Price Comparison: AICPA Life Insurance vs. Low Cost Level Term Life

Written by Termland.com

Group life insurance coverage offered by the American Institute of Certified Public Accountants, the AICPA, is available to member CPA’s and many take advantage of this valuable coverage to protect their families and businesses. However, upon careful review of policy costs and features, AICPA coverage is expensive and in most cases individual level term life insurance is a far better choice. If you are in good (preferred) health and over age 45, ordinary level term life is more cost effective when comparing total outlays over any 10 year period. Below is a comparison of actual policy costs of the AICPA Plan verses a competitively priced 10-year guaranteed level term life insurance policy that can be purchased in the open marketplace.

In each of the following examples, rates are based upon the 2008 life insurance cost information found on the AICPA website. Select rates (top preferred health class) are assumed without any policy riders. Quotes are based on monthly premium payments with the insurance face amount for each example being $1,000,000. Costs are compared over a 10 year period. Total premiums are calculated without the premium refund (non-guarantee) as well as with the premium refund option based on the 2008 schedule.

For the level term life insurance, rates are quoted based on a 10-year guaranteed level term policy with both preferred best and preferred nonsmoker health classes with no policy riders included. We have reviewed the marketplace and the lowest priced policies from the most competitive term life insurance companies are listed. All life insurance companies quoted currently maintain an A+ or better rating with AM Best Services.

All quotes are rounded to the nearest $1.00

Example # 1 Male age 45 nonsmoker in preferred health, $1,000,000:

AICPA Insurance Plan (5 year increasing term):

AgeMonthly PremiumAnnual Cost w/o RefundTotal Cost w/o RefundRefund %*Monthly Premium After RefundAnnual Cost w/ RefundTotal Cost w/ Refund
45$110$1,320$6,60053%$52$624$3,120
50$180$2,160$10,80032%$122$1,464$7,320
$17,400$10,440

The average 10 year cost of the AICPA plan w/o any premium refund is $1,740 annually or $145 monthly.

The average 10 year cost of the AICPA plan projecting the 2008 premium refund schedule (not guaranteed) is $1,044 annually or $87 monthly.

Individual 10-year Level Term Life Insurance**

AgeHealth Class***Monthly Premium****Annual Premium
45Preferred Plus$49$555
45Preferred$68$765

In the above example, even with the AICPA premium reimbursement, the monthly cost for the AICPA life insurance program exceeds the 10-year level term rates at the preferred plus health class by $38 per month or 77%. The 10-year level term option saves $4,560 over the 10 year period.

If we assume the preferred health class, the level term option still saves $19 monthly or 28% over the AICPA plan. That equates to a savings of $2,280 over the 10 year period.

Example # 2 Female age 45 nonsmoker in preferred health, $1,000,000:

AICPA Insurance Plan (5 year increasing term):

AgeMonthly PremiumAnnual Cost w/o RefundTotal Cost w/o RefundRefund %*Monthly Premium After RefundAnnual Cost w/ RefundTotal Cost w/ Refund
45$80$960$4,80053%$38$456$2,280
50$150$1,800$9,00032%$102$1,224$6,120
$13,800$8,400

The average 10 year cost of the AICPA plan w/o any premium refund is $1,380 annually or $115 monthly.

The average 10 year cost of the AICPA plan projecting the 2008 premium refund schedule (not guaranteed) is $840 annually or $70 monthly.

Individual 10-year Level Term Life Insurance**

AgeHealth Class***Monthly Premium****Annual Premium
45Preferred Plus$46$515
45Preferred$62$690

In the above example, even with the AICPA premium reimbursement, the monthly cost for the AICPA life insurance program exceeds the 10-year level term rates at the preferred plus health class by $24 per month or 52%. The 10-year level term option saves $2,880 over the 10 year period.

If we assume the preferred health class, the level term option still saves $8 monthly or 13% over the AICPA plan. That equates to a savings of $960 over the 10 year period.

Example # 3 Male age 55 nonsmoker in preferred health, $1,000,000:

AICPA Insurance Plan (5 year increasing term):

AgeMonthly PremiumAnnual Cost w/o RefundTotal Cost w/o RefundRefund %*Monthly Premium After RefundAnnual Cost w/ RefundTotal Cost w/ Refund
55$360$4,320$21,60032%$245$2,940$14,700
60$580$6,960$34,80020%$464$5,568$27,840
$13,800$42,540

The average 10 year cost of the AICPA plan w/o any premium refund is $5,640 annually or $470 monthly.

The average 10 year cost of the AICPA plan projecting the 2008 premium refund schedule (not guaranteed) is $4,254 annually or $354 monthly.

Individual 10-year Level Term Life Insurance**

AgeHealth Class***Monthly Premium****Annual Premium
55Preferred Plus$138$1,555
55Preferred$177$1,995

In the above example, even with the AICPA premium reimbursement, the monthly cost for the AICPA life insurance program exceeds the 10-year level term rates at the preferred plus health class by $216 per month or 256%. The 10-year level term option saves $25,920 over the 10 year period.

If we assume the preferred health class, the level term option still saves $177 monthly or 200% over the AICPA plan. That equates to a savings of $21,240 over the 10 year period.

Example # 4 Female age 55 nonsmoker in preferred health, $1,000,000:

AICPA Insurance Plan (5 year increasing term):

AgeMonthly PremiumAnnual Cost w/o RefundTotal Cost w/o RefundRefund %*Monthly Premium After RefundAnnual Cost w/ RefundTotal Cost w/ Refund
55$300$3,600$18,00032%$204$2,448$12,240
60$490$5,880$29,40020%$392$4,704$23,520
$47,400$35,760

The average 10 year cost of the AICPA plan w/o any premium refund is $4,740 annually or $395 monthly.

The average 10 year cost of the AICPA plan projecting the 2008 premium refund schedule (not guaranteed) is $3,576 annually or $298 monthly.

Individual 10-year Level Term Life Insurance**

AgeHealth Class***Monthly Premium****Annual Premium
55Preferred Plus$99$1,130
55Preferred$128$1,435

In the above example, even with the AICPA premium reimbursement, the monthly cost for the AICPA life insurance program exceeds the 10-year level term rates at the preferred plus health class by $199 per month or 301%. The 10-year level term option saves $23,880 over the 10 year period.

If we assume the preferred health class, the level term option still saves $170 monthly or 232% over the AICPA plan. That equates to a savings of $20,400 over the 10 year period.

Summary

The real life examples above clearly show that based on price alone individual ordinary level term life insurance is superior to the AICPA group term life plan. For more comprehensive comparative information, see additional reasons to buy individual term insurance over AIPCA group life.

If you have coverage through the AICPA life plan, you should compare the actual long term costs based upon your age and health. There is absolutely no reason to overpay for term life insurance. For a custom term life quote click here or call MEG Financial today at (877)583-3955.

*AICPA premium refund percentages based on the 2008 schedule

** All Illustrated rates are based on a 10-year guaranteed level term policy and include both the preferred best and preferred nonsmoker health class with no policy riders. Price quotes are from the most competitive term life insurance companies at the respective ages and health classes. All life insurance companies quoted currently maintain an A+ or better rating with AM Best Services.

*** For more information on health classifications see, life insurance underwriting health classes defined.

**** Premiums paid monthly are usually subject to a surcharge of 4-8% depending on the insurance company.

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