AARP-Endorsed Insurance May Not Be So Cheap After All
A Bloomberg investigation found that some insurance policies with the AARP stamp of approval actually cost senior citizens more, and part of that money is getting kicked back to AARP in the form of "royalties" and "fees." Essentially, the AARP is taking a cut of your premium before passing it on to the insurer. These payments have gone from 11% of AARP's revenue in 1999, to 43% in 2007. One man found he was paying twice the average for his car insurance. When walked into the the group's brass and marbled headquarters, flashing his 20-year AARP card, to find out where his money was going, he was told the AARP doesn't give tours.
AARP’s Stealth Fees Often Sting Seniors With Costlier Insurance
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As a former AARP employee, I can attest to how wonderful the organization is. It provides invaluable assistance to seniors, including legislative and court advocacy. The cost of insurance may well be higher (I worked on other issues), but it should not deter people from supporting the AARP
As to the "marbled headquarters," AARP purchased the building 20 years ago to house its nearly 2000 employees. It's nice, but hardly a palace. Regardless, a strong looking building, which is near the Capitol, is needed to project an image of power and influence.
You should also know that all salary increases/bonuses at the AARP have been suspended--salaries that are already much lower than the private sector.
And really a tour of the AARP building? They could show him the cafeteria. Or the small offices and coffee maker. There's nothing to see there, but hard working people.
Insurance is not like buying milk people. It isn't "all the same" despite what you think. Also, the way a company rates a risk will result in some very substantial differences in premium. I always encourage people to shop around, but if you want to go with "Bill's 'surence Company" instead of a proven company be my guest.
So funny to me. I am an independent agent and you should see the look on people's faces when I tell them what the price is if they buy direct from the Hartford...there is usually a pause some anger and then the question...how big of a cut does AARP get???
@Anthony Rinaldi: Shill much for the industry? I understand you probably make a better income by getting people to pay as much as possible, but the idea that you have to overpay for coverage to make sure you get good coverage is BS, especially considering in most cases even the "proven company" will still try to screw you out of what you're owed once something happens. The whole thing is one big con game.
I actually do not get any incentive by increasing a policy's premium. I spend most of the day trying to reduce the premium my customer's pay. You also make the irronious assumption that all coverage is the same. If you buy a Lexus are you over paying becuase you could have bought a Toyota? After all it is a car that is made in the same factories? Oh wait, some people want more than just the minimum. You can remain in the childish mentality that all insurance is evil if you want, but don't call me a shill for understanding an industry you most likly know nothing about. Also, if you want better rates make yout government make liabity insurance optional like New Hampshire and you will see it plummit.
AARP=Evil money grubbers? Who would have thought?
Personally, I've found that the insurance companies that don't advertise on TV to be the best values. In fact, I see an inverse relation to the amount of ad time on TV and value (more TV ad time=less value). I shopped around a DOZEN car insurance companies the last time I switched and AAA was by far the cheapest (for me)--and I've never seen them advertise insurance on TV. At that time my wife was quitting work at an insurance company and AAA was actually cheaper than what we had been paying with her employee discount!
I'm not exactly sure how the reasoning worked on this anyway. Wait, if we sign up with this insurance company that has paid money to AARP to use their name, surely the insurance will be cheaper. Derr?
It would seem that if you were buying AARP branded insurance you were buying it for other reasons. For instance, the security you associate with the name AARP. There's no good reason to believe it would actually be cheaper.
Was he paying twice the average price he would have gotten for the same coverage with the same driving record? It only mentions a price for one other company so I would like to see a more detailed comparison between coverage and costs, specific to him. And, mathematically, if it's an average number, someone is paying higher rates.
Yeah, it's kind of shady AARP is getting kickbacks, but, do all insurance sellers get these?
luv the pic!
"Is this country kitchen buffet?"
For years I have called AARP the "old people's union". Now it appears that they are acting just like a union: telling the members how valuable the union is to them while they steal the members blind and take kickbacks!
Ha!
For those commenting on/questioning equal coverage, I think most consumerist readers know enough about this kind of thing to only compare apples to apples.
On the health insurance front, AARP recently agreed to lend its name to Pacificare/Secure Horizons...a really shitty company. According to the Secure Horizons reps, AARP was just lending its name to them and not actually paying claims for their members, and it looks to me that they entered into this deal in order to basically inspire more confidence in seniors when it comes to picking Secure Horizons as a Medicare HMO (which, again, is pretty terrible). I think AARP has been stepping into murky waters in the past few years.
My mother has AARP insurance from The Hartford, it is cheaper than every single other insurance company out there.
The one major problem I have with insurance companies, is that they base your cost on your credit. If you don't pay, they discontinue your insurance policy... why should your credit matter?
In some states, like Florida, if your policy is canceled, it is reported to the DMV and you must get insurance within a certain period or they suspend your driver license.
Just let this be a lesson, whenever you buy something with a third party's (i.e., other than the seller) name attached to it, you're probably paying a premium. Entities do not attach their names to products/services without something in return. The product provider might absorb part of the cost, but they probably won't pick up 100%.
Well, I have AARP/Hartford auto insurance. I switched from GEICO last year. For two vehicles, we were paying almost $1200 every six months. With AARP/Hartford, we pay $920 for a full year for the same coverage. I don't know if the premium will jump when we renew, but we always look at new coverage when it comes time to renew. Sometimes you can get a better deal from your existing insurance company without changing a thing.
Bottom line? Be an informed consumer and take nothing at face value.
AARP is one of the strongest lobby groups in the country. You think they fund such a huge organization through those $12.50/yr membership fees? I don't think so...
Just because it represents senior citizens doesn't mean it's innocuous.
Yes, AARP has two faces: the sweet elderly face that helps old people. I like that face.
The other face is the money-grubbing, DC-lobbying, scumbag political side. That face is just scary. Even by DC standards.
I wonder which one all the insurance cash goes toward...
AARP is just selling insurance from other companies. I didn't know this until my mother qualified for Medicare and looked at supplement policies. They don't have their own products.
My mother could get the exact same insurance significantly cheaper directly from the company which sells it through AARP. I can't remember which plan she finally got, but I know we had all the plans spread out. AARP tells you the company they're reselling insurance for.
All you're doing is paying for the television commercials and liberal lobbying organization if you buy from AARP.
In today's world, it's better to buy insurance from an insurance company at the best price, and spend the rest of your money as you see fit.
If AARP insurance is more expensive, don't buy it. Does not sound to hard to me. If people vote with their money then AARP will either compete or stop existing.
@Robert Poletto: Kudos to you. That is why I don't buy things where the company is the 'official supplier' of whatever to some organization. Think 'detroit car' is the 'official car' to the ny yankees. OK, so I'll just run out and buy the car. Not gonna happen (and that's before all the car makers going down the crapper).
Of course, it's not just cars and the yankees. It's just about every sports organization and little doodad that they need. I wonder how come there's no official tp sponsor for the yankees. I can just imagine (but don't want to) the testing that goes on for that badge. But then again they don't test for the official car or airline either. It's just a matter of who pays the most for the wonderful privilege of saying they're the official airline of the ny giants or ny yankees.
/ok, end of rant. Thanks for listening.
It's not surprising. The AARP started out as an insurance sca... uh sales broker. From the company's website:
1940s Origins
Even AARP detractors credit California educator Dr. Ethyl Percy Andrus as "one of the truly great women of recent American history," as Dale Van Atta put it. Andrus had become the first female high school principal in the state of California, and upon her retirement she became interested in the poverty of her fellow retired teachers trying to live on tiny pensions.
Andrus founded the National Retired Teachers Association (NRTA) in 1947. She started a nursing home for teachers but was unable to find health insurance for them until joining forces with Leonard Davis, who had succeeded in securing this for a group of retired New York teachers. Their first policy went into effect in 1956; within a year the number of subscribers had leapt from 5,000 to 15,000. The policies were highly profitable, pulling in $75,000 in premiums per month and laying out only $25,000 in claims. The Continental Casualty Company, which had developed an insurance plan to be sold by mail, found the NRTA members to be reliable customers.
In 1958 Andrus and Davis created the American Association of Retired Persons to share the insurance benefits the NRTA had gained with the general retired population. Davis provided the $50,000 of start-up capital. The company publication, Modern Maturity, consumed much of this capital but proved an effective marketing tool, touting an "invitation to security" in the organization's health insurance plans. A company publication, the Bulletin, described the group's lobbying efforts. Thousands of volunteers also worked to promote the offerings of AARP/Colonial Penn.
@FedericoServius: Come on, any organization that sends out junk mail and "endorses" products is not entirely honest.
We checked around for new car and term life insurance in 2008 and found AARP to be one of the more expensive offerings. We finally went with less expensive AIG for both.