Orlando, FL 4/9/2012 9:04:40 PM
News / Health & Wellness

AARP is not a life insurance company

Learn about AARP today!

What is an AARP? It is many things but not an insurance company, though it functions as a popular conduit for life insurance policies sold by insurers under the AARP life insurance brand. Confused?

 

AARP life insurance is just one of the products identified with the organization, which dates to 1958 when a retired educator in California, Ethel Andrus, started it. Actually that was the year Andrus founded AARP on the back of an organization she had founded in 1947, the National Retired Teachers Association. She started the NRTA as a vehicle for health insurance for aging former teachers and in 1958 decided to expand it beyond the teaching profession.

 

AARP stands for American Association of Retired Persons. However, in 1999 the initials AARP became the official name without standing for anything, because the organization was serving people as young as 50 years of age and a long ways from retirement. As a brand, AARP is widely recognized and has a membership of about 40 million Americans.

 

AARP life insurance is actually a product of the New York Life Insurance company. That’s because AARP is not legally organized as an insurance company and cannot itself underwrite policies. Because its membership is so large, however, AARP is attractive to New York Life. It is able to win discounts for its members from the insurance company, because of the high volume of policies involved. Both term and permanent insurance policies are offered.

 

For the same reason—volume—the insurance company cuts AARP members some slack in terms of eligibility. Whereas many insurance companies will ask numerous questions about existing and pre-existing health conditions before underwriting a policy, AARP life insurance policies can be approved with just relatively few questions being answered correctly. An estimated 80 percent of AARP life insurance applicants win approval.

 

However, these lower underwriting standards can mean an AARP-New York Life policy-holder gets less coverage for more cost than if he were to opt for a policy from a traditional underwriter. It is a trade-off, but the swap is deemed worth it for many senior citizens whose incomes and bank accounts are stretched; the popularity of the insurance program is evidence of its appeal.