Over the years, our firm has provided both CPA’s and their referred clients ideas on securing affordable life insurance. Many CPA’s are also a members of a fantastic association called American Institute of CPA’s, which also offers life insurance to their members. In this review, we will be evaluating the the details of CPA Life insurance and Spouse Life insurance coverage.
(AICPA) CPA LIFE & SPOUSE LIFE
- The plan is offered through Prudential for members to establish life insurance coverage at group rates
- Both CPA Life and Spouse Life are term insurance
- Must be an active member of the AICPA, and pay membership dues to maintain benefits
- Both plans are age bracketed every 5 years, which means your coverage will go up in cost every 5 years
- The plan also offers various health categories which you can qualify at Preferred, Select, or Standard rates (most people can qualify for coverage)
- The death benefit’s can range in amount depending on your age from $10,000 – $2,500,000
- Your spouse is priced separately and can not have any more coverage than you
- The maximum age of eligibility to begin this plan is 74
- The coverage decreases by 50% at age 75
- Coverage ends at the age of 8o yeas old
- Premium refund is available
CPA Life and Spouse Life also offers a premium cash refund each year in mid February. The refund is not guaranteed and fluctuates based on what Prudential doesn’t use for claims or overhead. The Cash Refund earns no interest and is not a policy cash value, but is simply a return of your money.
While this often sounds like a great deal, most accountants are number cruncher’s and can evaluate the true cost with a little analysis. The refund available is between 10-40% and is calculated based on your age bracket and underwriting class. As you get older your premiums will get more expensive and the refund available decreases.
We have an example, comparing the AICPA life insurance rates (with cash refunds) to individual coverage.
AICPA, CPA Life Compared to Individual Coverage
|AICPA – CPA Life
|AICPA – CPA Life
|Company A (20 year)||Preferred Plus||$129||$129||$129||$129|
- AICPA refund not applied
- AICPA refund for select, 38% age 55-59, 28% age 60-74 (2015)
- AICPA refund for standard, 20% age 55-59, 10% age 60-74 (2015)
- Male, age 55, non smoker. Preferred Plus, $500,000, 20 year term
This offering of life insurance through the AICPA makes economic sense at younger ages and if you have any serious health conditions. However, as accountants get older the prices for life insurance are significantly more expensive than open market pricing.
If you are in decent health and over the age of 50, it is cheaper to buy individual coverage outside of the group. In other words, this AICPA life insurance plan is overcharging you for life insurance for a year then giving a refund.
You may also want to learn more about the two other other AICPA life insurance plans which we will be covering in another post.
To conduct a cost analysis to determine if you can save money by purchasing an individual policy versus maintaining your group coverage. You can also run cost comparisons on “Instant Life Insurance Quotes”. Please call us for a free review of your current group coverage 1-877-2491-358.