Should AARP Handle Your Finances?
By Eric Schurenberg, Mary Granfield, Marguerite T. Smith, Lani Luciano

(MONEY Magazine) – Like many other nonprofit organizations, AARP needs money. But instead of hawking museum replicas, AARP sells $106 million worth of products and services ranging from angina medications to tours of Katmandu. Operations are run by AARP's partners, which include some of the major names in their fields, from Prudential, for health insurance, to Scudder Stevens & Clark, for mutual funds and the credit union. AARP also works with the Internal Revenue Service to provide free tax preparation for the elderly and arranges discounts of up to 50% on rental cars and hotels. Many AARP members are unaware that their group earns millions marketing its wares. ''I have some misgivings about that,'' said Arie Gary, 73, of Miami, when it was explained to her. ''After all, they palm themselves off as a nonprofit group dedicated to helping seniors. Yet they're making money while they could be dropping prices for services instead.'' Others, such as Dick Carrow, 55, a financial planner from Boise, Idaho, condone AARP's arrangements. ''I don't really care how they negotiated for the programs,'' observes Carrow, ''if the products are good and the rates are low.'' That's a pretty big if in some cases, as the following analysis demonstrates.

MUTUAL FUNDS Steady but uninspiring performances

Advertising for AARP's seven no-load mutual funds, managed by the Scudder fund family, touts the ''AARP Advantage.'' But MONEY's comparison found nothing extraordinarily advantageous about the funds. Returns have generally been middling, though share prices fluctuate less than those of comparable funds, a sign that Scudder is mindful of the conservative leanings of its AARP clientele. Shareholder service is solid, though not superior to that of most large, no-load groups open to all investors. Management fees are low, and there is no 12b-1 charge, but the funds' total expenses tend to be steeper than the competition's. That is because of higher-than-average operating expenses resulting partly from AARP's costly amenities for shareholders, mostly earmarked for aged novice investors. For instance, Scudder provides separate telephone lines (including a special line for the hearing impaired) just for AARP. The 46 designated phone reps are employed by Scudder, but AARP trains them to be sensitive to older people's concerns. In one exercise, for example, reps wear glasses smeared with petroleum jelly to simulate cataracts. ''The idea,'' explains Scudder vice president Davia Temin, ''is to remind a phone rep not to tell an elderly caller to read the fine print in the fund prospectus.'' Since phone staffers are not permitted to offer specific investment advice, they provide the same information anyone might get calling a major no-load family. Other services from AARP/Scudder, such as recorded 24-hour yield quotations and shareholder newsletters, are also standard for no-load mutual fund groups. MONEY's advice: evaluate all funds, AARP's included, to find the ones that best meet your needs. Note that a seven-fund family cannot offer all the categories or provide the full portfolio diversification sought by many investors. There are, for example, no aggressive growth, international, precious-metals or tax-free money-market funds. Here's a rundown of what AARP does offer: -- Like most fund groups, AARP's family is anchored by a money-market fund. Originally, AARP Money Fund bought only U.S. Government securities, the safest type. The trade-off, though, was a lower-than-average yield. Last spring, the $209 million fund began to buy other high-quality securities such as AAA-rated corporates to narrow its yield disadvantage compared with other funds. As yet, however, the move has had little impact: AARP's recent yield of 6.67% is still about 0.2 percentage points below that of the average high-quality money- market fund. -- At the other extreme of the risk spectrum is the $94 million Capital Growth Fund, which invests in stocks of fast-rising companies. It has been AARP's star performer, up an average of 18.6% annually from its inception in 1985 through mid-1988. Over the same period, all growth funds rose an annualized 15.5%, on average. -- AARP's other equity fund, the $247 million Growth and Income Fund, buys dividend-paying stocks as well as convertible bonds to help dampen swings in the share price. This fund returned an annualized 16.2% from 1985 through mid- 1988, typical in its category. Like any stock fund, however, it is not immune to risk. In last October's crash, the fund fell 15.3%, compared with a 14.2% drop for the average growth and income fund. -- The most popular AARP fund by far is the $2.8 billion GNMA and U.S. Treasury Fund, which splits its portfolio between Government National Mortgage Association securities and Treasury bonds. The fund's annualized total return of 10.3% since its launch in 1985 matches the average for all GNMA funds. -- Another taxable fixed-income fund, AARP's $123 million General Bond Fund, invests in high-quality corporates that fluctuate in value more than GNMAs do. This fund has been up 9.1% annualized since 1985 vs. 11.4% for the category. -- AARP's two tax-exempt bond funds, the $288 million Insured Tax Free General Bond Fund and the $79 million Insured Tax Free Short Term Fund, have also lagged the competition. An investment in Tax Free General grew at an 8% annual rate through midyear, compared with the category average of 11.7%. The short- term muni fund returned only 5.8%, in a field averaging 7.9%. A major reason for this subpar performance is that unlike most muni funds, AARP's funds buy only insured bonds -- ones guaranteed by a private insurer against default. The cost of the insurance reduces yields by one-quarter to one-half of a percentage point. Some mutual fund authorities, such as Gerald Perritt, editor of the Mutual Fund Letter (205 W. Wacker Dr., Chicago, Ill. 60606; monthly, $115 a year), argue that muni fund insurance protects too little and costs too ! much. While it removes the risk of default, it does not safeguard shareholders against the far more serious risk that rising interest rates will cause their share values to drop. Moreover, says Gerald Perritt, a competent muni fund manager can minimize the risk of default at no extra cost by analyzing and monitoring his bonds. One or two unforeseen credit problems will have only a small impact on the value of a well-diversified, uninsured fund. -- Eric Schurenberg

PHARMACY Good prices if you can wait a week

The savings from the AARP Pharmacy Service could be worth the $5 price of admission into AARP all by itself. There are only two reasons not to consider buying prescription drugs from AARP or from one of its mail-order competitors: you can't wait a week to receive your medication or you need to consult a pharmacist in person. Obviously the AARP pharmacy and its postal-outlet competitors cannot beat the convenience of the local drugstore. But AARP is next best in speed, aiming for deliveries within six days (see the table below). AARP also offers same-day service at its 12 walk-in centers around the country. When using a mail-order pharmacy, you typically get its catalogue and then send in an order form, with your doctor's prescription. Refills may be requested by phone. The pharmacy will send the bill with your medication. Unlike the other mail-order pharmacies, AARP offers braille labeling on containers. But both Medco's National Pharmacies and Baxter Healthcare feature a 24-hour toll-free emergency hotline for consultations with pharmacists; AARP's 12 toll-free numbers are staffed only weekdays and from 9 a.m. to 5 p.m. local time. The hotline of America's Pharmacy is not available Saturdays or after 9 p.m. central time. Members who order prescription drugs from the AARP Pharmacy Service can expect fair and sometimes exceptionally low prices -- as well they should, considering the group's ability to buy in bulk. AARP Pharmacy, the nation's second largest private mail-order drug operation after Medco's National Pharmacies, regularly stocks some 5,000 brand-name prescription drugs and 825 generics. AARP also sells limited brands of over-the-counter items such as aspirin, shampoo, toothpaste and suntan lotion. Prices resemble those at discount stores. AARP encourages members to buy generic drugs rather than brand names to get savings -- as much as 75% -- and this is basically sound advice. Food and Drug Administration studies confirm the safety of generics for most prescription drug users. Patients should consult their doctors before switching from brand names, however. -- Mary Granfield

HOMEOWNERS INSURANCE A contender but not always No. 1

Anyone 50 or older who needs homeowners insurance ought to at least send in a request form published in Modern Maturity for a price quote from AARP. (You can't get an estimate unless you are an AARP member.) Then contrast the cost of coverage AARP sells jointly with The Hartford against rates from several other companies. In some areas and situations, you may find AARP's homeowners a good buy. Then again, in other circumstances, you could find it a bum deal. There is no household insurer who offers the best terms across the board (see the table, above right). Retirees, in particular, should not be shy about shopping around since insurers consider them preferred risks and consequently discount their rates. An old saw among insurance agents is that if lightning strikes, a retiree is more likely to be home to put out the fire. Price is the main consideration when choosing homeowners insurance, since coverage is fairly standard. Most homeowners buy the policy known as an HO-3 and, if necessary, purchase extra coverage for their valuables. The AARP/ Hartford policies, unlike those of some competitors, do not cover mobile homes, farms or houseboats, however. You will also be turned down if you heat primarily with a wood stove or use more than 25% of your home for business purposes. Like some insurers, AARP/Hartford offers a discount on its auto and homeowners policies if you buy the combo. In AARP's case, you get 10% off auto and 5% off homeowners. Many AARP members get the homeowners coverage, which averages $300 to $600 a year, just to save on auto insurance that can easily cost more than $600, says Ron Hagen, director of insurance services for AARP. Half a dozen states, including Massachusetts and New York, prohibit such tie- in discounts, however. Service among insurers does vary somewhat. State regulators do not keep separate complaint files for AARP/ Hartford homeowners policyholders, but The Hartford's own service record is generally considered above average. As with some of its other financial products, AARP boasts that its homeowners customers can talk with phone service reps specially taught to deal with the elderly. But don't let that factor be decisive if the price isn't right. -- Marguerite T. Smith

AUTO INSURANCE Drivers: You'd better shop around

Think twice before signing up for the auto insurance plan offered jointly by AARP and The Hartford. High annual premiums and surcharges levied after traffic violations or accidents spoil the deal for many policyholders, particularly those over 70. Even AARP staffers admit their automobile insurance plan could be improved. ''There are significant numbers of people who could do better elsewhere,'' says Ron Hagen, AARP's director of insurance services. AARP's only possible edge is the quality of its policyholder service. In three offices around the country, The Hartford maintains a staff of 2,000 customer service representatives who work exclusively with AARP members. As part of an eight-week training session, new reps are taught by a gerontologist how to respond to the special needs of the elderly. For example, they learn how to enunciate better when speaking on the phone with the hearing-impaired. In the table on the next page, MONEY compared AARP's mail-order auto insurance with policies sold by four nationally respected companies. Three serve the general public: State Farm, Geico and Allstate. USAA, like AARP, restricts its policyholders to a defined group -- in this case, active and former military officers. The companies quoted premiums for hypothetical drivers in St. Petersburg, Phoenix and Bellwood, Ill., a small Chicago suburb. AARP did not sell the least expensive policy in any of the nine examples. In four cases, its insurance was the most costly. When AARP started selling car insurance five years ago, it aimed for premiums as much as 10% below those of State Farm, the nation's largest auto insurer. Today, AARP's premiums often rise well above that target level. In one of our comparisons, AARP charged 80% more than State Farm. Also unlike some other insurers, AARP sometimes assesses drivers in their seventies far more than those in their sixties. AARP takes a particularly tough stance on accidents and traffic violations. If your car gets wrecked or you are caught speeding, you can expect to find a surcharge tacked on to your premiums for the next three years. As a test, MONEY asked the five insurers for the penalties they would impose on a retired 65-year-old married couple with a 1984 Buick Regal Coupe and a 1982 Buick Skyhawk Limited Coupe if they were fined for driving 15 miles per hour over - the limit and if they filed an accident claim during their first year as policyholders. AARP's surcharges were highest or second highest in all but one of the cases surveyed. For example, if the couple filed an accident claim in Bellwood, Ill., they would see their AARP premiums rise 56%, compared with a 4% increase by State Farm. Add on a speeding conviction and that would raise their AARP premium another 26%. State Farm would not add that surcharge. Some insurers give big breaks to policyholders with 10-year clean-driving records. Not AARP. If the couple cited above had no accidents in the previous 10 years, State Farm would waive its surcharge for their first accident claim. AARP would cut their surcharge by 39%, at most. USAA would not levy a surcharge on long-term policyholders after their first speeding violation. AARP would in some states, as would Allstate and Geico. AARP policyholder discounts are typically provided by other major insurers too. AARP sales brochures boast of low mileage credits and lower premiums for mature drivers, as well as discounts for defensive-driver training or good safety records. Most are offered by the other insurers MONEY surveyed. Moreover, some competitors discount more generously. For example, while AARP cuts premiums 10% for policyholders who also take its homeowners plan, Allstate's homeowners discount is 15%, and Geico reduces premiums as much as 20%. (These discounts are not permitted in every state.) Two touted features of AARP's auto insurance actually deliver less than meets the eye. AARP guarantees its premium rates for 12 months, while many insurers only lock in rates for six months. But since AARP premiums generally are high initially, a one-year guarantee may be no bargain. AARP also promises that it will automatically renew your policy every year, regardless of your driving record. Exceptions: people convicted of drunken driving or those who have had their licenses suspended or revoked. Robert Hunter, president of the National Insurance Consumer Organization, says poor drivers would probably pay less in their state's assigned-risk insurance plan than they would paying AARP's surcharge-heavy premiums. ''Guaranteed renewability at inaffordable prices is no guarantee at all,'' says Hunter. -- M.G.

HEALTH INSURANCE Thumbs up on two of its policies

AARP markets three different types of Prudential group health insurance policies through the mail. (It does not offer comprehensive, major-medical coverage, which is prohibitive for most elderly people.) Of the three group policies, two of them provide excellent coverage for the price and one is a clunker. On average, AARP returns to policy-holders 78 cents of each dollar in premiums -- guaranteed -- compared with the industry norm of about 60 cents. AARP's service also stands out: 200 Prudential claims representatives, working exclusively for AARP members, answer toll-free calls weekdays from their Fort Washington, Pa. office. The three policies: Medigap. Most people 65 or older need this type of coverage for hospital and doctor bills that Medicare ignores, and AARP's bears investigating. Its policy has four variations. Three provide identical coverage and do not cover prescription drugs but have different annual deductibles for hospital and doctor bills ranging from zero to $200. Price: $143.40 to $591 a year. The fourth AARP Medigap policy costs an additional $280 a year and reimburses up to $500 annually for prescription drugs. ''We have heavy claims experience on that one, which is why the reimbursement is low,'' says William Matusz, who runs AARP's health insurance operation. ''But we feel it's important to offer prescription drug coverage to the elderly.'' Like most other Medicare supplemental plans, AARP's has a drawback: it pays only those doctor fees Medicare deems reasonable. The difference between Medicare's rates and actual rates can be large. For example, an office visit to an Atlanta internist can cost as much as $150, but Medicare will reimburse you for only $21.84. If you are in excellent health or know that your doctor's fees are within the Medicare guidelines, AARP's Medigap policy will deliver among the best values around. Whether you buy AARP's Medigap policy or a competitor's, plan to shop for coverage again after January, when the new law expanding Medicare coverage begins phasing in and new Medigap policies hit the market. If you already carry a Medigap policy, the insurer will update your coverage to reflect the law. Long-term care. The exorbitant cost of nursing homes ($24,000 a year, on average) makes policies such as AARP's worth considering. But like most of the 80-odd competing nursing-home and home health-care plans, AARP coverage is limited. The policy, which costs $240 to $1,620 a year, pays a flat $50 daily benefit -- 25% below typical nursing-home costs -- and stops paying benefits after only three years. By contrast, policies from Aetna, John Hancock and others offer daily benefits of as much as $100 and pay for up to six years. But premiums run about $300 to $2,000 annually. The AARP long-term-care policy does boast three distinct advantages over competitors'. Unlike some plans, AARP will cover Alzheimer's disease if it is diagnosed after purchase of the policy. Some policies require that you be hospitalized before they will reimburse for nursing-home stays. AARP's doesn't. AARP also defines care broadly: it covers all types of nursing homes as well as at-home care and adult day-care centers. Hospital-indemnity. Like other insurers' policies, AARP's indemnity policy is a bad buy. This type of coverage pays a flat daily benefit for each day you spend in the hospital; AARP charges $120 to $240 a year for $30 to $160 a day in coverage. Since other medical expenses are not reimbursed, this is a limited and uneconomical use of premium dollars. -- Lani Luciano

CREDIT UNION Safe savings and a Visa card too

The five-month-old AARP Federal Credit Union may someday become one of the organization's major operations. If just 4% of members join, it would become the nation's largest credit union -- and it is already worth a look for anyone 50 or older who needs a Visa card or a money-market savings account. It is also supersafe: accounts and certificates are federally insured up to $100,000 by the National Credit Union Administration. As yet, though, you won't find one-stop banking at AARP Federal. The credit union does not grant mortgages or personal and home-equity loans, although one day it may. You will probably never want to keep checking or saving accounts at AARP Federal if you prefer banking face to face. The credit union keeps costs down by eliminating walk-in branches, says president P.A. Mack Jr. Instead, it operates via a toll-free number (800-642-1181) and also accepts deposits or withdrawals at any of the 19,650 automatic teller machines in the nationwide PLUS network. If you have never heard of AARP Federal, that is intentional. AARP is rolling it out slowly and quietly, with the first national advertising planned in Modern Maturity in January. Its investment manager, Scudder Stevens & Clark, and its back-office administrator, Banc One, don't want to get prematurely flooded with cash or paperwork. AARP Federal does tend to nickel-and-dime members when they sign up. To join, you must pay a separate membership fee of $5 and open a savings account with a minimum deposit of $250. By contrast, banks and thrifts don't charge fees to belong, nor do they require that all customers open savings accounts. But once you are on board, the deal improves. AARP Federal's checking and savings plans are at least equal to the competition. Banks typically demand $500 to $2,000 to open money-market accounts, but you can get a similar AARP account for as little as $250. In either case, you are limited to writing three checks, other than for cash, each month. The AARP credit union also offers four different certificates of deposit with maturities of six months to five years. You can find higher yields, as AARP's tend to lag behind those at banks and thrifts (see Investor's Scorecard, page 39). Recently, an AARP Federal one-year CD yielded 7.56%, compared with the national average of 7.89%. Perhaps AARP Federal's biggest sales point is its Visa card. The $10 annual fee is lower than the average $14 to $17 at banks, and its 14.9% annual interest rate is well below the 17% to 18% usually charged these days. Also, unlike many banks, which assess interest from the day you make a purchase, AARP allows a 25-day grace period.

Retired people may find it easier to qualify for the AARP Visa than for a similar card from another institution. Despite the Equal Credit Opportunity Act, some lenders do not play fair with older borrowers. ''We consistently find some discrimination against the elderly,'' says Jean Noonan, associate director for credit practices at the Federal Trade Commission. ''Some lenders say, 'No job, no credit, no exceptions.' Others give credit, but on much less favorable terms.'' When you apply for the AARP Federal Visa card, the credit union treats your retirement income like any employee's earnings. If you still don't meet the income threshold to obtain credit -- a figure AARP keeps under wraps -- AARP Federal will ask for more information about your net worth. -- M.T.S.

TRAVEL Discounts galore but tours are costly

AARP's travel bargains may be a prime reason why millions join the organization. The come-ons range from car-rental and lodging discounts to the AARP/Amoco auto club (see the table on page 149). Escorted tours are also available but tend to be costly. One big advantage in all AARP travel programs: they are open to members over 50 and their spouses of any age; most airlines and hotels offer senior citizen discounts only to people 62 or older. Price breaks on renting a car or staying in a hotel just once could more than cover the $5 annual AARP membership fee. Avis, Hertz and National give AARP members discounts of 5% to 25%, depending on when, where and what type of car you rent. Eighteen lodging chains, including Sheraton and Holiday Inn, also cut room rates 10% to 50%. American Airlines offers AARP members a 10% discount on some fares. (Anyone over 65 can get 10% off some of American's flights as well as hotel and tour discounts, however, by paying a one-time $25 membership fee to join the airline's Senior Saver Club.) Finally, AARP offers discounts of 5% to 28% on more than 100 cruises available to the general public from Princess Cruises, Holland America and 12 other lines. The AARP Travel Service -- run by Olson-Travelworld and Rural Route Tours, major tour packagers -- features a diverse menu of about 250 escorted tours for members who want to travel exclusively with small groups of people their own age and their families. (Minimum age: 12.) AARP reviews Olson and Rural Route itineraries, monitors the programs and follows up on criticisms but does not directly control the travel operation. To arrange a trip, a member calls the AARP Travel Service's special toll-free numbers (800-227-7737 or 800-448-7010) for brochures. He then phones back for booking or asks his own travel agent to do so. The Travel Service offerings compete most directly with such other packagers of tours for seniors as Grand Circle and Saga International Holidays. AARP provides the widest range of travel choices. These include accompanied tours to most parts of the globe, while Grand Circle covers only international travel and Saga, though providing both, has only 25 domestic itineraries. All three ''offer a combination of price and value,'' says Caroline Weintz, author of The Discount Guide for Travelers over 55 (Dutton, $7.95). AARP generally charges a bit more, however. For example, its 17-day Alpine tour starts at $1,998. Saga's similar 16-day trip runs $1,579 and up. Grand Circle offers a 20-day Alpine tour for as little as $1,995. On a per-day basis, AARP's version runs a minimum of $118 vs. $99 and $100 for Saga and Grand Circle, respectively. Arthur Frommer, the veteran travel writer, notes that tour packages can vary in price by several hundred dollars because of differences in the number of meals that are included, extra excursions and the quality of the accommodations. He suggests that if you want to take a seniors' trip, pick two comparable tours and then ask the operators to explain precisely why their prices differ. Frommer adds that tours catering specifically to elderly travelers rarely offer the most economical packages. They do typically provide special services targeted at an older age group, however. For example, AARP asks prospective travelers to fill out questionnaires on hearing, vision, allergy, mobility and other problems. If a trip to India, say, seems too ambitious for an AARP member, a Travel Service agent might suggest a less demanding itinerary. All three operators try to ensure that hotels they book have elevator service and that their groups avoid long hauls by bus or on foot, key considerations that tour packagers to the general public may ignore. -- M.T.S.

TAX PREPARATION Recommended for simple returns

You have nothing to lose by trying AARP's free Tax-Aide program -- and you may gain a great deal, especially if you have never used a professional tax preparer. But you don't have to be an AARP member to take advantage of this service as long as you are over 60. Tax-Aide is part of the larger Internal Revenue Service program called Tax Counseling for the Elderly (TCE). The IRS coordinates training of the 30,000 AARP and the other 38,000 TCE volunteers who assist in filling out returns from Feb. 1 to April 15 or beyond, for late filers. The tax counselors set up shop in neighborhood churches, schools and libraries -- and make house and hospital calls to shut-ins. Though Tax-Aide may be a boon if you need straightforward guidance on a simple income tax return, its volunteers, unlike accountants, will not suggest tax planning strategies or offer year-round consultations. If a Tax-Aide counselor makes a mistake costing you money, AARP will not pay the tax penalty and interest, as H&R Block and some other commercial tax preparers will. The risk of a costly mistake appears small, though. According to the IRS' most recent figures, TCE volunteers erred on only 4.9% of the 1040 forms they worked on for 1987. (The IRS does not break out separate error rates for AARP Tax-Aide volunteers.) Note that the 4.9% TCE error rate beats that of IRS employees paid to assist the public (5.9%). U.S. taxpayers in general had a 9.1% error rate. -- M.T.S.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: How AARP's products and services stack up DESCRIPTION: Comments on offering of American Association of Retired Persons.

- CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Check It Out Why it pays to shop for prescription drugs AARP's pharmaceutical prices are competitive, though not invariably lower than others such as Medco's National Pharmacies, available to members of the National Council of Senior Citizens, an AARP rival that charges a $12 annual fee ($16 per couple), or Baxter Healthcare's Mature Outlook, a Sears Roebuck discount club with a $9.95 annual fee. America's Pharmacy, the fourth national mail-order service surveyed, sells to the general public. It affixes a 75 cents-a-package handling charge; rates from the other three include postage. Chain-store prices below are averages based on a survey of 70 of them by Medi- Span, an independent firm; quotes assume a 10% senior-citizen discount, which is commonplace. The one advantage of a local economy chain is instant availability. AARP aims for an average arrival time of six days after receipt of an order -- a schedule it met in a MONEY spot test. National Pharmacies estimates seven to 10 days delivery, Baxter and America's Pharmacy 10 days to two weeks. Each drug is followed by its generic equivalent. Prices are for 100 tablets. DESCRIPTION: See above.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Check It Out Prices for five home policies

In these two representative examples of annual homeowners insurance prices, AARP/Hartford is in the ball park but isn't the champ among five national competitors. MONEY asked the insurers for premi ums on $150,000 of property coverage, $105,000 to $150,000 replacement-cost coverage for contents and $100,000 of personal liability coverage on three-bedroom, wood-frame houses owned by retired, nonsmoking couples over age 65. All prices assume that deductibles are $250 and that the owners have deadbolt door locks and room smoke detectors. Finer details of coverage differ slightly. DESCRIPTION: See above.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Check It Out Comparing five large auto insurers

This table indicates the necessity of getting prices from a variety of auto insurers, including AARP. USAA premiums generally were the lowest of the five insurers surveyed, but their poli cies are restricted to current and former military officers. The second most favorable in our three case studies was State Farm. Our hypothetical Policyholder A is a retired 75-year-old married ) male driver whose wife is not covered. He drives a 1984 Buick Regal Coupe. Policy holder B is a retired 65-year-old married couple with a 1984 Buick Regal Coupe and a 1982 Buick Skyhawk Limited Coupe, both insured. Policyholder C is a 55-year-old married couple in which the husband drives to work and both spouses' cars, a 1984 Buick Regal Coupe and a 1982 Buick Skyhawk Limited Coupe, are insured. In each of these policies, deductibles were $100 for comprehensive and $200 for collision. Coverage included $100,000 of liability insur ance, $25,000 for property damage, $5,000 for medical or personal injury protection and $25,000 of uninsured motorist insurance. Bellwood, Ill., a small town near Chicago, was in cluded to represent a suburban location. DESCRIPTION: See above.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Check It Out AARP's Auto club vs. five big competitors DESCRIPTION: Comparison of the American Association of Retired Persons Auto Club benefits with those of five other auto clubs.