AAA Life Insurance Review

ROP Term Coverage and no-med-exam policies

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AAA Life Insurance

AAA Life Insurance

Investopedia’s Rating
3.7

Our Take

AAA Life Insurance distinguishes itself with easy-to-apply-for guaranteed-issue and term life policies, as well as outstanding return-of-premium and conversion options for some term policies. The company has a solid financial foundation, which means it should be able to pay insurance claims well in the future. And it may have a special appeal to AAA members, who get a 10% discount on premiums. 

But on the other hand, they may need it, given that the company’s rates for term policies are expensive. AAA’s customer complaint data is also on the high side, and if you’re looking for a large whole life policy or lots of living benefits, you’ll want to check out competitors, because AAA lacks in those areas, too.

  • Pros & Cons
  • Company Overview
Pros & Cons
Pros
  • Offers a return-of-premium (ROP) term rider with three term options

  • Generous term conversion options

  • Guaranteed-issue policy available

  • Online quotes and application

  • AAA members can get a discounted premium

Cons
  • Expensive term policies

  • More complaints than expected for its size

  • Low coverage limits for whole life

  • Only one accelerated death benefit rider

Company Overview

The AAA Life Insurance Company, which is part of the American Automobile Association (AAA) family of companies, was founded in 1969. The Livonia, Michigan-based company has issued more than 1.4 million life insurance policies to customers around the country and paid out more than $3.8 billion in claims during its 50-year history. 

AAA offers several different types of life insurance, with multiple policies, and sells a variety of riders for added coverage. You can purchase life insurance through AAA in almost every state and the District of Columbia, but policies are not available in New York.

  • Year Founded 1969
  • Kinds of Policies Term life, whole life, guaranteed-issue whole life, universal life
  • Payment Options EFT, credit/debit card
  • Customer Service Phone: (888) 422-7020. Email: membersvc@aaalife.com
  • Official Website www.aaalife.com

Pros Explained

  • Offers a return-of-premium (ROP) term rider with three term options: Out of the 91 life insurance providers we reviewed, AAA is one of only 10 that offers return-of-premium term insurance. It made our list of the best life insurance companies for ROP term coverage because it offers more term lengths than many competitors.  
  • Generous term conversion options: For all of AAA’s term policies, you have until the end of the term to convert to a permanent policy. That’s a lot longer than competitors, which may only give you 10 years to make that decision, for example.
  • Guaranteed-issue policy available: Only about one-third of the companies we researched have guaranteed-issue policies, which provide modest coverage with no health questions or exams. These policies are good for people who might be turned down for other kinds of policies for health reasons.
  • Online quotes and application: For certain term and guaranteed-issue life policies, it’s easy to get an instant quote, submit an application, and buy coverage online, without speaking with an agent if you don’t want to. 
  • AAA members can get a discounted premium: An active AAA membership is not required to purchase life insurance from the company. However, if you are a AAA member, you can get a 10% discount on your monthly insurance premium. 

Cons Explained

  • Expensive term policies: Based on sample rates for term life insurance from AAA, we found the company’s prices are among the worst rates for 32 companies we researched.
  • More complaints than expected for its size: AAA gets about 50% more customer complaints that you’d expect, relative to the amount of premiums it collects. 
  • Low coverage limits for whole life: If you choose a traditional whole life insurance policy, the maximum amount of coverage available is $75,000. That’s lower than competitors, many of whom offer multi-million dollar coverage. 
  • One accelerated death benefit rider: Compared to other life insurance companies we reviewed, AAA offers few accelerated death benefit (ADB) riders—also known as living benefits. The only ADB rider you can get from AAA is a terminal illness rider. Some competitors offer two or three, including ADB riders for chronic or critical illnesses.

Complaint Index

AAA Life Insurance has more complaints than expected for a company of its size, as determined by the National Association of Insurance Commissioners (NAIC) Complaint Index.

The NAIC keeps a database of complaints reported for each insurance company, and the Complaint Index factors in the size of each company to give consumers an easy way to compare complaint information from companies of varying sizes. Carriers with about the number of complaints you’d expect, given their size, receive an index of 1.0. Companies with more complaints than expected get an index above 1.0, and those with fewer complaints than expected are given an index below 1.0. The lower a company’s index is, the fewer complaints it receives.

AAA’s three-year average complaint index is 1.426, which means the company got somewhat more complaints than expected relative to its size. For comparison, many of the picks on our best life insurance companies have indexes below 1.0, which means customers are generally satisfied with their experience. 

Third-Party Ratings

AAA has excellent financial stability. It has an A rating from AM Best, the leading credit rating agency for insurance companies. AM Best evaluates companies based on their balance sheet, debt, and other factors related to financial strength. Its grades range from D to A++. AAA’s rating indicates that it has an “excellent” ability to meet policyholder obligations and has sufficient funds to pay claims.

We recommend consumers stick with companies that have at least an A- rating. All but five of the 91 companies we reviewed do, and our 10 top-rated companies all have an A or better rating. 

Competition

Like all life insurance providers, AAA has advantages and drawbacks. When shopping for life insurance, comparing multiple companies is an important part of the process. In the table below, you can see how AAA compares to two companies of roughly similar size, Allstate and SBLI, based on several features like coverage types, price, and complaints.

  AAA Allstate  SBLI 
Types of Coverage Term, whole, final expense, universal Term, whole, universal, variable universal  Term, whole, final expense
Online Application  Yes  No  Yes 
AM Best Rating  A+ 
Price for Term Policies  Poor  Information not available  Excellent 
NAIC Complaint Index (averaged over 3 years)  1.426  1.128  0.597 

Our ratings take into account NAIC complaint index scores and AM Best ratings. The NAIC complaint index indicates how many complaints a company receives relative to its size. AM Best assesses a company's ability to pay its claims on a graded scale, with A++ being the highest. All our best life insurance companies have at least an A rating.

Policies Available 

AAA sells several kinds of life insurance, with multiple policies available for each coverage type. Here’s a closer look at the types of life insurance you can get from AAA:

Term Life Insurance

Term life insurance provides coverage over a fixed period of time, called a term. The premiums usually don’t change during the term, and your beneficiary receives a death benefit if you pass away during that period. AAA offers three term life policies that are renewable at the end of the term. 

You can also convert them to permanent insurance when the term ends, or after you turn 65, whichever comes first. This is one of the most generous conversion periods we’ve seen for term insurance. Competitors sometimes only give you a conversion period of a few years.

If you choose to renew a AAA term life insurance policy at the end of the term, you won't be able to keep paying the same rate. Because term life insurance premiums increase with age, you can expect to pay a much higher rate after renewing. 

ExpressTerm Life

The ExpressTerm Life policy is available in term lengths of 10, 15, 20, or 30 years, with coverage ranging from $25,000 to $500,000. If you are between the ages of 20 and 75, you can apply for this policy online and may be able to get approved in as little as 10 minutes without taking a medical exam. It comes with an accelerated death benefit (ADB) that allows you to access as much as half of your death benefit (up to $250,000) if you’re diagnosed with a terminal illness and have less than 12 months to live.

Traditional Term Life 

The Traditional Term Life policy provides coverage for 10, 15, 20, or 30 years, with coverage renewable (at a higher rate) until age 95. Anyone between the ages of 18 and 75 can apply, though older individuals may not be eligible for 20- and 30-year terms. Coverage between $50,000 and $5 million and higher is available, depending on your age. You can only apply for this policy through an agent, and there is a waiting period of up to six weeks before coverage begins. 

The policy comes with the same terminal illness accelerated death benefit as ExpressTerm Life, and you can add on riders for child term coverage, disability waiver of premium, and return of premium. 

Whole Life Insurance

Whole life insurance is a type of permanent coverage that provides protection for your entire life. The premiums remain fixed for the duration of the policy, as long as you continue paying the premium. When you pass away, your beneficiary receives a death benefit that is typically tax-free. One of the main benefits of whole life, like other permanent policies, is that it has cash value that grows over the life of the policy and can be borrowed against or withdrawn from if you need to access money from your policy. 

Whole Life Insurance

With AAA’s Whole Life Insurance policy, you can get between $5,000 and $75,000 in coverage. That’s a much lower coverage cap than competitors offer, and may not be enough for some families.

Anyone between the ages of 18 and 85 years old is eligible to apply. If you want more than $30,000 in coverage, a medical exam may be required; otherwise, you’ll just need to answer some health questions to qualify. If approved, you may need to wait up to six weeks before coverage begins. The premiums for this policy remain fixed until age 100, at which point, you are no longer required to continue making monthly payments. 

You can customize your coverage with endorsements, including child term, disability waiver of premium, accidental death, and travel accident riders. 

Final Expense Insurance

Final expense insurance, also known as burial or funeral insurance, is a small whole life policy intended to cover the costs of your funeral and other modest final expenses. It’s generally marketed to older people, has a face value that’s under $50,000, and is easy to qualify for—you rarely need to take a medical exam. Healthy people will usually be better off applying for coverage that requires a medical exam because it tends to be cheaper. 

Guaranteed Issue Whole Life

As with other guaranteed-issue policies, you can’t be turned down for this one from AAA for health reasons. No medical exam is required, and coverage can begin as soon as you make your first payment. It’s available for individuals between the ages of 45 and 85, with up to $25,000 in coverage. The premiums are level (meaning unchanging) until age 100, and after that, monthly payments are no longer required. This policy builds cash value and has a built-in travel accident endorsement that doubles the death benefit if you die in a covered travel accident. 

AAA’s Guaranteed Issue Whole Life policy has a graded death benefit. If you die of natural causes in the first two years of having the policy, your heirs won’t get the full death benefit. Instead, they’ll get a refund of all the premiums you’ve paid, plus 30%. 

Universal Life Insurance

Universal life (UL) insurance is another form of permanent coverage that has cash value. Unlike whole life, the cash value in a universal life policy grows based on current interest rates, which can fluctuate. You have the option to withdraw or borrow the cash value from your policy. In addition, most universal life insurance policies allow you to adjust the amount and frequency of your premium using funds from your cash value.

Lifetime Universal Life

The Lifetime Universal Life policy features a level premium and coverage between $100,000 and $5 million or higher, depending on your age. Anyone between the ages of 18 and 85 years old can apply for this policy, but you’ll need to take a medical exam. You must apply for the Lifetime Universal Life policy through a AAA agent.

You can add a child term, waiver of premium, or accidental death rider to this policy. It comes with an accelerated death benefit for terminal illness.

Accumulator Universal Life

This policy differs from the one above in that it’s designed to accumulate more cash value. You can purchase the Accumulator Universal Life policy between the ages of 15 days and 80 years old, with coverage limits ranging from $100,000 to $5 million or higher. Like the Lifetime Universal Life policy, it requires a medical exam to get approved. 

Accumulator Life allows you to adjust your premiums. But be aware that lowering the premium or skipping payments altogether could cause your policy to lapse if the cash value dips too low. With this policy, however, as long as you pay the minimum premium, your coverage is guaranteed to not lapse for 10 years.

Even though the Accumulator Universal Life policy has a no-lapse guarantee, your coverage may terminate if you don’t make the minimum payment to maintain the guarantee. If that happens and the policy lapses, you will most likely have to reapply for a new policy. 

This policy offers a number of optional add-ons, including child term, waiver of monthly deductions, accidental death and guaranteed purchase riders. 

Available Riders

Life insurance riders are endorsements that can be added to your base policy for extra protection. Most of AAA’s riders are optional and will raise your premium, but there are a couple riders that are free on some policies. Here are the riders available from AAA.

Terminal Illness Rider

A terminal illness rider is included for free with every AAA life insurance policy, with the exception of the guaranteed whole life policies. This rider allows you to withdraw up to 50% of your death benefit (maximum withdrawals depend on the policy type) if you get diagnosed with a terminal illness and are expected to live less than one year.

Return of Premium

AAA’s return of premium (ROP) rider is available as an add-on to the traditional term life policy. If you outlive the initial term, you can get back 100% of the premiums you paid into the policy. Unlike most other term life policies, when you add this rider, your term policy builds cash value during the term. We like that it’s available in term lengths of 15, 20, or 30 years—more options than most competitors offer. 

Guaranteed Insurability Rider 

A guaranteed insurability rider allows you to purchase additional life insurance coverage in the future, without taking a medical exam. This rider is only available on AAA’s accumulator universal life insurance policies. 

Child Term Rider

This rider will provide a small amount of life insurance coverage for each of your eligible children until they reach adulthood. The child term rider can be added to a Traditional Term Life, Whole Life, Lifetime Universal, or Accumulator Universal Life policy. Coverage is $5,000 per child on the whole life policy, $20,000 on all others. 

Waiver of Premium 

If you become totally disabled, a waiver of premium rider allows you to stop paying your premiums, without losing your life insurance coverage. You can add this rider to a Traditional Term Life, Whole Life, or Lifetime Universal policy. 

Accidental Death Benefit 

The accidental death benefit rider provides an additional payment of up to $150,000 on top of your policy’s face value if you pass away and your death is ruled accidental. This rider is available on AAA’s Whole Life, Lifetime Universal, or Accumulator Universal Life policy. 

Travel Accident Rider 

The travel accident rider provides an additional payout if you pass away in a covered travel accident. You can add this rider to a Whole Life, Lifetime Universal, or Accumulator Universal Life policy, and it’s included at no extra cost with a Guaranteed Issue Whole Life policy.

Customer Service

If you need to get in touch with AAA, you can call the main toll-free number at (888) 422-7020 during business hours, which are Monday through Friday, 8 a.m. to 8 p.m. ET, and Saturday 11 a.m. to 3 p.m. ET. You can also send an email to membersvc@aaalife.com or use the online form to send a customer support request

Price

Life insurance premiums are based on unique factors, like your age, health, and family medical history. Rates can also vary based on your insurance company.

Unfortunately, AAA’s term insurance rates are high compared to competitors, according to our research. To estimate the price of AAA’s term life insurance premiums, we got quotes for a 30-year, $250,000 policy for males and females in excellent health, aged 25, 40, and 55 living in either the 90666 or 94027 zip code. 

AAA’s prices were worse than 26 of the 32 companies we got quotes for. They’re much more expensive than some of our other “best” life insurance companies, like Protective and Banner, which tied for the cheapest term rates we found. 

Is AAA Life Insurance Right for Me?

AAA is best for folks who want ROP term insurance with some nice conversion options, and who don’t mind paying higher than the going rate. You can defray some of that cost if you’re a AAA member, since that gets you a small discount on premiums. AAA may also be a good fit if you want a quick and easy application process for term or guaranteed-issue insurance. 

But if you want more than $75,000 worth of whole life coverage, this isn’t the company for you. You’ll also want to look elsewhere if you want lots of living benefits, because AAA only offers one.  

Our Methodology: How We Review Life Insurance Carriers

We designed a comprehensive ranking methodology based on consumer priorities and life insurance company fundamentals to rank more than 90 insurers across five general categories: financial stability, customer satisfaction, product and feature variety, the overall buying experience, and cost.

In order to do this, we collected over 5,000 data points and scored each company based on 55 metrics. We grouped metrics by category to see how insurers performed in each; we then weighted category scores to determine how companies performed overall.

To learn more, read our full Life Insurance Methodology.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. AM Best. “Guide to Best’s Financial Strength Ratings - (FSRs).”