I’ve minced no words over the years about how bad the AARP/New York Life life insurance program is. It is so egregiously over priced and under guaranteed that I swear, if I got selling it to some elderly person in their home, I could be justifiably locked up. States everywhere are cracking down on the ethics of selling financial products to the elderly, yet they let AARP sleaze along under the radar molesting our seniors with their life insurance.
I have heard and read about the possibility that AARP has withheld payment of death benefits without justification and have never gone there because I just didn’t have any facts to work with. Yesterday I got a call from a woman in Florida who had read a post of mine on life insurance contestability. Her father died in April from lung cancer that was diagnosed just the month before. It was such a high stage and grade when they found it, there was simply no chance of survival.
Her father had purchased a $10,000 life insurance policy a year and 8 months prior to his death which meant that the death occurred during the two year contestability period. If death occurs during that two years the company, any company, is allowed to go back and investigate records to see if the insured died from something that was known to them but not included on the application. When she filed the claim they let her know what the process would entail and that no claim would be paid until the investigation was completed. She knew that her father had no previous knowledge of lung cancer or of any lung problems at all because she had been to virtually all of his doctor appointments with him for the last several years.
She called about 10 days ago to get an update and was told they had all the records and were reviewing them and that things should be settled shortly. Two days ago she called and was told that the company was going to return the premium plus interest and not the full death benefit. The claims person didn’t offer any explanation, but the only way that can be the answer is if they found out that the insured had knowledge of his lung cancer prior to applying. In that case it would be considered successfully contested and by law the company has to send back the premium plus interest.
It was at this point that she contacted me. She emailed me a copy of his policy and application and after reviewing everything it didn’t seem to me to be something that was contestable as long as the company didn’t have information that the daughter didn’t know about. My first thought was to refer her to the state insurance commission who I have no doubt would eventually get to the bottom of the problem and figure it out, but then I asked her if it would be ok if we conferenced in on the phone together with the AARP claims department, so she could let them know that as the beneficiary I was representing her in getting more information. I made no claim to be an attorney.
We got voice mail so she listened as I explained I was a life insurance agent who was representing her concerning the death claim on her father’s policy. It was a generous voice mail so I left all of the information including the fact that we had reviewed the application and policy and were not convinced that it was contestable and would they please call me the next day, today, and allow time for me to conference the beneficiary in again so we could hear why they thought it was successfully contested.
The funeral home that was holding the policy as collateral for the expenses got a call this morning saying that the policy would be paid in full. They didn’t call her and they didn’t call me. They just reversed course and agreed to pay the claim in full.
Bottom line. It makes me wonder if this isn’t a regular practice of AARP. For those who don’t know any better or don’t have as good a handle as his daughter did on his health, being told that the premium was being refunded with interest might fly. My sincere recommendation for those who have run into this same issue, even those who aren’t sure if the contestability was valid or not, is to call AARP/New York Life at 800-695-5165 and tell them that you want proof of successful contestability or you will go to the insurance commissioner and file a complaint. If you have any questions or think you may have been mistreated by AARP, call or email me directly. My name is Ed Hinerman. Let’s talk.
Ed,
I’m tired of your misinformation and half truths.
AARP/New York Life Program offers a range of policies types…all policies sold through AARP are GUARANTEED ISSUE. This means there is no health check and almost no qualification.
Every Guaranteed Issue Policy I have seen that is made available to seniors…with ANY company is a GRADED DEATH BENEFIT. The standard graded death benefit is a return of premiums for a death occurring during the first two years of the policy.
You always challenge people to post the “…industry standard illustration…” blah blah blah.
How about posting a copy of the policy for our review.
Don’t tell me about privacy…its entirely possible to anonymously post the base policy information without any personal information.
Oh…and for the record I am an Estate Planning attorney. I am not a licensed agent and do not sell insurance…but I frequently recommend the purchase of Whole Life insurance as part of complete financial and estate plan.
Try designing a NIMCRUT with term…or Universal Life. I understand how Life Insurance works. I have my JD, CLU, and ChFC. Term is right for some people in very limited situations.
You always say people won’t need life insurance their whole life…
You are always insuring your situation…either by self insurance or using an insurance company product.
As usual you will probably delete my post.
Rick,
If I ever deleted one of your comments I am so sorry. I really don’t mind getting ripped up a bit when I’m wrong, and I love it when I’m right.
You must be too young to be wallowing in AARP life insurance offers so let me help you out. They do have graded benefit, guaranteed issue whole life policies and you would be correct that in his case with one of those policies, return of the premium plus interest would be the correct outcome.
They also have a 5 year term insurance policy that is not a graded benefit and is not guaranteed issue. That would be what the deceased person I was speaking about in this post had. So, JD, CLU, and ChFC, wrong on the first count.
I do challenge people to post illustrations for comparisons. Blah, blah, blah? Would you rather we compare pictures of each other or perhaps weight each other’s acronyms and see who’s weighs the most. By the way for my readers who don’t know what a CLU is, it is Chartered Life Underwriter. Means Rick is supposed to know a little more about life insurance than I’m thinking he does.
Back on topic Rick. The only policy I have ever or will ever post on line is one of my own. There is no need in this case to post base policy information since AARP was wrong (and you too) and they paid the claim.
Apparently you only read enough of my blogs to decide that you don’t like me and you think you can tell who I am and what I do by occasionally stopping by. Rick, I am appreciative that you do read some, but if you don’t read the whole book, well, you missed part of the book.
I have never said that people won’t need life insurance their whole life. I may have said most and said in the context of assets outweighing the need to carry purchased insurance, so, JD, CLU, and ChFC, wrong again. My grand daughter has an RR after her name that you might want to look into. Reading Retention! It’s good stuff.
Since you follow my blog, please make sure you didn’t miss http://hinermangroup.com/blog/insurance/estate-tax-attorneys-and-financial-planners-are-stupid/. Wanna joust on that one?
I don’t think ANYONE should defend AARP’s New York Life Insurance…crap. The last call I made to get off all their mailing lists was the lst of March 2012. I was assured at the most 14 weeks to stop..usually about 4 weeks. Well here it is July and I keep getting New York Life Insurance…crap. Their car insurance screwed us. Their home insurance lied to us and said we couldn’t have lower premiums so after many years we quit AARP. Now who do I have to complain to to get them to leave US ALONE! New York Life sends stuff constantly with name and address all over the place..they are wearing out my shredder and I can’t take the chance of ID theft by just putting in the trash. I WOULD NEVER HAVE JOINED AARP IN THE FIRST PLACE HAD I KNOWN IT WOULD BE TO DEATH WE MAY PART…and from what I see, they are probably mailing to tombstones too!
Rick, I don’t care what kind of degrees you have. You are wrong. My best friends mother died last night. We called AARP today & were told that they may contest the payment of the death benefit (had this policy for 7 years) depending on what the medical records show. She had a history of stroke, high blood pressure but never, ever, a problem with her heart. She died unexpectedly of a heart attack. There is no reason to contest it, and my friend certainly didnt need to hear this less than 24 hours after her mother died in her home & she did CPR on her own mother. What kind of company would do that? Disgusting! And her premiums were ridiculous!! $45 a month for $25,000 policy. I understand a high premium due to her stroke history, but then to possibly not pay? Lets hope for their sake they do. I will make sure they do not get away with this! It will get very ugly for them…
Ed, I will be calling you depending on their decision. Probably after we start a lawsuit.
AARP NYL does prey on the elderly. My mother has been paying on a “whole life” policy for about 18 years. I estimated she has currently paid NYL about $6,300 for a $5,000 policy that only has a cash value of about $2,500 at this point. She originally purchased this policy for burial “as advertised”. What she didn’t understand was that this policy’s cash value has just disqualified her from receiving Medicaid which has been paying her assisted living bill. The only way she will requalify is to cash the policy ($2,500 surrender value) and spend down to get her resources below the $2,000 resource limit Medicaid has established (which by the way I think this limit has not been increased since the late 1980′s) As such she has paid $3,800 NYL and will still have nothing to defray her funeral costs as was her original intent.
Hi Ed,
Just curious if you’ve ever heard of NYL/AARP agreeing to pay out on a policy, then delaying the check? My stepfather dued 12/12, and we promptly filed the claim. We’re currently supporting my mother while we wait on the money to arrive. She finally called, and was told a check had been mailed on 1/15 and shd arrive in three days. Yet here we are on 1/28 without a check. Every time my mom calls, they say it will be here any day. When she mentions cutting a new check, they just tell her to give it time. They also claim it isn’t company policy to send checks FedEx or registered mail. Long story short: they didn’t deny her claim, yet we still have no money.
Thanks for any advice,
Jennifer
Jennifer,
You should call them back and when they give you the same answer, insist on speaking to a supervisor. When the supervisor tells you the same thing, tell them that you insist on speaking to an officer of the company. When they refuse that, insist that you talk to the supervisor’s supervisor. Tell them that you want to remain on the phone until the problem is solved and if at any point you are hung up on, let them know you are going to insurance commission, that you already have the complaint written up and will cc a copy of it to the President of NYL.
The answer to your question is yes, they will slow pay. They did to my mother’s estate and I was able to make them move, and fast, using the approach above. Sorry for you loss. Let me know if I can be of further assistance.
On December 21, 2013, my brother died in a house fire of smoke inhalation. He had a small AARP life insurance policy to use for his burial. He died a month and a half before the two year limit. I notified AARP of his death along with supplying death certificate, form with his family doctor listed and waited for them to settle. As of today, February 26, 2013, they have yet to settle because they didn’t have enough medical information. The doctor sent the info and because my brother didn’t visit the doctor regularly they have not paid the claim. I told them he lived in a very rural area with one doctor and that was it for information. If he had no medical problem he did not go to the doctor. I was told they would decide if they would pay and how much and would be back in touch. What now??? When the coroner ruled it an accidental death how can the insurance company argue the point???
A friend of mine just lost her her mother. Her mother had AARP Term life $14,000. She had the insurance for 11 months. She was diagnosed and died with cancer all in one week. Nothing re-exisisting related to the cancer. AARP offered to reimburse premiums. The only time constaint I see on this policy is suicide in the first two years. There was no other insurance. The funeral home actually had to send my friend home with her mother’s cloths until she could come up with some money for the funeral. Now she owes alot of people money. What can I do to help her collect on this policy. Thank you.
DO NOT USE AARP INS MY HUSBAND PASSED IN APR II HAD BEEN PAYEN HIS POLICY FOR 6 YRS IN HIS LASTS MOS OF LIVING AARP CANCEL HIS POLICY I HAD TO SALE MY HOUSE TO BURY HIM I COULD HAVE PUT MY MONEY IN A CAN
aarp plays games lies wont give a straight answer to any questions always will call back, i am now working with a lawyer, am going to make a call to the insurance commsion of ohio to see what they say. I have had it with them the more i look into them the the more i think they are not a company to do business with.
death within the contestable 2 years issue.
My mom passes away last may of 2012 and now, a year later, they just settled with a letter. We were waiting a whole year just to get her a tombstone with such payout but nyl made us waited. The letter said that upon signing up, her agent marked No on the part where it ask if she had ever gone to a hospital within the last 2 years. Her medical record showed that she did and was diagnose with a different disease than the one she died from. She did not get an exam from nyl when she applied either. They said they are going to pay back her premium plus interest and that was it. She had whole life and paying $75 a month for a $25,000 policy. They say if I am going to contest this, I have 30 days. I do not know what to do. help?