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.