Pros and Cons of Colonial Penn Insurance

Ever watched “The Price Is Right?” Or perhaps you recall tuning in to some “Golden Girls” every so often? If so, you’ll probably remember Colonial Penn’s famous TV commercials. Starring Alex Trebek of “Jeopardy!” fame, the company’s commercials were once plastered all over our square boxes at home, offering customers cheap, guaranteed acceptance life insurance policies for just $9.95.

With these commercials and its longstanding reputation in the insurance industry, it’s no surprise that Colonial Penn is one of the few companies you think of when looking for insurance. The company offers broad coverage options, with policies tailored to almost any age group.

To help you make an informed purchase decision, we examined some pros and cons of Colonial Penn Insurance. We’ve also reviewed the company on several fronts, including its history, product offerings, financial health, and customer service. Check out our review below.

About Colonial Penn

The Colonial Penn Life Insurance Company was founded by philanthropist and AARP co-founder Leonard Davis, and is based in Philadelphia, Pennsylvania. Commonly referred to as just “Colonial Penn,” the company has been offering life insurance options to individuals in a wide range of age brackets since 1968, making it a well-established life insurance company with more than 50 years of experience. The company was one of the first to offer older adults guaranteed acceptance life insurance plans that do not require a medical exam.

Colonial Penn targets audiences between 50 and 85, specializing in guaranteed acceptance whole life insurance and helping the families of the deceased with funeral expenses after their death.

The company currently offers coverage in 49 of the 50 states. However, it doesn’t provide term life insurance policies in Maine, Massachusetts, Montana, New York, or Vermont.

Colonial Penn is part of CNO Financial Group, along with Bankers Life and the Washington National Insurance Company. Combined, the group has more than 260 locations nationwide, employing more than 4,500 licensed insurance agents to serve about four million customers across the U.S.

Read more:

• Colonial Penn 995 Plan Explained
• Colonial Penn Life Insurance for Seniors

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Pros and Cons of Colonial Penn Insurance

Finding the right company for your insurance needs isn’t always easy. There are thousands of insurance companies out there, and it can be hard to know who to trust. Before you take the plunge with an insurer like Colonial Penn, it’s always a good idea to know what you’re getting into.

We’ve compiled some pros and cons of Colonial Penn Insurance that may help you make a more informed decision.

Pros

• An insurance company with more than 50 years of experience
• Policyholders are not required to take a medical exam for life insurance
• Excellent ratings through A.M. Best and Fitch Group
• Coverage is available in nearly every state
• Guaranteed coverage for applicants up to the age of 85

Cons

• Information about discounts and claim processes is not available on the website
• The company does not provide 24/7 claim reporting via phone or online
• Relatively low level of coverage for the price
• Lower payouts for first-time senior policyholders

Colonial Penn Products and Notable Offerings

Colonial Penn has a number of life insurance plans, but not all of them are available in all states. With a starting monthly cost of only $9.95, it is likely to be more affordable than other insurance plans, although you should always compare. Of course, you also need to make sure you are buying enough coverage to suit your needs.

The following products are available through Colonial Penn:

• Guaranteed acceptance whole life insurance
• Permanent whole life insurance
• Renewable term life insurance
• Additional riders

Guaranteed Acceptance Whole Life Insurance

All people ages 50 to 85 can apply for this policy, and acceptance is guaranteed. As with any guaranteed acceptance policy, Colonial Penn does not require health questions or medical exams from customers when they apply.

However, the coverage amounts for this policy are often smaller and vary greatly depending on who’s applying for the policy. You will get different levels of coverage depending on your age, gender, and state.

Coverage can be as low as $400 and as high as $17,000. In addition, expect to receive only a partial death benefit if the policyholder dies within the first two years of coverage.

Colonial Penn’s guaranteed acceptance life insurance assures customers that they can get a policy regardless of health or age (we say that, but keep in mind that Colonial Penn does have a maximum age limit locked at 85 for most states). As a result of its near-limitless age range and lack of a medical exam, it makes sense why it is so popular among older adults.

In line with its famous claim, Colonial Penn does indeed offer this policy for $9.95 a month. The company sells it by the unit. And to their credit, unit prices have remained the same over time.

Permanent Whole Life Insurance

This is Colonial Penn’s traditional permanent life insurance policy. A policyholder can receive a death benefit of up to $50,000. Applicants must be between the ages of 40 and 75.

There is no medical exam required for whole life coverage, but underwriters will look at answers to a short health survey to determine whether you are eligible for the policy. Prices are based on age and gender and remain the same throughout the policy’s lifetime.

Renewable Term Life Insurance

Applicants must be between 18 and 75 years of age to apply for Colonial Penn’s term life insurance, with coverage up to $50,000. Term life policies from Colonial Penn are guaranteed renewable up to age 90.

You will be asked to complete a health survey to determine your eligibility. The rates for this policy can vary from year to year. As the insurer’s age rises, so do the rates.

Additional Riders

Colonial Penn doesn’t have a large selection of riders, so if you’re looking for a customizable life insurance policy to suit all your needs, this isn’t it.

Colonial Penn offers a living insurance rider, which customers can add to either a permanent whole life or renewable term life insurance policy. This rider allows you to receive 50% of your coverage early when diagnosed with a heart attack, stroke, or chronic debilitating illness. Cancer patients can receive 25% of their coverage.

Applicants aged 65 to 75 are not eligible for the rider option, and this option is also not available for guaranteed acceptance policies.

Colonial Penn Customer Service

Today, we view the online user experience as part and parcel of customer service. Unfortunately, Colonial Penn’s official website is not particularly user-friendly.

To begin with, customers who wish to learn more about the company’s discounts and claims processes will be disappointed because this information isn’t listed on the company’s website.

The Colonial Penn website does not feature a timeline for responses to claims either, nor does it outline the process for customers. Typically, customers report a 10- to 14-day turnaround for filing claims, although some report responses to claims as soon as seven days.

Customers cannot file a claim via an online form or by phone, which is unexpected for a major insurer like Colonial Penn. The only way to submit a claim is by snail mail (email) — a much slower process compared to many other modern insurance carriers that offer online filing or 24/7 phone support.

Granted, Colonial Penn’s website does have options for prospective customers to request quotes, as well as the ability to pay bills online. While this is undoubtedly a step in the right direction, we would’ve liked to see more from a reputable carrier like Colonial Penn.

Customers may contact Colonial Penn by phone or email for most general inquiries. Colonial Penn’s hotline is open during limited hours, Monday through Friday. They have a Facebook page, which makes them more accessible to customers. According to their chat box, direct messages are usually answered within one day.

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Colonial Penn Insurance Customer Reviews

We reviewed all the complaints reported to the Better Business Bureau (BBB).

Despite Colonial Penn’s outdated claims process, consumers tend to respond positively to how straightforward its claims process is and its claims success rate.

Unfortunately, Colonial Penn receives a lot of complaints regarding its aggressive sales tactics that target the elderly. Also, a number of people felt they bought the wrong product or didn’t understand what they were buying. A few customers reported being surprised by the lower coverage payout amounts.

Is Colonial Penn financially stable?

Colonial Penn’s parent company, CNO Financial Group, has an A- rating from A.M. Best, an international credit rating agency that monitors the insurance industry. A.M. Best also places Colonial Penn in the $1.5 to $2 billion financial size category, further attesting to the carrier’s financial stability and strength.

Colonial Penn also holds a similar A- rating from Fitch Group.

Insurance companies are evaluated on many factors, including their financial strength. Colonial Penn’s rating scores are proof that the company can provide guaranteed, secure coverage. With Colonial Penn, you can rest assured that they will honor the policies they issue and pay out on schedule.

Our Verdict

Colonial Penn, is a company with a fascinating history, robust product offerings, and high financial ratings. Overall, we think they’re a pretty decent choice for a life insurance provider — provided you fit within their market demographic, that is.

The company’s products are certainly tailored towards a specific audience. Colonial Penn’s low underwriting requirements make it ideal for people who struggle to find coverage elsewhere due to their age or medical history. Typically, these are older adults who don’t require a large payout or full coverage — perhaps just enough to cover funeral expenses or any final arrangements.

However, for a company its size, it seems odd that Colonial Penn only accepts claims via email. It’s a relatively outdated claims process that may frustrate some. When you combine that with lower coverage across the board, you’ll realize that Colonial Penn is unlikely to be the best option available to you, especially if you’re still relatively young. For the same price, you can find better coverage elsewhere.

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