Colonial Penn Insurance – Ultimate Review

If you’ve been searching for life insurance then the chances are you’ve already come across Colonial Penn, who is one of the big names in insurance spending millions on their mass marketing techniques each year selling their ‘guaranteed acceptance’ policies.

Although it may be easy to come across Colonial Penn Insurance, it turns out to be a whole lot harder to understand exactly how their life insurance works, their prices, and their exclusions, so we’ve done the hard work for you and have compiled the answers for you. 

Who is Colonial Penn?

Colonial Penn Life Insurance Company, was founded by Leonard Davis in 1968 and is based in Philadelphia, US. Owned by CNO Financial Group, Colonial Penn is an insurance subsidiary whose key spokesperson is Alex Trebek, the Canadian-American TV personality. You may have also heard Colonial Penn mentioned in association with the name Conseco Direct Life, for which it was renamed briefly between 1998 and 2001, before reverting back to its original name. 

What kind of insurance does Colonial Penn offer?

Colonial Penn specializes in providing life insurance and offers three key types: 

  1. Guaranteed Acceptance Whole Life Insurance
  2. Life Choice Whole Life Insurance 
  3. Renewable Term Life Insurance

Guaranteed Acceptance Life Insurance

Perhaps the product for which Colonial Penn is most famous for is their Guaranteed Acceptance Life Insurance, aimed at seniors between the ages of 50 and 85 who fear that they may be turned down because of pre-existing health conditions. This policy has no medical underwriting, so you’re guaranteed to be accepted, but you will need to wait at least the minimum term of two years before it will pay out on notification of your death. If you were to die before the minimum term of two years this policy will not pay out n full! In the event of a death within the first 24 months, Colonial Penn will refund you your premiums plus 7% interest, however, if you were to die from an accident, such as one in a plane or car, then the full face value of the policy will be paid out even during the 24 month waiting period. As a whole life policy, this means that your premiums will never increase, your death benefits will never decrease, your coverage will not expire at any age and you can build cash value from which you can borrow. 

What will you pay for Guaranteed Acceptance Life Insurance?
Before we get into the nitty-gritty of cost, we must first clarify what Colonial Penn means when they refer to a unit. You see, in Colonial Penn language a unit is cleverly used so that they can advertise their coverage as starting from the small price of $9.95. Each applicant is given the option to buy a set number of units between 1 and 8, meaning that at the most they will be paying a $79.96 monthly premium. The important, and sneaky thing, to realize here is that buying a $9.95 unit at age 50 will not purchase you the same amount of coverage as if you buy one at age 40, because Colonial Penn change the amount of benefit each unit is worth depending on an applicants, age, gender, and sate. Given that the Colonial Penn final expense figure can change with the value of a unit, it gets a little hard to put a specific number on the coverage provided by a unit for each individual but to give you an idea, here are a few examples: 

  • A woman, aged 50 purchasing 2 units at $19.90 will receive $4166 in coverage
  • A woman, aged 85 purchasing 2 units at $19.90 will receive $954 in coverage 
  • A man, aged 50 purchasing 2 units at $19.90 will receive $3572 in coverage 
  • A man, aged 85 purchasing 2 units at $19.90 will receive $836 in coverage

Suddenly when looking at it this way it’s easy to see that for Colonial Penns target market, older seniors, this policy isn’t going to produce a great final expense and is instead just making Colonial Penn a huge profit. 

Life Choice Whole Life Insurance

Colonial Penn Insurance’s next most popular product is their Life Choice Whole Life Insurance which begins to build cash value after just 12 months and is available for people between the ages of 45 and 75. Unlike Colonial Penn’s Guaranteed Acceptance Life Insurance, prospective candidates will need to answer a few health questions and could be denied coverage based on their answers. As far as Colonial Penn policies go, this one is the best to go for by far however due to complex medical underwriting it can be hard to be accepted and Colonial Penn will not consider you if you have even just one of the hundreds of common medical problems including being on any form of blood thinner, insulin dependency, using a wheelchair, being hospitalized within the last year or having a mental disorder and if you are declined for this policy on medical basis they will then offer you their Guaranteed Acceptance Policy for which we already know they have a complicated unit cost system. In addition to having strict medical underwriting this Colonial Penn insurance policy will also have you paying above the odds for the same coverage you could get elsewhere, with prices rising sharply for those 60 and above.

Renewable Term Life Insurance

Finally, Colonial Penn offers a couple of Renewable Term Life Insurance options which are open to people as young as 18 and renew and increase in price every set period of years. As with Colonial Penn’s other insurance offerings, there’s still no medical exam, though you will need to answer some health screening questions. Of the three policies, this is often considered the worst one to go with for 2 main reasons, firstly the policy expires at age 90 and secondly the prices increase so much towards later life that it can be near impossible to afford in later years. For example: 

  • A woman between the ages of 51 and 55 who has purchased $30,000 worth of coverage will pay a premium of $34.47 – which seems fairly reasonable. 
  • The same woman at the end of her policy between 86 and 90 will pay $317.81 and her policy will expire on her 90th birthday. 

Conclusion 

Colonial Penn has captivated the country with its expensive advertising and use of figurehead Alex Trebek but ultimately their policies fail those who need them most and policyholders can often get much better deals with more favorable terms from smaller insurance providers.

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