When you think of Colonial Penn Life Insurance, you probably think of Alex Trebek. Colonial Penn was founded over sixty years ago, by one of the cofounders of AARP. It was one of the first life insurance companies to offer Guaranteed Acceptance life insurance policies. They market these policies to people over the age of 50 and those with health issues: people who might have difficulty buying traditional life insurance.
- Pros/Cons of Colonial Penn Life Insurance
- Products Offered by Colonial Penn Life Insurance: 40/100
- Financial Strength Rating of Colonial Penn Life Insurance: 70/100
- Customer Satisfaction Rating of Colonial Penn Life Insurance: 50/100
- Consumer Complaints Rating of Colonial Penn Life Insurance: 25/100
- Digital Experience Rating of Colonial Penn Life Insurance: 70/100
Pros and Cons
|– No medical exam|
– Policies are available up to age 85
– Rates never increase
– Thirty-day money back guarantee
– Easy online application
|– Maximum payout amount is $50,000|
– Pricing structure is misleading
– High rates
– BBB lists many complaints
– Two-year wait period before they pay a death
benefit for anything except an accident
Products Offered by Colonial Penn Life Insurance
- Guaranteed Acceptance Life Insurance
- Permanent whole life insurance
- Renewable Term life insurance
Guaranteed Acceptance Life Insurance: This is what Colonial Penn advertises in the commercials that appeal to seniors: coverage that can last your lifetime, rates will never increase, and you can’t be turned down. Colonial Penn says it builds cash value which you can borrow against, and you can pay monthly, quarterly, semi-annually or annually. Learn more about Guaranteed Issue/Acceptance Life Insurance
Permanent Whole life insurance: Available to anyone 45-75. The maximum benefit amount is $50,000 which is a small amount of life insurance. You can add a chronic illness rider, so that you get access to half of your policy before your death. This policy starts to build cash value after the first year, which you can then borrow against. There is no medical exam, but there are health questions, meaning you could be denied. This is the type of whole life insurance that is for covering final expenses and/or burial services.
Renewable Term Life Insurance: Available to anyone ages 18-75 (the chronic illness rider is available up to age 64). Unlike the guaranteed acceptance insurance, there are medical questions on the application for term life insurance and an underwriter may call you if you have questions. Rates increase every time you enter a new age bracket (every five years).
Accidental death rider: You can add an accidental death rider to any policy. If you do die in an accident, you get $50,000 more than the face value of your policy. If you have a $50,000 policy and die in an accident, your beneficiaries get $100,000. Learn more about Accidental Death Life Insurance
If you are looking for a traditional whole life insurance or any type of universal life insurance policy: guaranteed universal, or indexed universal, or variable universal insurance, you should look elsewhere. Colonial Penn life insurance don’t offer these life insurance policies.
The Confusion of Colonial Penn’s Life Insurance Pricing
While the pricing of Colonial Penn’s renewable term and whole life insurance are straightforward (although expensive), pricing for the Guaranteed Acceptance Life Insurance is confusing. They advertise, “$9.95 a month! And you can not be turned down!”
It’s true you can’t be turned down, but the $9.95 a month is misleading. It’s actually $9.95 per unit of insurance. Colonial Penn takes your age, gender, and location and then assigns you some amount of coverage. For example, for a 50-year old male, one unit of coverage is $1,786. You can buy up to eight units. As your age increases, the amount of coverage each unit is worth decreases. If this 50-year old waits until he is 51, the $9.95 he pays will only buy $1,732 worth of coverage. An 85-year old male would get only $418 worth of coverage. The maximum amount of coverage this 85-year old man can get would be $3,344 (1 unit= $418 X 8). That’s not even enough to cover funeral costs.
It’s also very misleading. People hear “Only $9.95 a month? I can afford that!” but that price would per unit of coverage and the coverage varies by how old you are.
Financial Strength Rating of Colonial Penn Life Insurance
Colonial Penn gets an A- rating from A.M. Best, or Excellent. This means they have an excellent ability to meet insurance obligations (i.e. pay claims).
Customer Satisfaction Rating of Colonial Penn Life Insurance:
J.D. Power does not rate Colonial Penn. On the BBB’s website, they get an A+. There are also 83 complaints about them in the last three years. The BBB breaks down the complaints for you:
- Advertising/Sales 18
- Billing/Collections 17
- Delivery Issues 1
- Guarantee/Warranty 0
- Problem with a product or service 47
Reading through many of the complaints, some deal with communication problems (for example, I canceled my policy and you still took money out of my account for the next six months). Many of them concern what customers believe to be misleading advertising (some people were denied from guaranteed acceptance policies). You should always read your life insurance policy information and make sure you understand what you are getting.
Consumer Complaints Rating of Colonial Penn Life Insurance
NAIC gives Colonial Penn a ratio of 1.74 for individual life insurance. A ratio of 1.0 is the median amount of complaints one would expect from a company, so a ratio of 1.74 means there are more complaints than you would expect.
Digital Experience Rating of Colonial Penn Life Insurance
You can easily get an online quote from Colonial Penn, and you can play around with how much coverage or units you want. However, some customers complained of a high number of sales calls when they filled out the form.
They website is laid out so that it’s easy to find the information you need. And there’s four online chat people available if you have questions. As far as paying your bill goes, you can do so by check or credit card, but you can’t pay it online. There is no mobile app.
Who Should Consider Colonial Penn Life Insurance?
If you are over 50, or if you have health issues, Colonial Penn may be a good choice. However, it still pays to shop around. Some insurance companies may be able to offer you a better rate, and probably more coverage.
It’s important to shop around for life insurance. Get quotes from several companies before you make a decision. Don’t be afraid to ask questions and make sure you know what you’re getting. If the representative seems impatient or curt with you before you’re a customer, that might be an indication of how they treat people.