Are the AARP benefits and discounts worth the yearly membership cost?
"Note: this answer was provided when the question was only about Life Insurance, therefore it does not address any other ""benefits"" Term Life Insurance is very easy to evaluate, once you have determined how much you need and for how long. For significant amounts of coverage they may require a physical to be performed. The price quotes will be for  two levels of health, so you can compare costs from many companies quite easily.  You have several sources in no particular order: employer, independent company, 3rd party like AARP, AAA, or via you bank or credit union. Note that the 3rd party will be getting a cut of the premium. Also some choices offered from the employer or 3rd party may be limited in size or duration. The independent companies will be able to have terms that extend for 10 years or more. So view the insurance offered by AARP as just another option that has to be compared to all your other options." It depends on you. If you're not an aggressive shopper and travel , you'll recoup your membership fee in hotel savings with one or two stays. Hilton brands, for example, give you a 10% discount. AARP discounts can sometimes be combined with other offers as well. From an insurance point of view, you should always shop around, but sometimes group plans like AARP's have underwriting standards that work to your advantage.
The snide answer is because they can. The psychological answer is that it drives loyalty. Because you have spent money on the membership, you are more likely to go back several times in the year in order to get your money's worth. Once you are in the store, impulsiveness can have its way with you, as you leave the store with a cart full of items that you didn't know you needed until you saw their low price. When we speak about a product or service, we generally refer to its value. Currency, while neither a product or service, has its own value. As the value of currency goes down, the price of products bought by that currency will go up. You could consider the price of a product or service the value of the product multiplied by the value of the currency. For your first example, we compare two cars, one bought in 1990, and one bought in 2015. Each car has the same features (AC, radio, ABS, etc). We can say that, when these products were new, each had the same value. However, we can deduce that since the 1990 car cost $100, and the 2015 car cost $400, that there has been 75% inflation over 25 years. Comparing prices over time helps identify the inflation (or devaluation of currency) that an economy is experiencing. In regards to your second question, you can say that there was 7% inflation over five years (total). Keep in mind that these are absolute cumulative values. It doesn't mean that there was a 7% increase year over year (that would be 35% inflation over five years), but simply that the absolute value of the dollar has changed 7% over those five years. The sum of the percentages over those five years will be less than 7%, because inflation is measured yearly, but the total cumulative change is 7% from the original value. To put that in perspective, say that you have $100 in 2010, with an expected 7% inflation by 2015, which means that your $100 will be worth $93 in 2015. This means that the yearly inflation would be about 1.5% for five years, resulting in a total of 7% inflation over five years. Note that you still have a hundred dollar bill in your pocket that you've saved for five years, but now that money can buy less product. For example, if you say that $100 buys 50 gallons of gasoline ($2/gallon) in 2010, you will only be able to afford 46.5 gallons with that same bill in 2015 ($2.15/gallon). As you can see, the 7% inflation caused a 7% increase in gasoline prices. In other words, if the value of the car remained the same, its actual price would go up, because the value stayed the same. However, it's more likely that the car's value will decrease significantly in those five years (perhaps as much as 50% or more in some cases), but its price would be higher than it would have been without inflation. If the car's value had dropped 50% (so $50 in original year prices), then it would have a higher price (50 value * 1.07 currency ratio = $53.50). Note that even though its value has decreased by half, its price has not decreased by 50%, because it was hoisted up by inflation. For your final question, the purpose of a loan is so that the loaner will make a profit from the transaction. Consider your prior example where there was 7% inflation over five years. That means that a loan for $100 in 2010 would only be worth $93 in 2015. Interest is how loans combat this loss of value (as well as to earn some profit), so if the loaner expects 7% inflation over five years, they'll charge some higher interest (say 8-10%, or even more), so that when you pay them back on time, they'll come out ahead, or they might use more advanced schemes, like adjustable rates, etc. So, interest rates will naturally be lower when forecasted inflation is lower, and higher when forecasted inflation is higher. The best time to get a loan is when interest rates are low-- if you get locked into a high interest loan and inflation stalls, they will make more money off of you (because the currency has more value), while if inflation skyrockets, your loan will be worth less to loaner. However, they're usually really good about predicting inflation, so it would take an incredible amount of inflation to actually come out on top of a loan. I came across an article posted at Squawkfox last week.  It's particularly relevant to answering this question.  See 10 Ways to Cut Your Fitness Membership Costs.  Here's an excerpt: [...]   If you’re in the market for a   shiny new gym membership, it may be   wise to read the fine print and know   your rights before agreeing to a   fitness club contract. No one wants to   be stuck paying for a membership they   can no longer use, for whatever   reason.   But if you’re revved and ready to burn   a few calories, here are ten ways to   get fitter while saving some cash on a   fitness club or gym membership. Yay,   fitness tips!    [...] Check it out! I don't have an account with either of those CUs, but I do have membership at 2 different CUs.  If they accept credit card payments online via transfer from another institution, there's no reason to move your money, unless there are other benefits (higher interest rates). All the CUs would likely require is membership ($5 deposit minimum?).  If you were to get a card through Chase or Capital One, you wouldn't be expected to open a checking/savings account with them and transition over to those accounts. Watch this super late post to a 2009 thread.  Thread Necromancy in action! Yes, it's absolutely worth it to get an extended warranty because electronics just don't last as long as they used to. This is ever more prevalent in the year 2013. Is it a ripoff?  Future Shop (in Canada) and Best Buy (U.S. & Canada) offer warranties that are typically 25% of the cost of the product.  That's a huge mark-up, massive! Yet, to my knowledge they are one of the only retailers that you can walk into the store and just drop it off for exchange.  As opposed to, buying a 3rd party extended warranty that is considerably less expensive, yet it puts the burden on you to mail the product in, wait for god knows how long to receive a refurbished, repaired, or new (their choice) product.   It's a gamble, an expensive one. Yet, if you're spending top dollar on a product, wouldn't you like to have some peace of mind that it will last you at least 2-3 years. Unfortunately as I mentioned earlier, electronics (or anything for that matter) just aren't as reliable as you'd hope. The Xbox 360 gaming console was notorious for being poorly made.  In fact, many people not only had to take advantage of the extended warranty, but had to do so, more than 2-3 times. So make sure you do your homework on a product, before you even think about buying it.  What do I do? I buy at Future Shop, Best Buy or Staples for the convenience of dropping off the product in the event of an issue.  I really don't want to bother with the hassle of applying for warranty service and long mail-in / return wait period.  If the product is $100 or so, forget it..and just buy it whoever has it cheapest and cross your fingers. Putting money into your Amazon gift card balance is also a very convenient option, but I like these recurring Red Cross and Wikipedia ideas also. I'm not the guy you're responding to, but you asked a good question. There's a dearth of data, but [about 1% is the estimate.] (http://www.businessinsurance.com/article/20110814/NEWS03/308149986#)  Either way, having increased young adults on an insurance plan is a good thing. Socially, this demographic is exceptionally stinging from the Great Recession and I think the ability to give young adults health insurance (and thus the freedom to start developing a career without worrying about health coverage) outweighs the nominal additional premium costs. Fiscally, having young adults in a group plan decreases the risk profile of that plan since young adults don't incur the same expenses that a 45 or 50 year old would. As someone who has worked for both an insurance carrier and an insurance agent, the reason people buy insurance is two fold: to spread risk out, and to get the benefits (when applicable) of approaching risk as a group. What you are really doing when you buy insurance is you are buying in to a large group of people who are sharing risk.  You put money in that will help people when they take a loss, and in exchange get a promise of having your losses covered.  There is an administrative fee taken by the company that runs the group in order to cover their costs of doing business and their profits that they get for running the group well (or losses they take if they run it poorly.) Some insurances are for profit, some are non-profit; all work on the principle of spreading risk around though and taking risk as a larger group. So let's take a closer look at each of the advantages you get from participating in insurance.  The biggest and most obvious is the protection from catastrophic loss.  Yes, you could self-insure with a group size of one, by saving your money and having no overhead (other than your time and the time value of your money) but that has a cost in itself and also doesn't cover you against risk up front if you aren't already independently wealthy.  A run of bad luck could wipe you out entirely since you don't have a large group to spread the risk around.  The same thing can still happen to insurance companies as well when the group as a whole takes major losses, but it's less likely to occur because there are more rare things that have to go wrong.  You pay an administrative overhead for the group to be run for you, but you have less exposure to your own risks in exchange for a small premium. Another significant but less visible advantage is the benefit of being part of a large group.  Insurance companies represent a large group of people and lots of business, so they can get better rates on dealing with recovering from losses.  They can negotiate for better health care rates or better repair rates or cheaper replacement parts.  This can potentially save more than the administrative overhead and profit that they take off the top, even when compared to self-insuring. There is an element of gambling to it, but there are also very real financial benefits to having predictable costs.  The value of that predictability (and the lesser need for liquid assets) is what makes insurance worth it for many people.  The value of this group benefit does decrease a lot as the value of the insurance coverage (the amount it pays out) decreases.  Insurance for minor losses has a much smaller impact on liquidity and is much easier to self insure.  Cheaper items that have insurance also tend to be high risk items, so the costs tend to be very high relative to the amount of protection.  If you are financially able, it may make more sense to self-insure in these cases, particularly if you tend to be more cautious.  It may make sense for those who are more prone to accidents with their devices to buy insurance, but this selection bias also drives the cost up further.  Generally, the reason to buy insurance on something like a cellphone is because you expect you will break it.  You are going to end up paying for an entire additional phone over time anyway and most such policies stop paying out after the first replacement anyway. The reason why people buy the coverage anyway, even when it really isn't in their best interest is due to two factors: being risk averse, as base64 pointed out, and also being generally bad at dealing with large numbers.  On the risk averse side, they think of how much they are spending on the item (even if it is less compared to large items like cars or houses) and don't want to lose that.  On the bad at dealing with large numbers side, they don't think about the overall cost of the coverage and don't read the fine print as to what they are actually getting coverage for.  (This is the same reason that you always see prices one cent under the dollar.)   People often don't really subconsciously get that they are paying more even if they would be able to eat the loss, so they pay what feels like a small amount to offset a large risk.  The risk of loss is a higher fear than the known small, easy payment that keeps the risk away and the overall value proposition isn't even considered.