In a previous post we made the case for why almost all seniors shouldn’t buy their life insurance from final expense or senior life insurance companies. Those are companies whose entire block of business is made up of small final expense and burial life insurance policies. The almost never require an exam and in a lot of cases the just issue policies because you send money, not asking any health questions at all. We know it all sounds so easy and at our ripe old ages, by golly, easy is worth something. But for 20 minutes more of your time let’s put a fence around how big a difference there really is.
We like to use AARP as an example when doing this comparison, partly because they are one of the most respected senior organizations and partly because when it comes to life insurance they don’t deserve that respect. The primary product they offer is a 5 year term policy, meaning that the price will go up every 5 years. What that means is that the price goes up at ages 55, 60, 65 and so on. At my age 60 the price is $108.25 per month. If I had bought it at age 59 it would have been $78 a month, but would have jumped when I turned 60. At age 65 it goes up to $143.96 per month, age 70 up to $207.25 per month. When you turn 75 there is no more term insurance. Funny how that works. About the time you might start thinking you need it.
So, let’s compare AARP to real life. Using me as an example and making myself is kind of poor health I can buy $50,000 of permanent insurance, a universal life no lapse guarantee, with a guaranteed level premium (forever) for $111.00 a month through North American Life. So, let’s say I live to age 80. I will have paid in $26,640 and my policy will policy will stay in force for as long as I need it by continuing to pay $111.00 per month.
But back to AARP where we know that by age 75 I will have paid $27,495 although that isn’t guaranteed. At age 75 I have to convert my AARP baggage to a whole life policy at $407 a month. So between the term and whole life I will have paid more than the death benefit, $51,715. The premium could theoretically remain level to age 100, but that isn’t guaranteed. Another 20 years of those premiums would be $97, 680. So if you happen to live close to a hundred you will have paid New York Life, with a big cut to AARP, a total nearly three times the death benefit.
So by age 100 I have unfortunately paid in about $53,000 to North American, but the price is guaranteed to remain level and ends at 100 and the death benefit goes on until you die. We are cautious about pointing fingers but shame on AARP. They rip older Americans off and claims their lobbying efforts are worth the price of supporting them. If you are over 50, 60 or 70 or even 80 and want to know what real life insurance can be purchased for, call or email us directly. We can help.
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