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
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
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