UPDATED: Nov 30, 2018
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About Colonial Penn
Colonial Penn was founded in 1968 by AARP co-founder Leonard Davis, which makes it not at all surprising that the retired and senior market has always been the company’s main target audience. The company was purchased by Conseco, now known as CNO Financial, in 1997. For a brief time period, it operated under the name Conseco Direct Life before returning to the more recognizable brand.
Colonial Penn directs much of its advertising at the 50 plus market, using a series of paid celebrity endorsers that have included Ed McMahon and Joe Theismann. Alex Trebek is the current face of Colonial Penn. In addition to their simplified issue policies for the over 50 market, the company also offers whole life insurance and term life insurance plans to a wider age range.
The company’s headquarters is in Philadelphia, PA, and they remain true to their roots as a direct market insurance company. They have moved into the new age, however, offering online services in addition to their phone and direct mail approaches.
Colonial Penn Products
Keeping things simple, Colonial Penn has only three life insurance options to choose from, including their best-known guaranteed acceptance option. All of the company’s plans come with a 30-day money-back cancellation period.
Guaranteed Acceptance Life
This whole life insurance plan is offered to those between the ages of 50 and 85. While it has no medical exam or questions, there is a period of two years from issue during which benefits are limited. The plan, as the name implies, guarantees issue regardless of what medical conditions may exist.
Guaranteed Acceptance Life offers flexible payments, from monthly to annually, and a range of benefit amounts. The site does not list the available benefit amounts but states that benefits can be seen when running a quote, this is because benefit amounts are determined based on applicant information. Our quote returned a maximum death benefit amount of $14,288, and we explain this odd amount and how Colonial Penn determines it in further detail in the rates section below.
The basic whole life plan from Colonial Penn can be taken out a little younger, starting at age 40. While this plan also has no medical exam, some medical questions will be taken into account during underwriting.
Like all whole life plans, Colonial Penn offers a cash accumulation benefit along with the chosen death benefit. The maximum coverage amount for this policy is $50,000.
Colonial Penn’s renewable term life product can be issued between the ages of 18 and 75 and can be renewed up to age 90. Unlike the other plans, this product does see an increase in rates over time as the policy is renewed at an older age.
Benefit amounts for the term product are available up to $50,000.
We ran a quick quote for the Guaranteed Acceptance product with a male from California aged 50 years. The plan returned a range of rates based on units of coverage.
One unit came out to $1,786, somewhat of an awkward number. The reason being is because Colonial Penn’s rates are determined in the opposite way from how most insurance companies determine their rates – the rates are set at intervals starting at $9.95 for one unit, and what one unit will be, depends on the applicant.
Thus, a different applicant would receive a different amount of coverage for the same premium. The maximum premium on this quote came out of $79.60 a month with a death benefit of $14,288.
This allows Colonial Penn to advertise that anyone can get coverage for $9.95 a month – which they can – but not everyone will get the same amount of coverage. A 70-year-old male, according to our quote, gets on $717 worth of coverage at the $9.95 a month rate; that same person would get only $5,736 at the top $79.50 a month rate. Although it’s all in the fine print, it’s a bit deceiving to the average insurance shopper.
By comparison, we ran the same sample age (50) through Colonial Penn’s standard whole life and returned $10,000 in coverage for $29.65 a month and the maximum of $50,000 for $133.24 a month. That makes the latter a better value for those who do not have concerns about eligibility and thus do not need to go the guaranteed acceptance route.
In the interest of comparing Colonial Penn to our standard sample at a younger issue age, we also ran quotes for a 30-year-old male. At this age, only the term life policy is offered.
The quote came back at $5.99 for $10,000 in coverage and $23.96 for $50,000 in coverage. These numbers are on the high side; we have seen double the coverage for a lower monthly premium elsewhere – it is also important to note that these premiums will go up as the policy is renewed over time.
Colonial Penn has an informative claims section that provides all of the details needed to file a claim as well as helping information in regards to the process.
Claims can be filed only through the mail, but assistance is offered via a toll-free number. Claims forms can be downloaded from the website, or they can be sent out to the beneficiary by request.
While the claims process does not utilize online services as much as we like to see, it is in line with companies who focus on the senior market.
Ratings and Consumer Reviews
Colonial Penn has an A- with the Better Business Bureau, docked according to the page for the five complaints against the company in the past three years, though only one was closed it the past 12 months. Considering the size and reach of this company, the complaint volume here is quite low.
Oddly for such a well-known company, we were unable to find much in the way of consumer reviews of Colonial Penn. Certainly a lack of complaints can generally be construed as a good thing.
The Bottom Line
Colonial Penn has the star power to sell its products, but it does not offer the best value in life insurance. The unit system for the guaranteed acceptance plan makes the rates look appealing, but the practice is at best confusing and at worst deceptive. Although the rates for the standard plans are a better value, be sure and do the approrpaite homeowork and rate comparisons to ensure you are getting the rate best suited to you.
For a list of companies that we recommend, visit our Best Insurance Companies page.