Colonial Penn Life Insurance Review 2016

A life insurance policy is an essential part of ensuring your family members continue with the lifestyle to which they’re accustomed should you pass away, while also covering additional expenses such as funeral and medical bills. It’s important to have a policy that matches your requirements exactly, so many people use a life insurance comparison tool to compare various companies and products.

Colonial Penn is a popular choice for people in mid- to late-life stages, as the company offers its own guaranteed acceptance life insurance product with advertised low monthly premiums. Before you buy such a policy, study the fine print and consider Colonial Penn life insurance reviews to get a better idea of what the company has to offer.

Colonial Penn Life Insurance Options

colonialpennColonial Penn insurance products include two types of life insurance: Guaranteed Acceptance Life Insurance and Whole Life Insurance. The guaranteed option is immediately appealing, as Colonial Penn doesn’t reject your application on the grounds of pre-existing health conditions. That guaranteed acceptance comes at a price, and for a healthy person, this type of policy is more expensive than whole life insurance products that require a medical questionnaire.

Both products are whole life insurances that run for your full lifetime and therefore provide a death benefit. Whole life policies offer advantages such as fixed premiums and the option to take a loan against the accumulating cash value. This is in contrast to term life insurance products offered by many insurers, which only run for a limited time to cover premature death and don’t pay out if you outlive the agreed term of the insurance.

Insurance Options at a Glance

With the availability of two whole life insurance options from Colonial Penn, it’s important to understand the differences to make an informed decision. At a glance, the products compare as follows:

 Guaranteed Acceptance LifeWhole Life
Age50-8540-75
Excluded StatesMA, WAME, MA, MT, NY, VT, WA
Medical ExamNot requiredNot required
Health QuestionnaireNot requiredRequired
CoverageLifetimeLifetimes
Maximum BenefitVariable$50,000
Builds Cash ValueYesYes
Premium RateFixedFixed
Apply OnlineYesYes

Guaranteed Acceptance Life Insurance

Colonial Penn’s Guaranteed Acceptance Whole Life Insurance offers acceptance, regardless of your current health, because of a two-year limited benefit period during which time you only get death benefits amounting to your paid premiums. The product is available to anyone aged 50–85, and there is no need to complete a physical examination or fill out a health questionnaire.

As with other whole life insurance policies, premiums and benefits are locked in. That means you don’t pay any more, or receive any less in death benefits, regardless of how long you live. It’s possible to pay premiums monthly, quarterly, semiannually or annually, and your coverage is secure as long as you pay your premiums. While the coverage is in force, it accumulates a cash value, and you may obtain a loan on it with a fixed interest rate of 8% APR. Unpaid loans at the time of your death are deducted from your death benefit.

The main downside to this type of policy is the high premium cost for a small death benefit, which means it may be a better idea to put money into a high-interest savings account instead. Colonial Penn calculates the premium based on units, wherein each unit has a fixed price of $9.95. The benefit associated with each unit varies based on your age, gender and location. For example, a 60-year-old male would need to pay for eight units per month ($79.60), which is $955 each year, for $10,000 of Guaranteed Acceptance Life Insurance coverage.

Whole Life Insurance

Colonial Penn’s Whole Life Insurance is available to anyone aged 40–75 and is payable to an age of 121. There’s no need for a medical examination, but there’s a health questionnaire to determine eligibility. It’s possible to apply online, but this method requires an electronic signature to verify you haven’t falsified any of the information in your questionnaire. Benefits are available in increments up to a maximum of $50,000.

This type of policy offers some of the advantages of the guaranteed acceptance option, including the accrual of cash value for obtaining a loan and flexible payment options including direct debits and credit cards. It also works out to be more cost-effective for healthy, able-bodied people.

Complaints Against Colonial Penn

When you choose a life insurance product, it’s important to consider all aspects of the company, including its customer service and track history of complaints. Colonial Penn’s history of complaints indicates a consistent increase in the number of complaints leveled at the company each year. Figures from the National Association of Insurance Commissioners list 31 closed complaints in 2013. This figure increased to 49 complaints in 2014 (+58%), and then to 70 in 2015 (+43%).

Looking at the ratio of the company’s U.S. market share of closed complaints in which the respective state upheld the complaint compared to the company’s U.S. market share of premiums for any given policy type shows that Colonial Penn fares poorly against the national median of 1 (wherein a number greater than 1 indicates more complaints and less than 1 indicates fewer complaints):

  • 2013 Ratio score: 1.76
  • 2014 Ratio score: 2.60
  • 2015 Ratio score: 3.64

In Conclusion

Colonial Penn offers two types of whole life insurance. The company’s guaranteed acceptance product is useful if you’re elderly or in poor health, but it’s expensive for the amount of death benefit it provides. Colonial Penn doesn’t offer term life insurance and has a high number of complaints ruled in favor of the complainant in comparison to the national median. You need to consider these pros and cons carefully before proceeding with a product purchase.

You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved.
Published August 17, 2016
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