Colonial Penn Life Insurance Review

FT Contributor  | 

Colonial Penn, probably best known for its TV ads featuring Jeopardy host Alex Trebek, offers life insurance. Colonial Penn has several different policy types, but all provide quick coverage and smaller payouts. Colonial Penn’s focus is primarily on providing coverage for so-called “final expenses,” such as funerals, although they also offer more traditional policies.

Colonial Penn has a guaranteed acceptance policy, allowing people to purchase insurance without undergoing a health exam or answering health questions.

While Colonial Penn offers rates similar to other life insurance policies that do not require medical questions or a health exam, the cost is more expensive than insurance policies requiring health information. For this reason, this company’s insurance is best for people who need quick coverage.

Are Colonial Penn’s life insurance options a good deal? It depends on whether one of its policies meets your needs.

Colonial Penn Life Insurances

Life insurance provides benefits for your family or other beneficiaries when you pass away. Policies often offer some form of financial support to surviving family members and cover costs associated with your funeral and other end-of-life expenses.

Colonial Penn has three life insurance policy options.

  • Term life insurance is for adults between 18 and 75, though you’re able to renew an existing policy until you reach the age of 90. You can get up to $50,000 in coverage. The premiums may change and will get higher as you age. Though you do not need to undergo a physical exam to get this insurance, you need to answer health questions.
  • Whole life insurance offers coverage throughout your life. However, you cannot apply until you reach age 40, and you can continue to contribute until you reach age 75. Premiums for whole life policies are more expensive than term life policies. However, once the premium gets set, it will not change. You do not need to undergo a health exam to qualify for this policy, but you have to answer health questions.
  • The Guaranteed Acceptance Program is for final expenses. There is no medical exam, and you do not need to answer any health questions. However, payouts are capped at $17,000 and can be as little as $400. You won’t get full death benefits until the policy has been active for two years. You need to be between the ages of 50 and 85 to qualify. This coverage provides help with covering your funeral costs.

You should take a closer look at the details to see if one of these programs is right for your life insurance needs.

Colonial Penn Term Life Insurance

Term life insurance expires if you stop paying premiums or if you reach a certain age. Also, as you age, the premiums increase. The goal of term life insurance, including Colonial Penn’s policy option, is to provide financial support to your surviving family members and pay funeral expenses if you pass away.

Term life insurance is cheaper per month than whole life insurance, but it offers a similar payout. For this reason, such a policy from Colonial Penn is best for people who do not expect to die soon, but who want coverage for their family if they pass away unexpectedly.

Cost

The monthly premium for Colonial Penn’s term life insurance depends on your gender, age, and answers to the initial health questions. Colonial Penn increases the premiums as you age. The increases happen when you move into a higher five-year age bracket. After each jump, the price will remain the same for the next five years.

You can purchase coverage between $10,000 and $50,000, and the monthly premium will be higher depending on the amount of the payout. While the cost of insurance for young adults will be a few dollars per month, the rates can rise into the hundreds of dollars as you age into your 70s and beyond.

Restrictions

You can qualify for term life insurance if you are between the ages of 18 and 75. If you get a policy before you turn 75, you can renew it until you reach age 90. However, the monthly premiums will be quite high after you pass the 70 to 75 age bracket.

The maximum payout is $50,000. This amount may be suitable for some customers, but those with a larger family may need additional coverage.

Colonial Penn Guaranteed Acceptance Program

Most of Colonial Penn’s advertisements are for its Guaranteed Acceptance Program. With this program, you can get up to $17,000 in coverage without answering any health questions. However, there is a two-year limited benefit period during which you will not get the full payout if you die. You purchase this insurance by the “unit.”.

The coverages last for your whole life, but the maximum payout is much less than term life or traditional whole life insurance.

Because of the lower payout, Guaranteed Acceptance insurance is often known as “burial insurance” or “final expenses” insurance. It covers funeral expenses and other end-of-life costs, but is not really meant to provide income assistance or other benefits to your surviving family members.

Cost

This product costs $9.95 per unit, and you can purchase multiple units. Colonial Penn claims that the rates will not change during your lifetime, so the rate you pay when you start your policy will be the same rate you pay as long as you have the coverage.

Restrictions

You do not need to answer health questions or take a physical exam when you get this insurance. However, you must be 50 or older to qualify. You can purchase this insurance until the age of 85, though the exact age restrictions may vary by state. You do not get the full benefits for two years.

Colonial Penn Whole Life Insurance

Whole life insurance builds value over time and provides benefits for your family when you pass away. The advantage of this type of insurance is that it offers coverage for your entire life. Colonial Penn locks in your payment for your lifetime, so it will not change as you age. However, the maximum payout is $50,000.

Cost

Costs for whole life insurance depend on your age and your health status. If you are younger, you have more time to add value to your policy, so premiums will be lower. However, Colonial Penn says that your rate will not change during your lifetime. Whole life insurance does not expire. Because of this added advantage, premiums are more expensive than term life insurance.

One advantage of Colonial Penn is that you can pay your premiums monthly, semi-annually, or annually.

Restrictions

You need to answer health questions during the underwriting process. Colonial Penn reserves the right to deny your application if you have some preexisting conditions.

You need to be at least 40 years of age to get a whole life policy, and you need to purchase the insurance before you reach 75. Coverage is not available in New York or the U.S. Virgin Islands.

Is Colonial Penn Life a Good Insurance Company?

Colonial Penn is a good insurance option in specific situations. If you have other life insurance or inheritance plans for your beneficiaries, a Guaranteed Acceptance policy can cover funeral costs so that these expenses do not cut into the inheritance.

Term life insurance from Colonial Penn is a good option for younger people who want to protect their family and provide financial assistance if they die unexpectedly. However, if you want a policy that will not expire, you need to opt for Colonial Penn’s whole life insurance.

Colonial Penn has competitive rates, but its maximum payouts may not be enough to provide financial support to your family after your death.

Pros

  • Colonial Penn policies do not require a medical exam.
  • Guaranteed Acceptance policies do not require answering any health questions.
  • You can choose the amount of your Guaranteed Acceptance coverage by purchasing more units of insurance.
  • Term life coverage premiums are cheap for younger customers and only increase once every five years.

Cons

  • Policies have low maximum payouts.
  • Guaranteed Acceptance policies require a two-year waiting period before you get full benefits.
  • Guaranteed Acceptance policies do not provide any meaningful benefits to family members.

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