Most CPAs assume the AICPA has their best interests at heart and they trust that the life insurance coverage provided by their own association is the best offer available. Unfortunately, that is not always the case. In reality, the plan you get through the AICPA is a group plan offered through Prudential, which is significantly more expensive than buying life insurance in the open market. It is also a plan that every CPA can participate in – and since there are healthy and unhealthy CPAs that participate in the plan, the cost increases for healthy CPAs in the AICPA Group Life Insurance Plan. Continue reading to learn more about our reviews such as our AAA Term Life Insurance review.
Group Coverage Accounts for the Collective Health of All CPAs
You might be wondering why it costs more for a group policy, when Prudential is gaining so much business from the AICPA. People assume that they receive a discount based on volume, but unfortunately group coverage means Prudential is taking on the risks of both the healthy and unhealthy CPAs. That is why you can’t simply trust that you are getting the best rate through AICPA.
If you are over the age of 50 and you are in good health, you can qualify for a more affordable term life insurance policy with an individual policy rather than the group plan. With an individual policy you can get a level term, while the AICPA has regular rate increases.
Thee CPA life insurance plan offered by the AICPA will go up every five years. That is why CPAs need to shop around to ensure they are getting the best deal when it comes to their insurance.
The AICPA Life Insurance Cash Refund Policy
It may also be tempting to stick with the AICPA life insurance plan because of the refund they offer you each February depending on the company’s overall performance. They act as if they are giving back to their customers any funds they do not use on overhead or claims. Other insurance companies actually do the same thing, but they do it by lowering their rates each year to increase their market share.
AICPA Vs. Individual Life Insaurance : Look at the Fifteen Year Figures
As CPAs, it’s crucial that you do the math to include the refund and rate increases to make sure that what you will pay over the next fifteen or twenty years is still lower with AICPA. Keep in mind that you may be paying less the first five years and then end up paying double the next five years, and then double that for the last five years (source). I’ve done the math and the AICPA Group Life Insurance plan is not the best price out there.
For example, a 55 year old male with a $500,000 policy for 15 years will pay $35,940 according to the most recent AICPA rate guide. It is $5,580 at age 55, $10,860 at age 60, and a staggering $19,500 from age 65 to 70. This takes into consideration the 33% annual refund, which was the last refund they offered. That percentage could actually decrease next year.
If you go with a 15 year individual life insurance policy using the same example from other reputable insurance providers, it can range anywhere from $16,500 to $33,000 depending on your health. That’s a potential savings of almost $18,000.
Please take the time to compare your term life insurance options before committing to one. If you are a healthy individual, you will probably be better off buying an individual term policy instead of the plan AICPA has arranged for CPAs.
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