate on the easier to write and faster to place options #2, #3 and #4.

Look for
Option # 1, Guaranteed Universal Life with North American starting at $25,000 in coverage is very cost effective coverage.  Full and immediate benefit. Fully underwritten, it requires a blood tests and carriers usually review 5 years of medical records.   Applications take on average 6 weeks and require from the agent and brokerage good old fashioned time and expense, and have a lower placement ratio.  That’s why certain marketing organizations, including direct mail, phone and mail solicitations, don’t want to get bogged down doing them, even though it’s in the client’s best interest.

Plan B
Option #2, Simplified Issue Whole Life, is full and immediate benefit, comes into play for affordability, smaller policies $3,000 to $8,000.  Also the underwriting is less strict, no blood test or medical records, usually only MIB * check and prescription drug check, and helps with coverage if a serious condition occurred two or more years ago.   Remember a $25,000 Guaranteed Universal Life cost about as much as a $10,000 whole life, so make sure to consider option # 1 before settling on option # 2.  See here ages 60 to 69 whole life quotes.  See here ages 70 to 70 whole life quotes.

Option #3   Suitable for those who have had a major health problem but having occurred  over two years ago.

Option # 4    No health questions.  Basically, all one needs is be cognitively and physically able to sign the application.

Modified Benefit Whole Life
The beneficiary receives a percentage of the death benefit in the first few coverage years.  The percentage rises and generally by the 4th year there is a full benefit.


Guaranteed Issue Whole Life
  also called  Graded Benefit Whole Life
No health questions.  Coverage is characterized by a waiting period for the full life insurance benefit.   The waiting period is typically 2 or 3 years.  If the insured dies during this waiting period, the beneficiary receives a return of premium plus interest, typically 5% or 10%.  After the waiting period, it’s the full death benefit.   The application question are limited, and coverage is not available only if the individual has a terminal condition or bedridden.

This doesn’t sounds bad, if you’ve had recently something like cancer or a heart attack and really need coverage. What’s the catch?  Well, Modified Whole Life is relatively expensive.  One of the best ways to judge this coverage is to divide premiums into the death benefit to see at what point cumulative premiums exceeds death benefit.  For example with Liberty Bankers Life a 71 year old female.

$99.88 monthly for $10,000  Face Amount  – Modified Whole Life

Years 1 – 3  benefit equals return of premium plus 10%
Year 4  death benefit 100%
Year 5  death benefit 105%
Year 6  and thereafter 110% benefit

In this example, Year 6 and thereafter a 110% of face amount is an $11,000 death benefit.    Annual premium is $1,198.56   ($99.88 x 12)

$11,000 / $1,198.55 =  9.2 years.     Thus, cumulative premiums exceed the death benefit after a little over 9 years.

Whether or not this is a good value depends on the individual’s health condition and life expectancy.  In the example above: will this 71 year old live into her 80’s?  If she does, the owner ends up paying more in premiums than receiving in benefit.

 

Please contact me for a free and confidential quote.

Licensed agent: Sean Drummey
phone: (910) 328-0447
Email: spdrummey@gmail.com

 

Basic Types of Policies: NY Dept. of Financial Services

(* MIB  Medical Information Board,  checks prior life insurance applications)

 

Revised: 8/22/14

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Mail offers for child life insurance are second class

I got a offer for child life insurance in the mail today.  Whole Life. Low rates. Cash Value. Coverage for $5,000 to $25,000.  No medical exam.  My advice is to throw these offers away.

Why?  Because they are level benefit whole life coverage.  The death benefit always remains the same.  A $25,000 policy will always be a flat $25,000: 10 years, 20, 30, 70 years from now.  You want whole life coverage with an increasing face amount as a hedge against inflation.  This is called “par” or participating whole life.  It pays dividends. You get to share in the profits of the life insurance company, so it builds more cash value than “non par”, non participating, whole life that are offered by direct mail.

Par whole life is also inexpensive. MassMutual have the best plans.  For example a $25,000  policy for a 1 year old boy is $14.09 a month, for a 10 year old girl it’s $15.09 a month.  Applications are a bit longer to fill out than mail offers, but it’s worth it.  There are no medical exams.

 

Image:  Wikimedia Commons

Guaranteed acceptance life insurance: your last choice

Don’t fall for mail order offers for guaranteed issue life insurance or guaranteed issue life insurance. Better options are out there. You can potentially save thousands on premium or get twice as much coverage with another carrier.

I received the other day a mail solicitation from United of Omaha Life Insurance Company for guaranteed acceptance life insurance.  This is also called guaranteed issue life insurance or graded benefit life insurance.  They say “You Cannot Be Turned Down.”  They offered coverage choices from $10,000 to $3,000.

Wait. This is last resort life insurance.  Don’t even consider this until you’re sure you can’t get something better. Just to give you an idea, a 65 year old woman, preferred non smoker rate, can get $25,000 of guaranteed universal life, fixed rate to age 110, with Genworth for less than $10,000 whole life with a 2 year waiting period with United of Omaha for graded benefit whole life insurance.

Take these steps when shopping for a small final expense life insurance policy.

#1 Choice     For excellent, good, average, or even poor health

Fully underwritten life insurance.   Full and immediate benefit.  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, 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:     2 years after any major health problem, or with multiple serious health problems

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:    Major health problems but not terminal

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:     Terminal health, or nearly terminal health

Guaranteed Issue Life Insurance No medical questions.   Guaranteed approval.   2 or 3 year waiting period.  Most Expensive.

 

Please contact me for a free and confidential quote.

sean's profile picLicensed Agent:  Sean Drummey
phone:  (910) 328-0447
email:    spdrummey@gmail.com

 

AARP life insurance poor choices

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.

Continue reading “AARP life insurance poor choices”

Simplified Whole Life: Affordable Even in your 70’s

Cremation is inexpensive.  Prices vary but scattering one’s ashes might run in the $1,000 range. Simplified issue whole life insurance is also inexpensive.   A $3,000 in coverage for a female non tobacco is about $20 a month at 70 and $38 a month at 80.  Here are sample quotes those in their 60’s and in their 70’s.  Simplified means a only short questionnaire and no blood test.

If you haven’t had any really, really bad health problems, or they were over 2 years ago, you can qualify for simplified issue.  It’s full and immediate benefit life insurance, unlike some life insurance pitches you see on TV or get in the mail.   I recommend Liberty Bankers Life to my clients.  Good idea to get one of these while you’re fairly healthy and before hitting 80.