Colonial Penn Life Insurance Review | Pros and Cons (2022)

November 7, 2022

63 8 minutes read

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When it comes to selecting a life insurance policy, there are several factors to consider. What type of coverage do you need? Which company should you choose? And, most importantly, what is the right price for you? In this detailed review, we will assess Colonial Penn Life Insurance and determine if it’s the ideal choice for you.

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Colonial Penn Insurance Overview

Colonial Penn offers a range of life insurance options that combine simplified underwriting with a limited death benefit. These policies are especially suitable for individuals who don’t require a substantial payout, primarily covering funeral expenses, and may face difficulties obtaining coverage elsewhere due to age or medical history. The company offers life insurance to customers aged 18 to 85.

Reading: How much life insurance do you get for 995

Colonial Penn provides two types of life insurance products: term and whole life. None of their policies require a medical exam, although there are health questions to determine eligibility. The renewable term life insurance policy allows you to renew until the age of 90, based on your current age at the time of renewal. Seniors aged 40 and above can opt for whole life insurance with a life insurance payout. Customers over 50 can also obtain a guaranteed acceptance whole life policy without a medical questionnaire.

While Colonial Penn offers reasonable prices for its final expense insurance products, it’s important to compare prices from other providers if you’re young and healthy. The policies don’t require a medical exam but generally have higher monthly premiums compared to other insurance companies.

Colonial Penn Life Insurance Policies

Colonial Penn provides various life insurance coverage options, including simplified underwriting and limited death benefits. Their offerings include renewable term life insurance, guaranteed acceptance life insurance, permanent life insurance, and life insurance with an optional life benefit rider.

Pros and Cons of Colonial Penn Life Insurance

Pros:
- Colonial Penn is a well-established insurance company in the industry.
- They hold a strong financial rating of A- with A.M. Best and A- with S&P.
- They offer both term and comprehensive policies.
- Their Colonial Penn 995 plan has gained significant recognition.
- Colonial Penn provides a no-exam policy for term insurance.
- They offer guaranteed acceptance coverage.
Cons:
- Colonial Penn only offers their brand-name products as a captive insurance company, limiting variety.
- The policy options are minimal.
- They do not offer universal life insurance.
- Age restrictions apply, with a minimum age of 18 years for term policies and a maximum age of 75 years.
- Coverage amounts are limited to a maximum of $50,000 for term and whole life plans, with a minimum coverage amount of $10,000.
- Term insurance is only available for 10, 20, or 30 years.

Term Life Insurance

Colonial Penn’s renewable term life insurance policy is available in all states except California, Montana, New York State, and the Virgin Islands. The policy is open to individuals aged 18 to 75, renewable until the age of 90. The maximum death benefit is $50,000, and your monthly premium increases as you age. No medical exam is required; eligibility is determined based on a medical questionnaire.

A one-year term policy is also available, and you can start a new plan each year. The death benefit is limited, with a maximum value of $50,000 assignable to one or two beneficiaries. This policy can be purchased by individuals aged 18 to 75, without a medical exam but with some health questions. The cost is based on age and gender, and it can be renewed until the age of 90.

Whole Life Insurance

Colonial Penn’s permanent whole life insurance policy is available to individuals aged 40 to 75, excluding applicants from New York State or the Virgin Islands. While a medical exam is not required, a health questionnaire is necessary to determine eligibility. This whole life policy provides coverage for your entire life and pays a maximum benefit of $50,000. Cash value begins to accumulate after the first year, and premiums vary based on age and gender. In Montana, premiums are based on age alone.

For individuals who are willing to answer health questions or are under 50 years old, Colonial Penn offers standard whole life policies instead of guaranteed acceptance policies. Applicants aged 40 to 75 can purchase up to $50,000 of coverage per lifetime. Health questions are required, but no medical exam is necessary. The price depends on age and gender.

Guaranteed Whole Life Insurance

Colonial Penn’s Guaranteed Acceptance Policies, often known as final expense insurance, are available for individuals aged 50 to 85. This whole life policy does not require a medical exam, although there is a two-year limited benefit period for guaranteed coverage. During the waiting period, the full death benefit will not be paid to beneficiaries if the insured individual passes away.

Pros of Guaranteed Acceptance Policies:

The policy accumulates cash value from the first year of coverage.
The coverage continues for your lifetime as long as you pay the premium, with a fixed rate.

Cons of Guaranteed Acceptance Policies:

There is a restricted death benefit, primarily marketed towards seniors looking to ease the financial burden on their families after their passing.
No questions about health or medical exams are required, but the premium is higher due to the lack of personal information. Other insurance companies that consider more information, such as health and age, and require a medical exam may offer cheaper premiums.

Coverage amounts vary for each individual, but if the insured individual passes away during the first two years, they will not receive the full amount paid.

Life Insurance Option

Colonial Penn offers an additional feature called the Life Insurance Option. This option allows individuals diagnosed with cancer or other chronic illnesses, or those who have had a heart attack or stroke, to receive up to 50% of their whole life or term life death benefit.

Pricing

The cost of coverage at Colonial Penn varies depending on the type of insurance and the level of protection you select. Their rates are generally 30-150% higher than the best rates available. While their final expense program may seem attractive due to lower premiums, it’s important to note that as you age, the coverage for funeral expenses decreases. For example, a $9.95 life insurance plan at age 50 could be worth $1,786, but at age 75, it may only provide $560 in coverage, which may not be sufficient considering average funeral costs of around $15,000.

Company Overview

Colonial Penn Insurance Company was founded by Leonard Davis, one of the co-founders of AARP, over 50 years ago. It is currently owned by CNO Financial Group. The company was among the first to offer guaranteed acceptance life insurance. While initially established in Philadelphia, its headquarters are now located in Carmel, Indiana, employing 5,000 individuals. Tim Arnold currently serves as the executive director.

The company gained significant visibility through television advertisements featuring the late Alex Trebek as the face of Colonial Penn. Trebek served as a paid brand ambassador for many years, and after his passing, he was replaced by Meredith Viera.

Colonial Penn holds an A- financial rating from A.M. Best, although ratings from Standard & Poor’s and Fitch have been downgraded to BBB+. According to A.M. Best’s financial strength rating, Colonial Penn meets the requirements of a top-tier insurance provider, ensuring it has sufficient funds to pay claims. The National Association of Insurance Commissioners indicates that policies are backed by the claim-paying ability of the issuing insurance company.

Customer Service and Support

As a direct-to-consumer insurance provider, Colonial Penn does not have insurance agents or financial experts available to discuss individual insurance needs. However, you can obtain an insurance policy quote online or contact Colonial Penn’s sales department at 877-877-8052. Customer service is available Monday through Friday from 8:30 a.m. to 10:00 p.m. Eastern Time and Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time.

To cancel your policy, you can contact Colonial Penn’s Customer Service Department at 800-523-9100. You have 30 days from enrollment to terminate your contract and receive a refund of any fees paid if you decide the plan is not suitable for you.

Criticisms and Complaints

Colonial Penn has received a varying number of complaints from different sources, and market research results are inconsistent. However, the Better Business Bureau has granted Colonial Penn an A+ rating, even though it did not make the cut in J.D. Power’s 2020 US Life Insurance Study. Over the past three years, the BBB has received 81 complaints against Colonial Penn, primarily concerning advertising, billing, and sales issues.

Colonial Penn has received numerous complaints over the years, with a complaint rate above the national average. Misleading advertising has played a significant role in these complaints, as some consumers feel deceived when they realize they receive only $10,000 in coverage for a monthly premium of $9.95. Considering the company’s size and restricted coverage plans, Colonial Penn may not be the most suitable option for life insurance.

Colonial Penn Life Insurance Reviews: Evaluating the $9.95 per Month Plan

Colonial Penn’s $9.95 plan, also known as the 995 plan, offers guaranteed acceptance and limited coverage for life insurance products. The death benefits are lower, but there is a cash value component. However, as you age, the coverage for funeral expenses decreases. For instance, at age 50, a $9.95 life insurance plan may provide $1,786 in coverage, while at age 75, it may only offer $560, which may not be sufficient considering average funeral costs.

Comparing Colonial Penn Life Insurance Quotes

To determine the best life insurance policy for your needs, take advantage of our calculator to compare Colonial Penn life insurance rates with quotes from other insurance companies.

Before Making a Purchase

Before comparing insurance companies, it’s crucial to decide what type of policy you want, estimate your coverage needs, and determine the duration of coverage required. Ensure that the insurers you are considering offer the coverage you need. When comparing rates, make sure to request quotes for the same coverage amount, and ensure that the policy’s medical criteria align with your requirements.

To shop for life insurance, obtain quotes from multiple companies, similar to shopping for car insurance. Your goal is to find the policy with the most affordable rates. It’s recommended to purchase insurance from a company with an A.M. Best rating of “A-” or higher, indicating financial stability.

By shopping around and working with an independent agency, you can potentially secure significantly cheaper rates for final expense life insurance or other policies. An independent company can search the market and find the insurance provider that offers the best coverage and rates based on your specific needs.

Conclusion

If you’re seeking a life insurance company that offers a wide range of options and policies, Colonial Penn may not be the ideal choice for you. While they possess good financial ratings and provide term life insurance without a medical exam, their limited product offering may restrict your options. If you’re interested in obtaining a life insurance quote, please reach out to us. We work with numerous top-tier life insurers and will help you find the perfect policy to meet your needs. Feel free to browse our additional reviews below.

Do You Need Assistance?

If you have a pre-existing medical condition and are looking for life insurance, it’s crucial to seek expert help to ensure you get the coverage you need and to avoid potential rejections. Applying for life insurance without a medical exam can be risky, as being denied coverage may result in a waiting period of two years before you can obtain life insurance again.