There are life insurance products on the market that are guarantee issue. This means that it is guaranteed that you will be able to get covered by the plan even with health concerns. This is obviously a good option for clients who have serious health issues and can’t qualify for a regular life insurance plan that is fully underwritten. If you can qualify for an underwritten product, it will allow you to buy larger amounts of insurance and it will be much more cost effective. With a guaranteed issue product you can expect to pay at least twice as much and be limited to purchasing about 50,000 in death benefit. AARP offers a very popular guaranteed issue program. Often times through group insurance you can get a larger amount of guarantee issue, but 50,000 is usually about the max in the individual market. The caveat to most guarantee issue life insurance policies, is that they may not pay a death benefit in the first two or three years. If something were to happen to the insured in the first couple years, the beneficiary would get all premiums paid in, plus interest. While that is better than a sharp stick in the eye, it obviously provides no leverage in the first couple years.
Typically, we will work with clients on their specific underwriting situation and help them find the carrier (s) that will underwrite there issue the most favorably. If they can qualify for the fully underwritten product, than we will go with that route. If not, then we will go to guaranteed issue products and figure out the best fit. Some clients don’t want to take the medical exam and we have options for that too. This is more expensive than underwritten, but it is available.
The AARP has partnered with New York Life Insurance Company to create the “AARP Life Insurance Program”. Basically it is a program designed for members of AARP to get either permanent life insurance, term life insurance, or guaranteed issue life insurance. It appears as if the permanent insurance coverage is whole life insurance and it can be attained from age 50-80. The term life insurance requires no medical exam and only three medical questions to be approved for coverage and ages 50-74 can apply for this coverage. The guaranteed issue life insurance is exactly as it sounds. There is no medical exam or medical questions to be answered and it is for members 50-80. The guarantee issue pays limited benefits for the first two years except for death by an accident.
AARP has done well with this program as it has partnered with one of the premium life insurance companies with huge name brand recognition. While New York Life and AARP are great brand names, it is important to know that you often overpay for brand names. It may be that the rate for your product through the program can be beat in the private market. I suggest to clients that are interested in this program to let us run independent quotes for comparison. I compare the AARP Life Insurance Program to how you might overpay for a pair of expensive brand name jeans. You can get great jeans that don’t have the label of the fancy pair, but that serve you perfectly well. Just make sure you check out your options.
