What AARP whole life insurance is

AARP whole life insurance is a permanent life insurance product sold through AARP to people age 50 and older. Unlike term life insurance, which covers you for a set number of years, whole life covers you for your entire life as long as you pay the premiums. The policy builds a cash value over time — money you can borrow against or withdraw if you need it.

AARP does not underwrite or sell the insurance itself. The actual policy is issued by New York Life Insurance Company. AARP negotiates rates for its members and handles marketing, but New York Life is the company that holds your policy and pays claims. This matters because your contract is with New York Life, not AARP.

Whole life premiums are much higher than term life premiums for the same death benefit, because the insurance company knows it will eventually pay out — you are covered for life, not just 10 or 20 years. Part of what you pay goes into a cash value account that grows at a rate set by the insurance company.

Key Takeaways

  • AARP whole life insurance is issued by New York Life and covers you for your entire life, not a set term, as long as premiums are paid.
  • The policy builds cash value that you can borrow against, but premiums are significantly higher than term life insurance for the same death benefit.
  • You must be at least age 50 to purchase AARP whole life, and underwriting requirements vary depending on the death benefit amount you request.
  • The policy can be cancelled at any time, and you can withdraw or borrow from the cash value, though doing so reduces the death benefit paid to beneficiaries.
  • AARP whole life is one option among many; term life, universal life, and other products may cost less or better match your actual coverage needs.

Age and underwriting requirements

You must be at least age 50 to purchase AARP whole life insurance. There is no upper age limit stated by AARP, though New York Life will evaluate your health and medical history regardless of age.

Underwriting means the insurance company reviews your health to decide whether to issue the policy and at what rate. For smaller death benefits — typically $25,000 or less — New York Life may issue the policy with no medical exam, based only on health questions you answer on the process. For larger death benefits, a medical exam is usually required. The exam is free and typically happens at your home or a nearby location.

If you have a serious health condition, the company may decline to issue the policy, offer it at a higher rate, or exclude certain causes of death from coverage. You will learn the decision before your policy takes effect, and you have a window to cancel if you do not accept the terms.

How much the premiums cost

AARP whole life premiums depend on your age, health, gender, the death benefit amount you choose, and the specific policy design. A person age 60 in good health might pay $50 to $100 per month for a $50,000 death benefit, but someone age 75 or with health issues could pay significantly more for the same benefit. There is no single price to quote.

The premium you lock in at the time you purchase the policy stays the same for life — it does not increase as you age. This is different from some other insurance products where premiums rise over time. However, the trade-off is that whole life premiums are much higher upfront than term life premiums for the same death benefit.

You can request a quote directly from AARP by phone or through their website. The quote will be based on your age, health answers, and the death benefit amount you want. You are not obligated to purchase after receiving a quote.

Cash value and how to use it

As you pay premiums, part of the money goes into a cash value account within the policy. This account grows at a rate determined by New York Life, typically between 2 and 4 percent per year, though the rate can vary. The cash value is not the same as your death benefit — it is a separate pool of money that belongs to you.

You can borrow against the cash value while the policy is in force. The loan is not taxed as income, and you do not have to repay it on a set schedule — the insurance company straightforward deducts any unpaid loan balance from the death benefit when you die. However, the loan accrues interest, and if the loan balance grows larger than the cash value, the policy can lapse.

You can also withdraw cash value directly, though withdrawals above the amount you have paid in premiums are taxed as income. Withdrawals reduce the cash value and the death benefit, so this option is usually a last resort if you need money.

If you cancel the policy, you receive the cash value minus any outstanding loans. In the early years, the cash value is usually much less than the premiums you have paid, because the insurance company deducts administrative costs and commissions upfront. It typically takes 10 to 15 years for the cash value to equal what you have paid in premiums.

When whole life makes sense and when it does not

Whole life insurance is most useful if you have dependents who will need money after you die, you expect to live a long time, and you want a policy that never expires. It is also an option if you have health issues that make term life unaffordable or unavailable — whole life premiums are locked in, so your health does not affect the rate later.

Whole life is usually not the best choice if you need coverage for a specific period — such as until your children finish college or your mortgage is paid off. In those cases, term life insurance costs far less and provides the same death benefit. Whole life is also not a good investment vehicle; the cash value growth is modest, and you pay high premiums for the privilege.

If you are trying to decide between whole life and term life, ask yourself: Do I need coverage for my entire life, or just the next 10, 20, or 30 years? If the answer is a specific timeframe, term life is almost always cheaper. If you genuinely need lifetime coverage and can afford the higher premiums, whole life is worth considering.

How to get a quote and what happens next

You can request a quote from AARP by calling 1-800-624-2777 or visiting the AARP website. You will need to provide your age, gender, health information, and the death benefit amount you are interested in. The quote is free and does not obligate you to purchase.

If you decide to move forward, you will complete a formal process. For smaller death benefits, this is usually just a written form with health questions. For larger benefits, New York Life will schedule a medical exam at no cost to you. The exam typically takes 15 to 30 minutes and includes basic measurements and blood work.

After the exam, New York Life reviews your process and medical information. This process usually takes two to four weeks. You will receive a decision letter stating whether the policy is approved, approved at a different rate, or declined. If approved, your coverage begins on the date the policy is issued, and you will receive your policy document by mail.

Comparing AARP whole life to other options

AARP whole life is one of several permanent insurance options. Universal life insurance is similar but offers more flexibility — you can adjust your premiums and death benefit over time, and the cash value growth is tied to market interest rates. Variable universal life lets you direct the cash value into investment accounts, with higher potential returns but also higher risk.

For most people, term life insurance is the most affordable option. A 20-year term policy for a 60-year-old might cost $30 to $50 per month for a $100,000 death benefit, compared to $150 to $250 per month for whole life with the same benefit. If you only need coverage for a defined period, term life is usually the better choice.

Some people also consider final expense insurance, which is a smaller whole life policy (typically $5,000 to $25,000) designed specifically to cover funeral and burial costs. These policies have lower premiums and faster underwriting than standard whole life, but the death benefit is much smaller.

Frequently Asked Questions

Can I cancel my AARP whole life policy anytime?

Yes. You can cancel at any time by contacting New York Life. If you cancel, you will receive the cash value of the policy minus any outstanding loans. In the first few years, this amount is usually much less than the premiums you have paid. After 10 to 15 years, the cash value typically equals or exceeds your total premiums.

What happens if I stop paying premiums?

If you miss a premium payment, New York Life will send you a notice. You usually have a grace period of 30 to 31 days to pay. If you do not pay within that window, the policy lapses and coverage ends. However, if your policy has built up cash value, you may be able to use it to keep the policy in force automatically — this is called automatic premium loan.

Is the death benefit taxed?

No. The death benefit paid to your beneficiaries is not subject to federal income tax. However, if your total estate is very large, the death benefit may be subject to federal estate tax — this is a separate issue from income tax and applies only to estates over a certain threshold (currently $13.61 million for 2024, though this changes yearly).

Can I get AARP whole life if I have a pre-existing health condition?

Possibly. New York Life evaluates each process individually. Some conditions may result in a higher premium, a waiting period before certain causes of death are covered, or a decline. The only way to know is to explore. You are not obligated to accept the offer if the terms are not acceptable to you.

How is AARP whole life different from buying directly from New York Life?

AARP negotiates rates and underwriting terms with New York Life on behalf of its members. The policy itself is the same — it is issued by New York Life and your contract is with them. The main difference is that AARP members may receive lower premiums or more favorable underwriting than someone buying directly. You do not have to be an AARP member to purchase, but membership may offer better rates.