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Colonial Penn Life Insurance Review: Quick Coverage, but Limited Payouts

Colonial Penn Life Insurance Review: Quick Coverage, but Limited Payouts

Editor's Rating

Final expense insurance for those that want quick coverage.

Good for

  • Final expense insurance
  • Quick turnaround coverage
  • Flexible coverage lengths

Bad for

  • Income replacement
  • Low-cost term life insurance
  • Terminally ill consumers
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Editor's Rating

Final expense insurance for those that want quick coverage.

Good for

  • Final expense insurance
  • Quick turnaround coverage
  • Flexible coverage lengths

Bad for

  • Income replacement
  • Low-cost term life insurance
  • Terminally ill consumers
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Colonial Penn offers a range of life insurance products that combine simplified underwriting with a limited death benefit. They're best suited for consumers who don't need a large payout — perhaps just enough to cover funeral expenses — and would typically have trouble buying coverage elsewhere due to age or medical history.

This company offers competitive pricing for its final-expense products, but if you're young or healthy, you should probably compare quotes from other insurers. Colonial Penn's term and whole life insurance products don't require a medical exam and have a maximum death benefit of $50,000, meaning you'll typically pay higher premiums and can't buy more coverage later on if your financial needs change.

Colonial Penn life insurance products by type

Colonial Penn specializes in life insurance products with smaller death benefits and limited underwriting. Often referred to as final-expense insurance, these products make the most sense for people who want to have coverage in place quickly.

For instance, someone in poor health may only need a small payout to cover funeral expenses, a loan or another limited financial obligation.

Depending on your financial needs, Colonial Penn offers three types of life insurance policies:

Term life insurance
Guaranteed acceptance program
Whole life insurance
Monthly premium range$12.49 – $56.46$9.95 – $79.60$29.65 – $133.24
Changes in premium?Yes, premiums increase with ageNoNo
Death benefit$10,000 – $50,000Approx. $400 – $17,000$10,000 – $50,000
UnderwritingApplication with health questions; no medical examNo health questions; no medical examApplication with health questions; no medical exam
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Sample premiums are for a 50-year-old man. The range represents the difference between the minimum and maximum coverage offered.

You can apply for all of Colonial Penn's life insurance products online, and none require a medical exam. This is convenient for consumers who want to quickly purchase coverage. While Colonial Penn also advertises a 30-day money-back guarantee, this feature isn't unique and shouldn't be a reason you decide to purchase from them.

Most states have "free look" laws requiring insurers to provide a full refund, if requested, for 10 to 30 days after purchase.

Colonial Penn term life insurance

Colonial Penn offers a one-year level term life insurance policy, meaning you essentially start a new term each year. The term life policy also has a limited death benefit, with a maximum value of $50,000, which can be designated to either one or two beneficiaries.

Cost

Since the policy has a one-year term, the premiums you pay increase as you get older, typically in five-year increments. For example, a woman who purchases $50,000 of coverage would pay:

  • $35.21/month between the ages of 41 and 45
  • $45.21/month between the ages of 46 and 50
  • $56.46/month between the ages of 51 and 55

If you know you want coverage for a longer period of time, you'll pay a higher average premium with Colonial Penn than if you purchased a longer-term policy elsewhere (such as a 10-year or 20-year term) since your risk profile increases with age. In addition, you can find lower prices elsewhere with significantly more coverage because Colonial Penn has a limited underwriting process with no medical exam. This raises premiums, as they're unable to verify your health status.

Given these factors, if you're fairly healthy and not concerned about your ability to pass a medical exam (they're simple and only take about 30 minutes), you can save a lot of money over time by getting a fully underwritten policy elsewhere.

Restrictions

Colonial Penn does not offer term life insurance in Maine, Massachusetts, Montana, New York or Vermont. New policies are only available until age 75 but, if you already have coverage in place with Colonial Penn, you can continue to renew annually and maintain coverage until age 90.

Colonial Penn guaranteed acceptance program

Colonial Penn's guaranteed acceptance program is a whole life insurance policy with a limited death benefit, and is often marketed to seniors who want to reduce their family's financial impact upon their death.

Unlike some final-expense insurance products that let you choose a particular payout, Colonial Penn collects your age, gender and location, then assigns you a "unit" of coverage (policyholders can purchase up to eight units). Since the price is fixed, the amount of coverage available per unit varies according to your risk profile. The minimum value of a unit of coverage is approximately $400 and the maximum is approximately $2,100, meaning the maximum death benefit you can select is around $16,800.

For example, say one unit of coverage provides a $1,621 death benefit for a 60-year-old woman. If she wants the policy to cover all of her funeral costs — which generally average $10,000 — she should purchase seven units of coverage. The policy would offer a total benefit of $11,347 to her beneficiary when she dies.

Since the guaranteed acceptance coverage is a form of whole life insurance, it accumulates a cash value that can be borrowed against at an 8% annual interest rate.

Cost

Monthly premiums are directly tied to the number of units purchased, and each unit costs $9.95 per month. You can purchase up to eight units, so the maximum monthly premium is $79.60. If you pay annually, you receive a discount equal to one month's premium, or an 8.3% discount for the year.

Restrictions

A guaranteed acceptance policy can only be purchased between the ages of 50 and 85, and the policy's death benefit is limited for the first two years of coverage. If you die during the first two years, unless due to an accident, your beneficiaries would receive a smaller payout (the sum of your premium payments with 7% interest compounded annually). This type of clause is regularly included by every insurer that offers guaranteed acceptance policies, as it wouldn't be economical for them to offer such a product otherwise.

Colonial Penn whole life insurance

If you're willing to answer health questions about yourself or haven't yet reached 50, Colonial Penn offers traditional whole life insurance as an alternative to the guaranteed acceptance program. Since the company can better assess your risk through health questions, this policy's death benefit can be as high as $50,000 in value. However, it's still significantly lower than what is available through other insurers.

Cost

Colonial Penn's whole life policy lets you choose the particular death benefit you want, meaning premiums vary based on your risk profile. To give you a sense of the range of monthly premiums, we've pulled sample rates for the maximum and minimum coverage amounts offered:

40-year-old man
40-year-old woman
75-year-old man
75-year-old woman
$10,000 death benefit$18.71$14.36$118.29$94.07
$50,000 death benefit$76.04$56.79$576.44$455.36
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These quotes are meant to be illustrative and are not binding. You may be quoted a different amount based on your personal details.

Restrictions

Colonial Penn does not offer whole life insurance in Maine, New York or Vermont, and policies can only be purchased between the ages of 40 and 75.

Colonial Penn customer reviews and complaints

Colonial Penn has a Financial Strength Rating of A- (Excellent) from A.M. Best, which means it has plenty of resources on hand to pay claims. Consumers also tend to give positive feedback regarding Colonial Penn's quick and simple claims process.

However, Colonial Penn receives a significant number of complaints about its aggressive sales tactics targeting the elderly. In addition, many people felt they purchased either the wrong product or didn't understand the product before buying it.

While this is true for any insurance product, if you're considering purchasing life insurance from Colonial Penn, it's incredibly important to review all documents and materials yourself before submitting an application or purchasing coverage.

Life insurance payments

Colonial Penn offers multiple payment options for all its life insurance products:

Payment method
Details
Credit cardsTypically accepts Visa, Mastercard and Discover
Electronic funds transfer (EFT)Payments are automatically deducted from your bank account. In some cases, the first payment must be made by check before EFT can be implemented.
Direct billingA bill is sent to you each payment period.
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How much are Colonial Penn's life insurance rates?

For a 50-year-old man, rates for term life insurance from Colonial Penn can range from $13 to $57 per month. Guaranteed acceptance policies ran between $10 and $80 per month, while whole life insurance was the most expensive at $30 to $133. Ultimately, your own quotes will depend on your age, gender and the amount of coverage you select. Find out more about how much life insurance typically costs.

Who is Colonial Penn's life insurance good for?

We think Colonial Penn makes the most sense if you just want a small amount of coverage for funeral costs and other end-of-life expenses rather than full coverage. Colonial Penn's low underwriting requirements are especially beneficial if you have trouble obtaining coverage elsewhere due to advanced age or a complicated medical history.

What other providers offer final-expense insurance?

Besides Colonial Penn, we recommend checking out final-expense insurance from providers such as AAA, AIG and Gerber. These companies offer competitive rates for coverage options that are fairly similar to what Colonial Penn offers. For a more in-depth look at these providers, read our guide to final-expense insurance.

Maxime Croll

Maxime is a Sr. Director at ValuePenguin focusing on the insurance industry. Previously she was the Director of Product Marketing at CoverWallet, a commercial insurance startup, and helped launch NerdWallet's personal insurance business. Maxime has contributed insurance insights and analysis to Forbes, USA Today, The Hill, and many other publications.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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