If you want to quickly assess the Pros and Cons of the group life insurance plans available through the AICPA, then this article will suffice. However, for people who want to delve further into the plan features, riders and other important aspects of the AICPA coverage, we have more in-depth articles available. A good place to start will be with the following articles:
The AICPA is an excellent organization and most of the CPAs we know are members. We have spent many hours researching the life insurance plans offered through the AICPA and hope you will see that our conclusions and recommendations are well-founded. Although our overall assessment of their life insurance offerings is not favorable, we want you to know we hold this organization in high esteem for the educational and advocacy work they do.
Just glancing at the lists below might lead you to believe that we don’t recommend any of the AICPA plans. While we recommend other individual coverage for most people, there are exceptions – as you will see below.
AICPA Life Insurance: Pros
- All AICPA Life Plans are group policies underwritten by Prudential – an excellent company with very strong financial ratings.
- Very good Simplified Issue life insurance option through CPA Life (Increasing Term). This product is great for people who would not normally qualify for coverage due to health reasons.
- The CPA Life plan is also available to spouses on a Simplified Issue basis. This can be helpful if your spouse has a medical condition that makes it difficult to secure reasonable life insurance rates.
- Expedited Application Process = Quick Policy Issue. You have the option with the LPT product to select the Standard rate class. Although the premium is significantly higher than Select and Preferred rates, you can get a policy issued quickly. No exam is required for Standard rates. The same holds true for the Standard rate class with the CPA Life (Increasing Term). Sometimes, getting a policy issued quickly (with no exam) can be important.
- Children Life Insurance Rider. This rider is relatively inexpensive ($6 per year) and provides $10,000 face amount for all of your dependent children.
AICPA Life Insurance: Cons
- Higher Premiums for Level Premium Term – This is the bottom line for most people. If you can get a guaranteed level term for the exact same amount and term length from an A+ rated carrier, then that is what matters most.
- Lack of Options for Term Coverage. Your only options for term insurance are 10-year and 20-year term periods. You can’t select a 15-year, 25-year, 30-year, or Term for Life policy with the AICPA.
- Paying a much higher premium upfront and then waiting for the annual Trust Refund.
- Lack of Guarantees: The Premiums for both the CPA Life (Increasing Term) and LPT (Level Premium Term are not guaranteed and could increase. Also, the Trust Refund can fluctuate each year. Our quotes include the refund from 2015 (the most recent one as of October 2016). This refund was the highest ever. It is possible the refund could decrease.
- Poor Conversion Options if leaving the Group Plan – If you terminate your membership with the AICPA, then you lose your annual refund. This could cause the net premium to increase by approximately 50%. See the CPA Term Cash Refund percentages here.
- Complexity – Underwriting classes can change as you get older. This requires an application at different ages. For example, a 40 year-old has the opportunity to get a better underwriting class at age 45 and 50, but has to undergo an exam to qualify. Cash Refund percentages change based on age. Eligibility for different coverage amounts varies based on association membership status. Again, this complexity can be a headache.
- Paperwork – You receive a Trust Refund check each year. You also will receive a K-1 Statement. According to the AICPA, “The K-1 statement specifies your portion of the taxable interest earned by the AICPA Insurance Trust or AICPA Group Insurance Trust.”
AICPA Life Insurance Pros and Cons – Conclusion
The AICPA puts a lot of effort into providing life insurance coverage to their members. We applaud their selection of Prudential Life Insurance Company as the sole insurance company for their group plans.
Their level premium term products (10-year and 20-year) are fairly competitive. However, you can find lower rates through companies with very strong financial ratings, especially in the Preferred and Preferred Best rate classes.
The one area where the AICPA life plan shines is with the simplified issue CPA Life (increasing term) plan. Due to the simplified (no medical exam) qualification process, this plan is ideal if you have serious health conditions. Even if you just have a few minor conditions and can only qualify for Standard rates, the CPA Life plan can be more affordable for up to 10 years or so.
Since the CPA Term plan increases when you reach a new 5-year age band, the rates increase substantially as you get older. If you are in average health, then it would be best to compare the rates with the CPA Term plan to plans available in the individual market. We found that several carriers, such as Ohio National Life and Banner Life consistently had lower rates at all rate classes.
Even if the rates were the same, we think the AICPA life products carry some risk. Since the rates are not guaranteed (even the level premium term), there is a chance the rates could increase at any time. Also, if for some reason you terminate your membership with the AICPA, you would lose your refund check (which is roughly half the premium).
We always encourage people to work with an independent agent so you can see ALL the carriers and compare your options. You might be better off with one of the AICPA life plans, but until you see comparison quotes, you won’t know. An independent agent can help you determine the appropriate rate class based on your unique situation.
If you receive an unfavorable underwriting offer, and independent agent can shop your case with many other carriers. This process ensures you receive the best possible offer.
Finally, we are here to help, so if you have any questions about life insurance, please call or complete the contact information in the quote engine. We will be glad to help.