Colonial Penn Life Insurance Review: 2020 Rates & Comparisons

Colonial Penn life insurance review blue compass
Colonial Penn Life Insurance Review: 2020 Rates & Comparisons

Disclaimer: Willamette Life is a direct competitor of Colonial Penn, this post is written to help you make a purchasing decision and to better understand your options.

Colonial Penn Logo

In this Colonial Penn Life Insurance review, we will discuss the company, the plans they offer, quotes, and alternative options that offer better pricing.

If you have ever watched TV, you have probably seen Alex Trebek, the host of Jeopardy!, in commercials for Colonial Penn’s insurance products.

Along with Alex, they have had other highly acclaimed spokesmen for their products throughout the years such as former Tonight Show announcer Ed McMahon, singer Lou Rawls, former Dallas Cowboys quarterback Roger Staubach, and Joe Theismann.

Colonial Penn was founded in 1968 by Leonard Davis who also co-founded AARP. The initial intent was to serve the senior market, over 65, who were also part of AARP a few years prior.

They have since broadened their marketing to 50-75 but also offer one product to people 18 and over. More on this later.

They offer three plan types with a few additional coverage options, known as “riders” to some of the policies. We will give you all the details that you need to make an informed decision and to make sure that Colonial Penn is actually the BEST choice for YOU.

Colonial Penn Life Insurance Review

Plans Offered:

  • Guaranteed Acceptance Life Insurance
  • Permanent Whole Life Insurance
  • Renewable Term Life Insurance

Plans at a glance

#1 Guaranteed Acceptance

The Guaranteed Acceptance plan they offer is the same as a “guaranteed issue” plan as referred to on our site multiple times and a plan offered by many other companies. This is Colonial Penn’s most popular and most marketed plan. Que Alex Trebek commercial…

Alex Trebek

Look familiar?

Guaranteed Acceptance plan details:

  • No Exam
  • Price Lock
  • Coverage Lock
  • Does Not Expire
  • No Medical Questions Asked

Acceptance for seniors 50-85 is guaranteed. While this sounds like a great thing, it is probably not your best option. We will get into this more later, but if you are healthy you will be able to qualify for more coverage at a lesser price with no waiting period.

There is a 2-year waiting period before you will be fully covered. Meaning that if you pass within the first 2 years after getting your policy, your beneficiary will not receive the full coverage amount but instead get the premiums you paid into the plan returned to them plus 7%.

All Guaranteed Issue plans have at least a 2-year waiting period. As the industry goes, a 7% return is not awful, but most other companies give a 10% return.

Companies who offer Guaranteed Issue plans with a 2-year waiting period and at least a 110% return of premiums during the waiting period are:

The ONLY reason you should get a Guaranteed Issue plan is if you are in very poor health. Within guaranteed acceptance coverage, there are other options that could be cheaper based on your age, gender, and the amount of coverage you are looking for.

However, there are even better options available if you are willing to answer some health questions. These better options include no waiting period, higher coverage, and lower monthly rates.

Three men who are confused

What is a Unit?

A unit of coverage* is a phrase they use to describe how the pricing works for this plan.

1 unit is $9.95 for everyone at any age. What does change is the COVERAGE you get per unit.

Coverage amount is determined given your age, gender, and state of residence.

Most companies, as an industry standard, offer different coverage amounts and then adjust the consumer price according to age, gender, and state.

Colonial Penn reverses this process by keeping the price increments for the consumer consistent while changing the coverage available. You will be able to see this illustrated in price charts included later in this post.

You can purchase up to 12 units of coverage for a total cost of $119.40. To get this cost you multiply $9.95 X the number of “units of coverage” you want.

The maximum coverage you can get with 12 units is just under $25,000 for a 50-year-old female. Conversely, for an 85-year-old male 12 units will only get $5,016 of coverage.

In order to get more coverage, you must purchase more units.

  • 1 Unit = $9.95
  • 2 Units = $19.90
  • 3 Units = $29.85
  • 4 Units = $39.80
  • 5 Units = $49.75
  • 6 Units = $59.70
  • 7 Units = $69.65
  • 8 Units = $79.60
  • 9 Units = $89.55
  • 10 Units = $99.50
  • 11 Units = $109.45
  • 12 Units = $119.40

I believe this is done strictly for marketing purposes in order to use the tag line of “coverage starting at $9.95”.

They can also get away with using this marketing plan well into the future by continually lowering coverage per unit given inflation and other market factors. Pretty tricky marketing plan by them!

Guaranteed Acceptance Male

Guaranteed Acceptance chart Female

 

Not that you are thoroughly confused let’s compare them to other companies that offer the SAME product.

We will do our best to illustrate these comparisons as simply as possible in 5-year increments to give you a general idea.

As you can see in the chart below, the exact cost comparison does not exist due to how Colonial Penn does its funky unit pricing. We made the closest comparisons possible given their irregular system.

Cost comparison male

Cost comparison female

 

If you want to see what the cost comparison is for your specific age, fill out an instant quote request on this page, the “get started” page, or give us a call at 833-518-0080

My opinion: They have set their Guaranteed Acceptance plan up to confuse people. As someone who is proficient in life insurance jargon, I was confused too!  

Personally, if I was contemplating buying this plan, I would feel victory in just understanding how it works and compelled to purchase so I wouldn’t have to learn a whole new set of rules and terminology of another company.

Once you understand their plan it makes you think that all insurance plans are as confusing as Colonial Penn’s – they are not!

Other plans are very straight forward and EASY TO UNDERSTAND.

#2 Permanent Whole Life

This brings us to the Permanent Whole Life plan offered by Colonial Penn. If you are in good health this would be a better option than guaranteed acceptance, you will just have to answer a few questions regarding your health.

By definition every Whole Life policy is permanent. They just happen to advertise this in the name of the policy. Don’t let them confuse you!

This plan is a Simplified Issue Whole Life plan, meaning that it meets the following criteria:

  • No Exam
  • Price Lock
  • Coverage Lock
  • Does Not Expire
  • Medical Questions Asked

Every carrier has different health conditions that determine eligibility for coverage. Meaning that some carriers will cover certain conditions and others will not. An example would be Carrier A accepts COPD, Carrier B does not therefor if you had COPD you would want to get a policy with Carrier A.

Colonial Penn is one of MANY carriers that offer this type of product. If you do not qualify for their Simplified Issue plan, there is probably another that you will qualify for.

Do not just assume that if you do not qualify for Colonial Penn’s Permanent Whole Life plan that you must get Guaranteed Acceptance.

As the COPD example above shows, there are carriers who might accept your health complications, you just need to look around or speak with an independent agency who can look around on your behalf.

Please know that we have options for you if you do not medically qualify with Colonial Penn. 

Your next step does not need to be guaranteed coverage. Your next step should be finding an independent agency to assist you in finding a plan.

Health conditions NOT accepted for Colonial Penn Perminate Whole Life plan are listed below. The medical background check that they run looks back 3 years, so if you have had any diagnoses or treatment for the following you will not be eligible.

  • AIDS or HIVGreen Heart with a check mark
  • Alcohol or drug abuse
  • ALS
  • Alzheimer’s or dementia
  • Angina
  • Angioplasty
  • Bipolar disorder, schizophrenia or psychosis
  • Cancer
  • Cardiomyopathy
  • Cerebrovascular disease
  • Chronic bronchitis
  • Cirrhosis
  • Collagen vascular disease
  • Congestive heart failure
  • COPD
  • Coronary artery bypass grafting
  • Coronary artery disease
  • Currently being evaluated or tested for an illness
  • Cystic fibrosis
  • Diabetic complications
  • Diabetes with insulin
  • Dialysis
  • Disability due to an illness
  • Emphysema
  • Hearth attack
  • Hearth disease
  • Hearth valve repair or replacement
  • Heart surgery
  • Hepatitis
  • Hospital confinement
  • Kidney disease, insufficiency, or failure
  • Liver disease
  • Lung disease
  • Multiple sclerosis
  • Muscular dystrophy
  • Myocardial infarction
  • Nursing home confinement
  • Organ transplant
  • Oxygen use
  • Pacemaker or defibrillator
  • Peripheral vascular disease
  • Pulmonary fibrosis
  • Receiving home health or hospice care
  • Rheumatoid arthritis
  • Sarcoidosis
  • Stent placement
  • Stroke
  • Systemic Lupus (SLE)
  • Transient ischemic attack (TIA)
  • Wheelchair use

As you can see this is quite an extensive list. A lot of people do not qualify and are then placed into the much higher priced guaranteed acceptance plan. Don’t let this be you!

Let us (or any other independent agency) help you find a cheaper plan with IMMEDIATE COVERAGE.

We can find you a plan that covers most of these conditions with no waiting period.

Below is a price chart of what you can expect to pay on a monthly bases for each coverage level available.

Permanent Whole Life Male Quotes

Permanent Whole Life Female quotes

Let’s see how they stack up against the competition!

Colonial Penn has competitive prices if you fall in the 40-50 age group. This obviously is not a very large age range so unless you were in fact born between 1970-1980 you should look elsewhere. This is illustrated in the charts below.

We chose Mutual of Omaha due to their extremely competitive rates for this product, company history, and financial stability.

Whole life Company Comparisons

Price comparison female quotes

In addition to Colonial Penn only offering competitive pricing if you are in your 40’s, they also do not accept applications for seniors over 75.

Most policies offered by the competition offer coverage up to 85 years young.

My Opinion: Only go with this option if you are looking for a low policy amount and are between the ages of 40-50.

Unless you are committed and have the time to call and compare all of the plans out there, you would be better served by contacting an independent agency to do your bidding for you.

#3 Renewable Term Life

Term life insurance by definition lasts for a specified number of years and then terminates.

This can be good or this can be bad, it just depends on what you are looking to get out of your policy.

Colonial Penn has this product available for people who are 18-75. The price is determined by your gender, age, and coverage amount and increases every 5 years if you renew the plan.

Once you reach the age of 90, the policy terminates with no option to renew. Between the ages of 75-90, you are able to renew your already existing policy but cannot take out a new policy after age 75.

The maximum coverage you can get with this (or any) Colonial Penn program is $50,000. The thing that usually makes Term coverage enticing is the larger policy amount options ($100,000-$1,000,000 on average), which as you can see are not offered here.

Term insurance is usually intended to have these larger payouts to replace lost income due to the premature death of someone in their working years.

While it is great that they offer this plan through the age of 90 (a lot of other companies expire at 80 years old) it still may not be your best option to cover your end-of-life expenses as it has an expiration date.

The price chart below was taken directly from their website.

Male Monthly premiums chart

Female Monthly Premiums chart

As you can see in the price chart above, once you graduate into a new age band** the price increases. This is quite typical of term coverage.

Why would you get coverage for your end-of-life expenses that increases in price and then terminates all together?

The majority of seniors in America are living on a fixed income and cannot always afford to pay more for the same coverage as they age. Especially if you look at the overall expense that aging seniors face such as an increasing cost of living, additional medical bills, and the inevitable end-of-life expenses.

My Opinion: If you are looking for Term insurance, look elsewhere for better pricing and higher policy amounts. If you are looking for coverage of final expenses only, strongly consider a Whole Life policy that promises a price lock, coverage lock, no termination, and living benefits.

Terminology to Know

Colonial Penn uses several different phrases that you need to understand before you can fully comprehend the details of the plans they offer. In my opinion, they make the process more confusing than it needs to be. Maybe this is done on purpose to confuse you, maybe not.

Old Man standing in the rain

*Unit of Coverage – Corresponds to the coverage amount you can purchase and it depends on age, gender, and state.

Compared to how other companies price their plans, Colonial Penn reverse engineers how they charge.

The price is set per unit of coverage but the coverage amount (the money your beneficiary will receive) changes based upon age, gender, and state.

**Age Band – Refers to a 5-year period where your monthly cost remains the same. Once you enter into a new “age band” your price will increase.

For example, when you go from 69 to 70 your monthly rate will jump up in order to keep the same coverage amount, sometimes as much as 60%!

Limited Benefit Period – The 2-year waiting period before you are fully covered.

There are some caveats during this time.

Non-accidental deaths will pay your beneficiary any premiums you have paid in, plus 7% interest.

If you pass away due to an accident, the full policy amount will still be paid. Accidental death does not include death resulting from bodily or mental illness or disease, infection, suicide, medical or surgical treatment, voluntary gas inhalation or taking poison, or any act of war.

Living Insurance – This is an additional benefit, new to the Colonial Penn portfolio, that you can include in your plan (term or whole life only, not available for guaranteed acceptance) where you can access up to 50% of your coverage amount upon qualification. You select from one of three conditions that you would like to be covered for.

Heart attack/stroke, cancer, or chronic illness are the options.

Example: If you had selected cancer and then later are diagnosed with cancer you can receive up to 50% of the death benefit money at this time. If you selected heart attack/stroke this would not be available with your cancer diagnosis.

Most companies include similar riders for free! Colonial Penn adds on an extra charge for this service.

Not only do other companies include this rider for free, but Colonial Penn also makes you choose if you think you are going to get cancer, have a heart attack, or be diagnosed with another chronic illness.

If you take the money after your selected health complication occurs, it will lower your death benefit. This means that if you take 50% of the policy after the health event, your beneficiary will only get the remaining 50% once you pass away.

But wait — didn’t you get this coverage for them?

Rider – Adds additional coverage or benefits to the policy.

Final Thoughts

a. The maximum you can get with any type of policy from Colonial Penn is $50,000. If you want a policy larger than $50,000 you’ll need to go elsewhere.

b. There are better options for no-questions-asked guaranteed acceptance policies. BUY SOMEWHERE ELSE. Colonial Penn confuses the issue with their “unit” pricing.

c. For Final Expense Whole Life, you will usually be able to find a better price elsewhere. If you are in your 40’s looking for this policy, Colonial Penn is a good option.

d. One of the enticing features of a Term policy is that it offers large coverage amounts for a small monthly cost. Large coverage amounts are unavailable through this company. You could be better suited by going through an independent agency.

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