Advantages & Disadvantages of the AICPA Life Insurance
Plan
Most certified public accountants that are members of the
AICPA carry some amount of term life insurance through the
association plan underwritten by the Prudential Insurance
Company of America. While the coverage offered by
the AICPA is relatively easy to obtain, in most cases it
may not be the best option. The list of the advantages and disadvantages
below is designed to provide an objective overview of the
strength and weaknesses of the AICPA term life insurance
plan.
Advantages of the AICPA Insurance Plan:
- The AICPA Term life Insurance Plan is underwritten
by the Prudential Insurance Company of America, a very
well respected insurer and rated A+ with AM Best.
- Preferred
rates or a select health class is available for those in
great health.
- Coverage is available up to $1,500,000
if you are under the age of 55 with an additional $500,000
available if you are a member of your State’s Society
of CPAs.
- An accelerated benefit option
rider is included
which allows a covered individual that is terminally ill
the opportunity to receive a portion of the death benefit
in advance of death.
- The AICPA plan is relatively easy to
qualify for and in most cases there is no medical exam.
- The AICPA plan offers the potential for policy refunds,
or premium reimbursements for premiums paid in excess of
death claims and expenses. While not guaranteed, this premium
refund or reimbursement option has paid out every year
since 1957, see the schedule
for AIPCA insurance trust refunds.
- Policy
riders are available such as accidental
death and dismemberment and waiver
of premium contribution for disability. Also
available is spousal term life and dependent
children’s
coverage.
- The AICPA plan offers conversion options that
allow covered members to exchange their term plan for another
life plan offered by Prudential Insurance Company of America
without proof of health.
Disadvantages of the AICPA Insurance Plan:
- You must be a member of the AICPA to participate.
- Coverage
costs increase every five years.
- Participants must
re-qualify (prove good health) every five years to maintain
the lower Select rates. If health deteriorates, participants
will be forced to pay the higher standard rate.
- Coverage
decreases over time.
- Coverage ends at age 80.
- Premiums are excessive
at ages 45, 50, 55 and beyond. Plan participants overpay
throughout the year but then may get a refund back at the
end of the year based on claims experience and expenses. The
premium refund is not guaranteed.
- Cannot compete with individual
level term life insurance. Costs
of individual term insurance are much lower and you can
guarantee your rate for a longer period of time and there's
no requirement for continuous proof of health.
For an actual price comparison see, comparing
the AICPA term life plan with individual ordinary term life
insurance.
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