Colonial Penn: Term Life Insurance Options And Benefits

Colonial Penn offers a range of life insurance products, including term life insurance and whole life insurance. However, it is important to note that Colonial Penn stopped selling term life insurance in 2021. Their term life policies were previously available only in New York and the U.S. Virgin Islands.

Colonial Penn's life insurance products are designed to meet different needs and are available to individuals of varying ages. Their whole life insurance, for example, is available to customers aged 40 to 75 and offers a maximum benefit of $50,000. On the other hand, their term life insurance is suitable for individuals aged 18 to 75 and is renewable up to age 90.

Colonial Penn's life insurance plans also differ in terms of the medical exams and health questionnaires required. While some plans require no medical exam or health questionnaire, others involve answering a few health-related questions.

In addition, Colonial Penn's life insurance rates vary based on factors such as age, gender, and location. Their guaranteed acceptance whole life insurance, for instance, is available for $9.95 per unit, with each unit's coverage amount varying based on these factors.

Overall, Colonial Penn has received mixed reviews, with some customers highlighting its accessibility and ease of claim processes, while others have complained about advertising and billing issues.

Pros and cons of Colonial Penn Life Insurance

Pros of Colonial Penn Life Insurance

• Colonial Penn offers guaranteed acceptance whole life insurance for those aged 50-85, with no medical exam or health questions required.
• The company provides accessible life insurance solutions with fixed premiums and policies that build cash value.
• Colonial Penn has been in business for over 50 years and has strong financial ratings, including an A rating from AM Best, indicating excellent financial stability.
• The application process is streamlined, and coverage is lifelong.
• Colonial Penn offers direct-to-consumer services with online quote capabilities.
• The company offers a 30-day free cancellation period, allowing customers to review the policy without financial commitment.
• Colonial Penn provides online policy management, making it easy for customers to view coverage amounts, cash value, loan information, and payment history.
• Customer service is available in both English and Spanish.

Cons of Colonial Penn Life Insurance

• Colonial Penn's life insurance products are generally more expensive than other options on the market.
• The company has received a high volume of complaints, particularly regarding advertising and billing issues, and delays in paying claims.
• The guaranteed acceptance policy has a restricted death benefit, and there are no universal life insurance options for flexibility.
• Coverage amounts are relatively low, maxing out at $50,000, and the older you are, the less coverage you get.
• Colonial Penn only offers whole life insurance and does not provide term life insurance or other types of permanent coverage.
• There is no comprehensive underwriting, and the company's limited policy types give individuals little choice.

Whole life insurance options

Colonial Penn offers two types of whole life insurance: Guaranteed Acceptance Whole Life and LifeChoice Whole Life. The Guaranteed Acceptance policy is available for individuals aged 50 to 85 and starts at $9.95 per month. It does not require a medical exam or health questions. The LifeChoice policy is a simplified-issue plan, meaning that no medical exam is required, but you must answer a few health-related questions on the application.

Guardian

Guardian has a diverse range of whole life products, including life insurance for people living with HIV. You can choose a policy with level premiums or a "limited payment" policy that allows you to pay off your policy in 10, 15, or 20 years. They also offer a range of riders, such as a disability waiver of premium rider and a long-term care rider.

MassMutual

MassMutual offers a string of whole life policies, some of which earn cash value at a set interest rate of 3.75%. Depending on the policy, you may be able to customize your coverage with various riders, such as a long-term care rider and a chronic illness rider.

Northwestern Mutual

Northwestern Mutual sells one whole life policy with flexible coverage starting at $50,000, and the option to blend term life for cheaper coverage. You can choose to pay premiums for 10, 15, 20, or 25 years, or until you reach a certain age. They also offer a range of riders, such as an accelerated death benefit and an additional purchase benefit rider.

New York Life

New York Life sells three whole life policies and offers a variety of life insurance riders, as well as customizable payment options. Their custom whole life policy offers flexibility with premium payments, allowing you to pay off your policy in the first few years or schedule payments to suit your needs.

State Farm

State Farm offers a standard whole life policy with level premiums, as well as single premium and limited payment policies. They also offer a final expense policy for applicants aged 45 to 80 (50 to 75 in New York) who purely want to cover funeral, burial, and end-of-life expenses.

AARP

AARP offers whole life insurance to its members and their spouses via a partnership with New York Life. Their standard whole life policy is available to members aged 50 to 80 and spouses aged 45 to 80, with no medical exam required. They also offer a guaranteed acceptance whole life policy that skips the questionnaire and medical exam, offering coverage to members and spouses within the same age range.

Term life insurance options

Colonial Penn offers two types of whole life insurance: Guaranteed Acceptance Whole Life and LifeChoice Whole Life. Guaranteed Acceptance is available nationwide, but LifeChoice is only available in New York.

Guaranteed Acceptance Whole Life

The Guaranteed Acceptance policy is available for individuals aged 50 to 85, with coverage starting as low as $9.95 per month. It is designed to ease the burden of final expenses such as end-of-life care and funeral planning, and is available without requiring a medical exam or answering health questions.

The policy has a two-year graded death benefit for non-accidental deaths. If the insured person dies before the two-year period ends, beneficiaries will receive the premiums paid plus 7% compounded annual interest. In the case of death from accidental causes during the first two years, the full face amount of the policy will be paid out. If the insured person dies after the first two years, the full face amount will be paid out, regardless of the cause of death.

LifeChoice Whole Life Plan

The LifeChoice Whole Life Plan is available to males aged 50 to 73 and females aged 50 to 75. This plan is exclusive to New York residents, and premiums are locked in for the life of the policy. No medical exams are required, and benefits are available up to $25,000. Policyholders can borrow against the plan at a guaranteed rate.

Colonial Penn stopped selling term life insurance in 2021. Before that, its term life policies were available only in New York and the U.S. Virgin Islands.

Guaranteed acceptance policies

Colonial Penn offers guaranteed acceptance whole life insurance for individuals aged 50 to 85. This policy is available without a medical exam or health questionnaire, making it accessible to those with pre-existing health conditions. The guaranteed acceptance policy is designed to ease the financial burden of final expenses, such as end-of-life care and funeral planning.

The guaranteed acceptance policy is sold in fixed-price units, with each unit costing $9.95 per month. The number of units purchased determines the total coverage amount, which varies based on age, gender, and state of residence. For example, a 66-year-old male would receive $846 in life insurance from a single unit, while a 73-year-old female would receive $560. The older the policyholder, the lower the coverage per unit.

The policy offers a fixed death benefit and builds cash value over time. It features a two-year limited benefit period for guaranteed coverage, with a graded death benefit for non-accidental deaths during the first two years. If the insured person dies from natural causes within the first two years, beneficiaries will receive the premiums paid plus 7% compounded annual interest. Accidental deaths during this period will result in the full face amount being paid out. After the initial two-year period, the full face amount will be paid out regardless of the cause of death.

While the guaranteed acceptance policy offers permanent coverage and fixed premiums, there are some important considerations. The death benefit is restricted, with a maximum coverage of $50,000. Additionally, the policy has a two-year waiting period before providing full coverage for natural causes of death. It is also generally more expensive than other options in the market, with rates that are 30-150% higher than the best rates available.

Customer experience and pricing

Colonial Penn provides direct-to-consumer services with online quote capabilities. However, customer feedback highlights a higher-than-average complaint ratio, mainly related to advertising and billing issues. Their rates are generally 30-150% higher than the best rates in the market, making it crucial for potential buyers to compare these rates with other providers.

The $9.95 Per Month Plan guarantees acceptance of life insurance products with limited underwriting and smaller death benefits that accumulate cash value. The issue with this plan is that the older you are, the less coverage you get, making it less effective for covering funeral expenses. For example, $9.95 at age 50 could be worth $1,786 in life insurance, but the same plan could be worth $560 in life insurance at age 75, when the average cost of a funeral is around $15,000, making it less than ideal coverage.

Colonial Penn's guaranteed issue life insurance policy (995 plan) costs only $9.95 monthly per unit. If you want more than one unit, you will multiply $9.95 by the number of units you’d like, yielding the total monthly cost. For example, if you buy 10 units, the total monthly cost would be $99.50.

Colonial Penn has an extraordinarily high number of negative consumer complaints. The National Association of Insurance Commissioners collects complaint data from state insurance departments around the country. According to its data, most complaints against Colonial Penn are about delays in paying claims and poor policyholder service.

Colonial Penn's $9.95 plan is the only option in all states except New York. It’s a guaranteed acceptance policy with no health questions or exam requirements. Because acceptance is guaranteed, there is a two-year waiting period. If you die during the first 24 months, Colonial Penn will only refund your premiums (plus roughly 8% interest).

Colonial Penn also offers LifeChoice whole life insurance in New York. It’s a simplified issue policy that does not require a medical exam, but you do have to answer questions about your health history. If you’re approved, there is no waiting period, meaning you will get the full death benefit payout starting on the first day of your policy.

Colonial Penn's whole life insurance rates can be confusing. Though Colonial’s intention seems to be providing competitive options, their rates often don’t measure up to the top-tier products available in the market.

Frequently asked questions