AARP Can Double Costs For Seniors

The L.A. Times is reporting that AARP products are not always the best deal for senior citizens. The American Association of Retired Persons is susceptible to a profit motive; $400 million – 40%, of their annual budget – is generated from “royalties and service provider relationship management fees” gleaned from products, such as Medigap insurance, sold to its 38 million members.

There is also a reason AARP’s Medigap policies — sold to Medicare recipients to cover expenses that the federal program doesn’t pick up — aren’t the cheapest, Sohn said. AARP is a national organization and wants to offer the same product to residents of every state. But providing health insurance is more costly in some states than in others. These products are regulated on a state-by-state basis, which makes operating in some places considerably more expensive than in others. Because the organization offers the same product everywhere at the same price, policyholders in low-cost states essentially subsidize those in high-cost states.

And with long-term-care insurance and term life insurance, AARP offers group plans that allow members to enroll at a reasonable price, even if they’re not in the best of health, Sohn said.

The flip side: People who are in great shape can find far less costly products. They’ll be required to get a physical exam to prove their good health, but it’s probably worth it. AARP life insurance policies can be more than twice the cost of policies you can find elsewhere, Tignanelli said.

The Association’s competitive price match policy does represent a good deal for seniors in the market for electronics or consumer goods.

Though AARP’s medical and financial products may cost more for some seniors, to others, they represent an otherwise unattainable deal. The only way to know for sure if you can get a better price is to shop around.

AARP not always best deal for seniors [L.A. Times]
(AP Photo/Wilfredo Lee)

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  1. eds70 says:

    As a senior, and longtime AARP member, I have carefully looked at all of the investment, health care, and insurance products they constantly promote. Auto and homeowners insurance is the only thing I have ever found a really good product, and a good value.

  2. Syrenia says:

    A few years back, my grandmother-in-law had some sort of cellular “emergency” plan that AARP had been promoting. It was something like $30/month and came with about 30 minutes. (This was at a time when I was getting about 200 minutes for the same cost.)

    I explained to her that any cell phone with power that was in range of a tower could reach 911, and that $30 for 30 minutes was a major rip-off.

    Then I set her up on an AT&T prepaid plan that cost her an average of $8 per month (assuming that she topped off the minimum amount every 90 days, as required).

    Heaven only knows what she paid for that AARP phone to begin with.

  3. Anonymous says:

    Any smart shopper knows it’s more than what you pay, it what’s you get for your money. And for some folks, AARP’s endorsed products and services may be the best value out there. Buyers should beware of comparing products just on cost and look at the details to understand what they may be getting or missing out on when buying health or financial products.

    Also, AARP doesn’t have stockholders, they have stakeholders and all of the organization’s revenues go into helping improve people’s lives as they age, whether through volunteer opportunities, consumer information and education, direct assistance or advocacy.

  4. Spooty says:

    @ShaarpTalker: You’re obviously an AARP troll, with the AARP in your name, and being a registered user since 2 minutes before your post. Nice attempt at PR spin, though….