Many professional organizations and other non-insurance companies offer their members life insurance policies. AICPA is one of those organizations.
This article will review the life insurance policies offered for CPAs by the AICPA. You’ll learn how their policies work, pros and cons, and who AICPA life insurance is best for.
- History and Ratings for AICPA Life Insurance
- AICPA Life Insurance has Limited Variety
- Life Insurance Policies Offered by AICPA
- Who Should Get an AICPA Life Insurance Policy?
- Compare AICPA to Other Life Insurance Companies
History and Ratings for AICPA Life Insurance
The American Institute of Certified Public Accountants (AICPA) offers its more than 400,000 members around the world a few life insurance programs and some great online tools to connect members with a policy.
The Prudential Co., a well-known insurer that also ranks well as a provider, writes the AICPA’s policies. Here are our ratings for AICPA.
- Affordability Index: 6.4
- Ease of Applying: 8
- Customer Service: 8.2
These three metrics are based on a number of factors including our industry knowledge of AICPA compared with other companies.
AICPA Life Insurance has Limited Variety
If you are in average to good health, you should be able to find better life insurance than the AICPA offers by shopping the open market and making your own coverage decisions.
CPAs who are 50 or older, especially, can save a significant amount of money by opening up options beyond the handful of programs the AICPA offers.
AICPA is a great association providing invaluable resources to its members. But any professional organization that directs its members to only a few insurance options will have this same weakness, a lack of variety that simply falls short of what you can find elsewhere.
Life insurance is a personal product and it should be customized to meet your specific needs. When you have only a few options to choose from, you’re automatically limited.
By shopping in the full marketplace and bringing in some of the best life insurance companies in the nation, you’ll have dozens more options for your coverage and a much higher likelihood of finding a precise fit for you and your family.
Life Insurance Policies Offered by AICPA
The AICPA does a great job selling its policies by highlighting features such as large coverage amounts and even cash refunds for policyholders.
Let’s take a closer look at these programs to see how they work.
AICPA’s CPA Life Insurance Plan
The association’s “Life Insurance Plan” policy is an increasing term life insurance policy issued by Prudential.
- Your rates will increase every five years, and the policy has a $2.5 million dollar coverage cap.
- Almost anyone can qualify – AICPA claims 90 percent of those who apply for CPA Life are approved.
What could be better? By finding a term policy with level premiums you can lock in a lower premium based on your current age and health and pay that same low rate for up to 30 years.
Also, if you are relatively healthy, your health can unlock lower rates rather than having your policy lumped in with the wider population. With a policy like this, you’re effectively paying higher premiums to subsidize the policies of less healthy applicants.
AICPA’s Life Insurance Cash Refund
This is the first thing many CPAs bring up during our conversations. Each year, in mid-February, the AICPA issues cash refunds for the money Prudential doesn’t use to pay claims or overhead. This refund percentage fluctuates depending on annual performance.
While this sounds like a great deal for accountants, you should know that all life insurance companies do this each year already.
However, instead of giving cash refunds to policyholders, most life insurance companies lower their life insurance rates to gain a bigger market share which helps preserve the overall health of the company and, by extension, your policy.
In other words, this AICPA life insurance plan is overcharging you for life insurance for a year and then giving a refund (while keeping all the interest accrued). It’s a great deal for Prudential but not necessarily for you.
AICPA’s Level Term Life Insurance
The AICPA now has a level term option.
However, they offer only a 10- and 20-year term option. If you want a 15-, 25- or 30-year term, it’s not available through the AICPA.
Why does this matter? Your life insurance coverage should be timed with your anticipated stages of life. If you just took out a 30-year mortgage, for example, and you worry how your partner would pay off the home if you died, a 30-year term policy makes sense.
You could get a 20-year policy now and then add a 10-year policy later. Remember though, rates go up with age, so your 10-year policy will have a higher monthly premium than if you got a 30-year term now.
Even on a 20-year term policy, you can beat AICPA’s advertised rates by getting your own individualized life insurance quote.
Since group coverage like the AICPA’s policies takes all risks (healthy and unhealthy) and lumps them in together, it’s almost always going to be more expensive for the people in average to good health who could get a lower rate elsewhere.
Who Should Get an AICPA Life Insurance Policy?
There are two reasons an accountant might choose an AICPA policy.
If You Don’t Plan to Compare Rates
If you’re looking for life insurance coverage but you don’t expect you’ll do much shopping around and comparing rates, just stick with the AICPA’s offerings.
AICPA’s policies are typically more expensive and less effective than the best policies out there. However, they are not necessarily the worst policies either. If you don’t care about rates as much, and don’t want to shop around, AICPA might be right for you.
With AICPA, at least you’re working with Prudential who is a reputable insurer.
If You Can’t Get Better Coverage Because of Your Health
AICPA’s Prudential-based policies offer a perfect solution for applicants with health issues. If you have major health issues, just go with a policy the association offers you.
As mentioned above, the way these group policies work is to distribute risk. While this means healthier people pay more, it also means people with health issues can pay less.
For the same reason, the AICPA Life Insurance Plan is also great for applicants who want the convenience of not taking the mini-physical required by traditional life insurance plans. The application process is quick and easy and you can do it online.
When to Shop the Open Market Instead
AICPA’s plans are more expensive than buying life insurance in the open market, so if you’re looking for the best coverage at the best price, shop around.
After researching, it was found that every scenario run for clients, age 45 and older, shows a cost-benefit to finding their own coverage on the open market. Savings tend to be most noticeable for healthy applicants in their 50s.
Compare AICPA to Other Life Insurance Companies
We’ve established you can usually find a better policy than the CPA Life Insurance Plan if you are in average to good health.
In any case, it is always a good idea to shop around and compare other companies before making a decision.
Here are some other niche life insurance companies for you to review along with AICPA’s life insurance.