AAA Term Life Insurance Review
By James Tobin, CFP®
Last Updated on
Life Insurance Help Desk Rating
AAA Life Insurance Carrier Specifics
Term, Universal Life, Whole Life
A -A.M. Best
$100K -Term, $25K-WL,UL
No Exam Options
COMPARE RATES INSTANTLY
AAA Term Life Insurance Carrier Specifics
Term, Universal Life, Whole Life
A -A.M. Best
$100K -Term, $25K-WL,UL
No Exam Options
Expert Review Of AAA Term Life Insurance
AAA Life Insurance Company History
The American Automobile Association (AAA or triple A) was founded in 1902. However, its life insurance division, spawned as a complementary product to the auto insurance it already marketed was introduced in 1969.
Between term insurance, universal life policies and small whole life policies designed for funeral expenses, AAA has a million policyholders in the United States.
So, while still primarily known for its roadside assistance and travel services, its life insurance products are worth a look,
The objective of this review is to see if AAA term life insurance rates among the best term carriers available. Please note that opinions shared here are exclusively those of Jim Tobin and The Life Insurance Help Desk.
AAA Life Insurance Ratings
The financial strength of AAA life insurance company is rated A (excellent) by A.M. Best. The other major ratings agencies have not rated AAA life insurance.
In addition to financial stability, AAA is also rated A+ by the Better Business Bureau (BBB). While there are certainly complaints, like with all big companies, AAA has been quick to respond to any public complaints. The NAIC or National Association of Insurance Commissioners lists the complain ratio as .15, well below the 1% average.
AAA Term Life Insurance
AAA offers traditional term life insurance policy as well an Express Term product. The Express Term product is a simplified issue policy. This is to say that there is no medical exam required to obtain this policy.
Express Term policies have coverage limits or caps at $500,000. These policies are more expensive than fully underwritten policies but in addition to not having to take an exam, you will likely receive an underwriting answer in only a few minutes.
The simplified issue policy can be applied for on the computer while a fully underwritten policy requires an agent.
Lastly, there is a AAA Members Only Group Term Life Insurance product. This is the weakest of the AAA term life insurance offerings. The product is marketed to AAA members and is simplified issue "banded premium" term.
The "catch" with this product is that it goes up in price every 5 years and expires at age 80. When compared to other term products on the market it is expensive.
Additionally it it is only sold in coverage amounts of 50K,100k, 250k and 300K. The Life Insurance Help Desk strongly advises to stay away from this product.
What is AAA Direct Term Life?
Term direct is the marketing label used for AAA Express Term. The reason this term is used is that the product can be purchased directly from Triple A life insurance via your computer.
While this appears a convenient option, it puts convenience before making an informed decision. The use of an independent agent has no cost associated with it.
The truth is that the rates are the same with or without an agent and the company simply makes a larger profit. The downside of this for the consumer is that with an independent agent you will be able to shop 50+ A rated carriers.
Being that different carriers have differing appetites for certain health risks, it is important to have an agent who has access to all the major carriers. The value of a good agent is knowing which carriers are likely to view your situation in the best possible light.
As an example, if you are being treated for anxiety or high blood pressure, you would rather send your application to a carrier that is more tolerant of those conditions than one known for catering to DUI or bad driving histories.
AAA Life Term Insurance Quotes and Details
AAA term life insurance are not readily available in a published form. However quote estimates can be obtained at aaalife.com. However, the estimates are of limited value due to the wide ranges.
As an example, I put my own information into the AAA term life insurance quote tool (19 yr.,300K, Term Express product) and got a monthly range estimate between 68/mo. and 347/mo.
The traditional term product comes in terms of 10,15,20,25 1nd 30 years. The available coverage amounts are a minimum of $100,000 and a maximum of $5,000,000. The application is taken by an AAA agent and underwriting can be reasonably expected to take several weeks.
The Express product comes in terms of 10,15,20 and 30 years The available coverage amounts range from $25000 to $500000
AAA Term Life Insurance Riders
There are several policy riders available for AAA term life insurance. However, it's worth noting they cannot always be used together.
Return of Premium Rider
Traditional AAA life term life insurance can be purchased with a return of premium rider. If you choose this rider, the monthly cost of the policy will be higher, but if you live until the policy expires, your premiums are returned to you. Additionally, should you cancel the policy mid- term, you'd receive a portion of premiums back.
While initially costly, this rider can be used as a "forced savings". Note that this rider is only available at age of 65 or younger for applicants purchasing policies with at least $100,000 in coverage for a term of 15 or more years. Additionally, no other riders are available whit return of premium policies.
Disability Waiver of Premiums
This provision would allow you to stop paying premiums (without losing your policy) if you were to become disabled.
If you die in an accident covered by the policy, this provides an additional payment of up to $150,000 to your beneficiary.
Guaranteed Purchase Option
If you need it, this gives you the ability to increase your coverage at some time in the future, without having to prove your insurability.
If you die or are seriously injured in a covered travel accident while driving or riding as a passenger, this provides an additional benefit to your beneficiary.
AAA Term Life Conversion Options
Life insurance "conversion" refers to the ability of the policy holder to convert term insurance to permanent insurance with no evidence of insurability.
In short, you don't have to prove your healthy or for that matter, be healthy. Convertibility can be a great tool if your health declines considerably and new term insurance would be either unattainable or unaffordable.
Unfortunately, the specific rules around AAA term life insurance convertibility are not publicly transparent as they are with most major carriers. The lack of clarity around conversion rules is a factor in our negative view of life insurance options offered by AAA.
AAA Term Life Insurance exclusions
The only exclusions that do not arise from underwriting are related to suicide within a two year period from the policy being put in force.
That said, it is rare, but possible, to have an exclusion arise out of underwriting. These exclusions usually center around dangerous activities.
We are not currently aware of any non suicide exclusion policy at AAA.
AAA Life Insurance Customer Service
Independent consumer review websites have received mostly favorable comments on AAA and only six complaints from the National Association of Insurance Commissioners were received in in 2019.
AAA Life Insurance Payment Options
AAA life insurance wi can be paid for by either telephone , online or traditional "snail mail". Revolving automatic payments can be set up through AAA e-services. Payment can be from a checking account or a credit card Accepted cards are Visa, MasterCard, American Express, and Discover. Money orders are not accepted as payment.
Grace periods vary from product to product but are never less than 31 days.
AAA Life Insurance Payout on Death Claims
AAA claims that most payouts take place within a few weeks. The limited number of complaints to the NAIC would seem to substantiate that claim. There do seem to be complaints about payouts on consumer affairs sites, but these complaints are generally not centered around term policies.
Because it's stressful enough when someone you cared about passes, AAA passes along the following tips
- Locate the life insurance policy.
- Contact the insurance company.
- Choose how you would like to receive the payment.
- Await payment.
Membership in AAA is not a requirement to purchase either traditional tern or Term Express. The express policy will waive a $60 policy fee if you are a member.
The simplified issue group term policy does require membership. However, as discussed earlier, this is not a product worthy of your consideration. There are far too many better options that are transparent and much better priced. Stay away!
That said, when I had an old Saab convertible I loved, my AAA membership was worth its weight in gold.
AAA Life Insurance Review- The Verdict
While I am a happy customer of AAA auto membership (and have used it!), I can not recommend their life insurance policies. It's not that the policies are horrible (with the exception of the AAA members direct express group insurance), it's just that they are not transparent and easily compared with market leaders.
It is usually telling when a carrier chooses not be readily compared with the competition. Moreover, you are almost always better off when you can comparison shop with several options available to you. For these reasons, we recommend using an experienced independent agency like the Life Insurance Help Desk.
If You are or soon will be in the market for life insurance, we encourage you to use our quote tools and we will get right back to you. Should you have any questions, please feel free to give us a call at (203) 454-1100.
Bonus: The most common mistakes people make buying life insurance and how to avoid them