Product Review: Alumni Insurance Program Life Insurance
You may have seen an ad in your alumni association newsletter or on its website for the Alumni Insurance Program (AIP). This is a program that offers life, health and other types of insurance plans to more than 300 alumni associations. You might think that buying life insurance through your alumni program will save you money, but in most cases it doesn’t. We took a look at the Alumni Insurance Program’s life insurance offerings and compared the rates and features to individual plans outside of the program. Here is our review of the Alumni Insurance Program’s life insurance offerings.
Alumni Insurance Program’s Life Insurance Offerings
The AIP currently offers three life insurance plans: AlumniTerm – AlumniTerm10/20 – AlumniTerm50+
AlumniTerm
The AlumniTerm plan is a group term life insurance plan that offers up to $200,000 of coverage. Rates increase in 5 year age bands and coverage is renewable to age 75. The AlumniTerm product works similar to group coverage that is available in an employer sponsored plan. We are not going to dig deep into the AlumiTerm group product as we have talked about the benefits and drawbacks to group coverage in another post. Before you consider a group policy, you should look at an individual policy first and compare the long term costs. Group coverage is almost always more expensive than an individual policy, especially if you are in good health.
AlumniTerm10/20
The AlumniTerm10/20 plan works more like a traditional level premium term policy in that it offers level premiums for 10 or 20 years of coverage, whichever you choose. It is a fully underwritten policy that offers three health ratings – “Preferred”, “Select” or “Smoker”. Like traditional fully underwritten life insurance, a paramedical exam is required for the AlumniTerm10/20 plan. The plan offers a Terminal Illness Rider that allows you to accelerate up to 60% of your death benefit if you’ve been diagnosed with a terminal illness and have less than 6 months to live. Coverage under this plan is renewable to age 75.
How do Rates for the AlumniTerm 10/20 Plan Compare to the Competition?
We compared 20 year rates for the AlumniTerm10/20 plan to a fully underwritten policy outside of the Alumni Insurance Program. The rates are for $1,000,000 of coverage for male and female nonsmoker applicants at various ages who would qualify for the best health ratings with either coverage. Rates as of 5/29/2015.
Fully Underwritten Policy Outside AIP AlumniTerm10/20 Plan
| Male | Annual Premium | Male | Annual Premium |
|---|---|---|---|
| Age 35 | $441.78 | Age 35 | $770.00 |
| Age 40 | $626.07 | Age 40 | $980.00 |
| Age 45 | $1,125.71 | Age 45 | $1,460.00 |
Fully Underwritten Policy Outside AIP AlumniTerm10/20 Plan
| Female | Annual Premium | Female | Annual Premium |
|---|---|---|---|
| Age 35 | $378.73 | Age 35 | $620.00 |
| Age 40 | $512.50 | Age 40 | $770.00 |
| Age 45 | $832.50 | Age 45 | $1,050.00 |
As you can see, even if you have the best health rating with the AlumniTerm 10/20 plan, it will still cost you much more compared to a fully underwritten policy outside of the AIP plan. By shopping your coverage, you could save thousands over the life of your policy.
Drawbacks to the AlumniTerm 10/20 Plan
- The AlumniTerm 10/20 plan is more expensive than other fully underwritten term life policies on the market as shown in the example above.
- There are only 3 possible health class ratings available – “Preferred”, “Select” and “Smoker”. A fully underwritten policy outside of the AIP plan offers more health class options.
- The plan is only available in 10 or 20 year durations. In today’s market, you can find companies that offer term durations of 10, 15, 20, 25 and 30 years giving you more options to customize coverage.
- The plan is limited to $1,000,000 of coverage which might not be enough for some people. Fully underwritten life insurance policies outside of the AIP offer much higher limits.
- You can’t add additional riders to the policy such as waiver of premium or child riders. The Terminal Illness Rider comes standard with the policy, but that is the case for most term policies in today’s market. Most term policies in today’s market allow you to add many different rider options.
- The policy is renewable to age 75. Most other term policies in the market are renewable to age 95.
If you are looking for term life coverage, there are definitely better options out there than the AlumniTerm10/20 plan. Before you consider an AlumniTerm10/20 plan, shop around. An independent life insurance agency like ours will be able to show you multiple quotes for coverage that could save you thousands over the life if your policy.
AlumniTerm50+ Plan
The AlumniTerm50+ policy offers up to $100,000 of protection. It is available to those ages 50 to 74. The rates for this product increase in 5 year age bands. The coverage is renewable to age 95, but it should be noted that coverage reduces once the insured reaches age 75. There are only 2 possible health class ratings with this product – “Nonsmoker” or “Smoker”.
How do Rates for the AlumniTerm50+ Plan Compare to the Competition?
Since the premiums for the AlumniTerm50+ plan increase in 5 year age bands, we compared the 15 year total cost of the AlumniTerm50+ plan versus a fully underwritten 15 year policy outside of the Alumni Insurance Program. The rates below are for $100,000 of coverage for male and female nonsmoker applicants at various ages. We used a “Standard” health rating for the fully underwritten policy and the best “Nonsmoker” rating available on the AlumniTerm50+ policy. Rates as of 5/29/2015.
Fully Underwritten Policy Outside AIP AlumniTerm50+ Plan
| Male | Total 15 Year Policy Cost | Male | Total 15 Year Policy Cost |
|---|---|---|---|
| Age 50 | $5,160.00 | Age 50 | $19,682.00 |
| Age 55 | $7,485.00 | Age 55 | $27,428.00 |
Fully Underwritten Policy Outside AIP AlumniTerm50+ Plan
| Female | Total 15 Year Policy Cost | Female | Total 15 Year Policy Cost |
|---|---|---|---|
| Age 50 | $4,215.00 | Age 50 | $8,472.00 |
| Age 55 | $5,790.00 | Age 55 | $11,922.00 |
As you can see, the rates for the AlumniTerm50+ plan are much more expensive than a fully underwritten policy at a “Standard” health rating outside of the Alumni Insurance Program. If you are in very good health, the discrepancy between the AlumniTerm50+ and a term policy outside of the AIP will be even greater. Before you consider the AlumniTerm50+ plan, it is best to shop around. We would be happy to show you all of your options as we shop over 40 life insurance companies to find you the best fit for your situation.
Drawbacks to the AlumniTerm50+ Plan
- The highest coverage amount is $100,000 which might not be enough for some people. Coverage limits are much higher for fully underwritten polices outside of the AIP plan.
- Rates increase every 5 years which is not the case for a level premium policy outside of the AIP plan.
- There are only two health classes with the AlumniTerm50+ plan. Fully underwritten plans outside of the AIP offer many more health class ratings.
- Coverage reduces automatically at age 75 which is not the case for fully underwritten life insurance outside of the AIP plan.
Is Alumni Insurance Program Life Insurance Worth It?
This review was in no way meant to say anything negative about the Alumni Insurance Program as an organization. We simply wanted to show that the AIP’s life insurance offerings are priced higher than many of the other options available in today’s marketplace. The fact that your school’s alumni program is affiliated with an insurance program like the AIP doesn’t mean that it provides the best value. If you are considering life insurance through the AIP, it is important to look at all of your other options. We would be happy to help you compare coverage rates. We shop over 40 of the top life insurance companies to find our clients the best value based on their needs. If you have any questions, give us a call at 888-687-9444 or email us at info@archstoneagency.com.
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.
