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

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

Final expense insurance for those that want quick coverage.

Editor's Rating

3.0/5.0

Good for

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

Bad for

  • Income replacement
  • Low-cost term life insurance
  • Terminally ill consumers

Find the Cheapest Insurance Quotes in Your Area

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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 towards shoppers that don’t necessarily want a large payout, perhaps just enough to cover expenses associated with their passing, and would typically have trouble obtaining coverage elsewhere due to their age or a medical history.

While the costs for Colonial Penn’s guaranteed acceptance insurance are on-par with those available for similar final expense products, if you’re in good health or young, we would advise you to 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 won’t be able to purchase a greater amount of coverage should your financial needs change.

Colonial Penn Life Insurance Products

The Colonial Penn Life Insurance Company specializes in life insurance products that have small death benefits and limited underwriting, a class of products often referred to as final expense insurance. These products are typically favored if you want to have coverage in place quickly, perhaps because you’re in poor health, and only need a small payout in the case of your passing (to cover funeral expenses, a loan, or other limited financial obligation).

Depending on your financial needs, Colonial Penn offers 3 types of life insurance policy:

Term Life InsuranceGuaranteed Acceptance ProgramWhole 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

Sample premiums are for 50 year old male, with the range representing difference between minimum and maximum coverage offered

All of Colonial Penn’s life insurance products can be applied for online and none require a medical exam, both convenient features for those that 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 1-year level term life insurance policy, meaning you essentially start a new term each year. Their term life policy also has a limited death benefit, with the maximum value being $50,000, which can be designated to either 1 or 2 beneficiaries.

Cost

Since the policy has a 1-year term, the premiums you pay increase as you get older, typically in 5-year increments. For example, a woman that purchased $50,000 of coverage would pay:

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

This means that if you know that 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 with other insurers for significantly higher levels of 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 that 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 which can be purchased for $9.95 (you can purchase up to 8 units of coverage). 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 could select, assuming you qualified, is less than $17,000.

As an example, for a 60 year old woman, 1 unit of coverage would provide a $1,621 death benefit. If she wanted coverage to take care of all the costs associated with her funeral (the average cost being around $10,000), she could purchase 7 units of coverage for $69.95 per month. This would offer a total death benefit to her beneficiary of $11,437 when she passed (7 multiplied by $1,621).

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

Cost

Monthly premiums are directly tied to the number of units of coverage purchased, with 1 unit equaling $9.95 per month. Since you can purchase up to 8 units, the maximum monthly premium is $79.60 (8 multiplied by $9.95/mo). Keep in mind that, 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 to 85, and the policy’s death benefit is limited for the first 2 years of coverage. This just means that, in the case that you died during the first 2 years of coverage, unless your passing was considered to be an accidental death by the insurer your beneficiaries would only receive a minor 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 their Guaranteed Acceptance Program. Since they’re better able to assess your risk through the health questions, this policy’s death benefit can be as high as $50,000 in value, though this is still significantly lower than what is available through alternate insurers.

Cost

Colonial Penn’s whole life policy lets you choose the particular death benefit you want, meaning premiums vary based upon 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 Male40 Year Old Female75 Year Old Male75 Year Old Female
$10,000 Death Benefit$18.71$14.36$118.29$94.07
$50,000 Death Benefit$76.04$56.79$576.44$455.36

These quotes are meant to be illustrative and are not binding. You may be quoted a different amount based upon 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 & Complaints

Colonial Penn has a A-, or Excellent, rating from A.M. Best, indicating their financial strength which is reflected in their positive feedback. Many beneficiaries have experienced a quick and simple claims process once their loved ones passed.

However, Colonial Penn receives a significant number of complaints suggesting they have aggressive sales tactics targeting the elderly (some even criticizing Alex Trebek, their spokesman). In addition, many purchasers felt they purchased either the wrong product or a product whose features weren’t properly explained beforehand.

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 MethodDetails
Credit CardsAccepts Visa, MasterCard and Discover (this option not available for all products in Pennsylvania).
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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