A guaranteed acceptance whole life insurance product might be a good fit for seniors with existing health issues, though payouts are significantly lower than average.
If you’ve ever found yourself channel surfing during the day, then you’ve probably already heard all about Colonial Penn life insurance from its sophisticated spokesperson, Alex Trebek. Is Colonial Penn the right answer for your life insurance needs? That depends.
This insurance company offers some tempting enticements, including no medical exams and a guaranteed whole life insurance product. However, what glitters isn’t always gold. The company’s death payouts aren’t very impressive compared to industry standards, and some customers have had problems with its 30-day refund policy. All in all, Colonial Penn might be the ideal insurance company for those in certain situations, but it probably isn’t ideal for everyone. Keep reading to learn more about the benefits and drawbacks of its different insurance plans.
Colonial Penn: best for seniors with pre-existing conditions
The Catch-22 of life insurance is that, often, the people who need it the most face the greatest challenges trying to get it. In this regard, Colonial Penn is a refreshing alternative. While the company offers term life insurance for all age groups, its whole life insurance products are geared squarely toward mature Americans.
In particular, seniors with a pre-existing condition that would make it difficult to find coverage with other insurers will likely be interested in the company’s most popular product, a guaranteed acceptance life insurance plan. This product requires no medical exam, and the company claims that you cannot be denied because of your health.
Younger folks or older Americans with a clean bill of health may be able to find policies with better benefits elsewhere, but if you’ve been denied by another insurer (or fear getting denied), Colonial Penn is definitely worth a closer look.
Things to consider about Colonial Penn life insurance
“Live for today. Plan for tomorrow,” Colonial Penn announces on its website. Those interested in planning for tomorrow can find a lot to like in this well-established company. It has received generally favorable marks from the top ratings agencies, which indicates that it is on solid financial footing and will likely be around when “tomorrow” comes and your family needs to collect on your plan.
Fans of the company will appreciate that it doesn’t require medical exams for any of its products, though you can expect to answer health questions as part of the submission process for two of its products. Locked-in premiums on its whole life insurance products and a clear rate schedule on its term life insurance are also useful benefits.
The primary drawback of the company’s life insurance is that the death benefits are relatively low, capping out at $50,000 for its term life insurance and whole life insurance.
- Guaranteed issue whole life insurance
- No medical exams required for any product
- Locked-in premiums for whole life insurance
- Low death benefit payouts
- No availability in some states
- May not be ideal for younger consumers
Colonial Penn life insurance products
Colonial Penn offers three life insurance products: a standard term life insurance, a permanent whole life insurance, and its flagship product, guaranteed acceptance life insurance.
|Coverage range||Age range||Exam required?|
|Term Life||$10,000– $50,000||18–75||No|
|Permanent Whole Life||$10,000–$50,000||40–75||No|
|Guaranteed Acceptance Whole Life||Varies||50–85||No|
*Table created using information available at https://colonialpenn.com/home as of 11/20/18.
Colonial Penn product details
Colonial Penn doesn’t require medical exams for any of its insurance products, regardless of your age or health. This can be comforting to those who don’t enjoy getting poked and prodded at the doctor’s office. However, be prepared to answer health-related questions if you apply for permanent whole life or term life insurance.
One obvious drawback of the company’s products is that the payout limits of the policy aren’t very high. While other companies are willing to pay out six-digit or even seven-digit benefits, Colonial Penn’s whole life insurance and term life insurance policies top out at a $50,000 payout. That won’t be enough for many individuals, especially younger or middle-aged adults who may wish for their benefit to cover the home mortgage or college costs for the kids.
These insurance plans could, however, offer enough of a death benefit to cover final expenses for those who do not want to burden their families with funeral and burial costs. If you are looking for a plan to cover that last big bill, this could be a good option. You could also search for dedicated final expense insurance with other insurers.
Speaking of other insurers, Colonial Penn offers only three life insurance products. If you wish to purchase additional types of insurance, such as accident insurance or long-term care insurance, you’ll need to search out a different company.
Term Life Insurance
Colonial Penn offers a standard renewable term life policy for adults ages 18 to 75. No medical exam is required, but get ready to answer questions about your health on the application. Rates depend on your age and gender. Once accepted, your rate will increase according to a set schedule every time you enter a new age band. Not exactly a fun birthday gift!
The maximum benefit of $50,000 is relatively low compared with term life products from other companies, so younger, healthier people can likely wrangle a better deal with a different insurer. (Learn more about no exam life insurance policies.)
Permanent Whole Life Insurance
Beginning at age 40, you can apply for Colonial Penn’s whole life insurance product. As with its other insurance products, you won’t have to undergo a medical exam, but you will have to answer questions about your health on your application. Once you are accepted, your rate is locked in for life and will never go up. After the first year, you will begin building a cash value that you can borrow against at a guaranteed interest rate. This can be a useful benefit in a financial pinch.
The biggest drawback to this policy is a measly max benefit of just $50,000. While the locked-in rate may comfort those on a fixed income or who fear the slow creep of increasing premiums, the low death benefit may convince some to look elsewhere for whole life insurance.
Guaranteed Acceptance Life Insurance
Colonial Penn’s most popular and unique product is its guaranteed acceptance life insurance plan. You can snag one (or at least apply) starting at age 50 and all the way up to age 85. As with its other products, Colonial Penn won’t require you to endure a medical exam. Here’s a bonus—you don’t even have to answer any health questions on your application. According to Colonial Penn’s website, you cannot be denied due to your health.
Premium prices will depend on the customer’s age, gender, and state. Customers can choose to increase their death benefit, but as the benefit rises, so does the monthly premium. Like its permanent whole life insurance product, rates are locked in once you are accepted. That means your monthly premium for this plan will never go up for the rest of your life.
That can be incredibly helpful to seniors on a fixed income, but keep in mind that Colonial Penn needs to make a profit somewhere. Premiums tend to be heftier than with similar whole life insurance plans, and payouts aren’t very high. Do your research and read the fine print before committing to this plan just because you get accepted.
Colonial Penn history and financial strength
If you decide to purchase life insurance through Colonial Penn, you’ll get the benefit of a company that has been around for over 60 years. Unlike some of its competitors, Colonial Penn specializes in offering life insurance with a focus on what it calls the “mature market.” Colonial Penn was one of the first guaranteed life insurance companies, which means it’s had plenty of time to test, tweak, and perfect this product.
As a result of its long history, Colonial Penn has received generally strong marks from the main ratings agencies and is considered to be financially stable. That’s a good report card for a company that might not need to make good on its payout promises for years or decades down the road.
Colonial Penn life insurance company is a subsidiary of CNO Financial Group, Inc., a large financial services holding company.
|A.M. Best 1||A-|
**All ratings current as of 11/20/18. Ratings reflect the evaluations of rating agencies but are not intended as a recommendation to purchase from any company. Rating agencies may update, suspend, or withdraw their ratings at any time.
Colonial Penn pulls in strong scores from well-respected ratings agencies, which indicate that the company is on firm financial footing. A.M. Best and Fitch rate it “Excellent” and “High Credit Quality,” respectively. Standard & Poor’s is a bit of an outlier. Though its BBB+ score matches that of Fitch, in the S&P rating system, this is only an “Adequate” rating. Still, this particular rating shouldn’t cause concern when paired with the stronger A.M. Best and Fitch ratings.
How Colonial Penn’s premiums stack up
Colonial Penn makes it easy to get a rate quote right on its website, as long as you don’t mind handing over your personal contact information, which will likely lead to a follow-up call from an agent. Once you complete the quote request, you’ll be taken to a page that lists all of Colonial Penn’s life insurance rates for the product you indicated. You can then choose different benefit levels to see how your monthly premium would change.
Colonial Penn’s competitive advantage is in offering convenient locked-in rates for its whole life insurance products and in offering its guaranteed acceptance life insurance. The tradeoff is that its premiums tend to be higher than average, while its benefits are nothing to write home about, as we mentioned earlier.
Customers who want an easy transaction, who prefer not to endure a medical exam, and who are looking for whole life insurance that won’t cost more every year may be willing to pay bigger premiums for these benefits.
Colonial Penn sample rates*
Term Life Insurance: 25 year old Female
|Death Benefit||Monthly Premium|
Term Life Insurance: 50 year old Male
|Death Benefit||Monthly Premium|
Whole Life Insurance: 50 year old Male
|Death Benefit||Monthly Premium|
Guaranteed Life Insurance: 50 year old Male
|Death Benefit||Monthly Premium|
*Sample monthly quotes are for illustration purposes only. Actual quotes may vary. Data effective 11/20/18. Rates are based on 50-year-old male smoker in good health and 25-year-old female in excellent health. Coverage and age options vary by type of policy, term, and other factors.
Colonial Penn claims and customer service
While Colonial Penn may have a slightly higher-than-average amount of customer complaints, as recorded by the National Association of Insurance Commissioners (NAIC), potential customers shouldn’t be too worried. Among all the policies Colonial Penn issued and managed in 2018, the NAIC logged only 21 Colonial Penn life insurance complaints. The NAIC’s records indicate that a majority of the complaints were related to premium refunds, though a few other customers mentioned delayed responses and billing issues. While the company was able to resolve some of these complaints, a majority of the complaints resulted in the company’s position being overturned.1
Colonial Penn claims to offer a full refund of premiums if a customer changes their mind within 30 days of purchasing a new policy. The number of complaints against the company indicate that receiving this refund may be not be as simple as their website implies.
FAQs about Colonial Penn
Still have questions about Colonial Penn? These FAQs may help.
Can I borrow from my permanent whole life insurance plan?
Yes. After paying into your plan for one year, you can borrow against it at a guaranteed interest rate.
Do I need to answer questions about my health for the guaranteed acceptance life insurance?
No. You do not need to undergo a medical exam or physical or answer any health-related questions when you apply for Colonial Penn’s guaranteed acceptance life insurance.
Are these plans available in every state?
No. Some Colonial Penn policies are not available in Maine, Massachusetts, Montana, and Vermont. Colonial Penn is underwritten by Bankers Conesco Life Insurance Company in New York, and plan details may vary for residents of the Empire State.
Colonial Penn: guaranteed plan; guaranteed premiums
If you’re willing to pay a higher premium and accept a smaller benefit in exchange for a guaranteed whole life insurance plan and locked-in premiums, then Colonial Penn might be the right answer for your life insurance needs. Younger and healthier adults searching for term life insurance can likely find a better deal with a different carrier, but older adults with health issues may want to give Colonial Penn serious consideration. The company has a long history and strong ratings, suggesting it will be around long enough to pay your benefit when the time comes.
Of course, it’s always a good idea to compare life insurance rates across multiple insurance companies to make sure you are purchasing the right plan.
Read more about top-rated life insurance companies or contact one of our knowledgeable, licensed agents today at (888) 234-8376.
ǂ A.M. Best’s financial rating scale is the following: A++ (Superior), A+ (Superior), A (Excellent), A- (Excellent), B++ (Good), B+ (Good), B (Fair), B- (Fair), C++ (Marginal), C+ (Marginal), C (Weak), C- (Weak), and D (Poor). A.M. Best’s Financial Strength Rating (FSR) is an independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations. An FSR is not assigned to specific insurance policies or contracts and does not address any other risk—including, but not limited to, an insurer’s claims-payment policies or procedures; the ability of the insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder. An FSR is not a recommendation to purchase, hold, or terminate any insurance policy, contract, or any other financial obligation issued by an insurer, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser.
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