Colonial Penn specializes in permanent life insurance for those above age 50. However, coverage amounts are relatively low, and there are many complaints against the company. This Colonial Penn life insurance review will help you decide whether it might still be a good fit for you, especially if you have end-of-life planning concerns.
Colonial Penn Life Insurance
Colonial Penn Life Insurance
Term options
N/A
Am rating
A
Pros:
- Low-cost permanent life insurance coverage
- Guaranteed insurance with no medical exam
- 30-day “try it on period” allows for cancellation for a full refund
Cons:
- Policies aren’t available to those under the age of 50
- LifeChoice Whole Life insurance is only available in New York state
- Coverage amounts are relatively low
Colonial Penn overview
Colonial Penn offers permanent life insurance to people 50 to 85. Their main approach is a guaranteed life insurance policy that doesn’t require a medical exam. With Colonial Penn, the applicant can’t be rejected for any reason.
However, there’s a two-year limited benefit period. This means a beneficiary might not receive the full amount of the policy payout if the insured passes within two years of establishing the life insurance policy. For example, the beneficiary might only receive premiums paid plus 7% interest compounded annually rather than the face value of the policy.
Additionally, Colonial Penn sells life insurance coverage in “units.” The insured buys units, and each unit cost is determined by age, gender, and state of residence. You can’t see final prices unless you fill out the quote form, but Colonial Penn advertises policies that start at $9.95 per month.
Colonial Penn is likely best for those who can’t get other insurance coverage and want a plan to help their beneficiaries pay final costs, such as for a funeral.
Colonial Penn policy coverage options
Colonial Penn offers two main policy options: Guaranteed Acceptance and LifeChoice.
Guaranteed Acceptance life insurance
- Permanent whole life coverage
- Up to $30,000 in coverage
- No health questions or medical exam required
- Available to those aged 50 to 85
The Guaranteed Acceptance policy from Colonial Penn allows you to access coverage without worrying about health questions or taking a medical exam. However, it’s hard to gauge what you will pay until you go through the quote process.
For example, a 64-year-old female in Idaho might pay $9.95 a month for one unit of insurance, which amounts to $1,313 in base coverage. To get 10 times the coverage ($13,130), the policyholder must pay $99.50 per month. On the other hand, a younger person could get a higher amount of coverage for the same amount. At age 58, the insured could receive $1,620 base plan coverage for $9.95 per month.
LifeChoice
- Permanent whole life coverage, exclusively for New York residents
- Up to $25,000 in coverage
- No health questions or medical exam required
- Available to females aged 50 to 75 and males aged 50 to 73
LifeChoice is issued by a different insurer in New York and is only available to New York residents. Additionally, it’s only possible to get the full coverage amount if you’re under the age of 66. For those 66 and older, the maximum policy amount is $15,000.
A 50-year-old female in New York would pay $15 a month for $5,000 in coverage and $67.80 for $25,000 in coverage. A 68-year-old female would pay more than double that for coverage, maxing out at $15,000.
Colonial Penn riders
Colonial Penn offers only an accidental death benefit rider. In most states, it’s available for people 50 to 80. The benefit is based on a monthly rate, allowing up to $50,000 in coverage for $10 per month.
Colonial Penn rates
Life insurance rates vary based on various factors, including age, gender, coverage amount, and where you live. Colonial Penn sells their insurance in units, so your coverage amount is based on units, and your cost is based on the number of units you purchase.
Here are some sample rates for Colonial Penn’s main offering, the Guaranteed Acceptance policy, based on females and males living in Idaho:
| Minimum coverage rate | Maximum coverage rate | |
|---|---|---|
50-year-old female | $9.95/month for $2,000 | $149.25/month for $30,000 |
75-year-old female | $9.95/month for $762 | $149.25/month for $11,430 |
50-year-old male | $9.95/month for $1,669 | $149.25/month for $25,053 |
75-year-old male | $9.95/month for $549 | $149.25/month for $8,235 |
Colonial Penn customer service
Even though Colonial Penn claims an A rating from AM Best for financial strength and an ability to meet its obligations, customers are less than satisfied with the policy.
While Colonial Penn has been accredited by the Better Business Bureau since 2020 and has an A+ rating, customer reviews tell a different story. On the Better Business Bureau’s site, Colonial Penn has a rating of 1.17 stars out of 5. Additionally, Colonial Penn’s National Complaint Index Report from the NAIC is at 22.19. This indicates that complaints about Colonial Penn are about 22 times what they should be when compared to peers.
How Colonial Penn compares
| Colonial Penn | Haven Life | Nationwide | |
|---|---|---|---|
Term lengths | N/A | Up to 30 years | Up to 30 years |
Bundled savings | No | No | Yes |
Permanent life available | Yes | No | Yes, but you must call to get a quote |
Coverage amounts | Up to $30,000 | Up to $3 million | Up to $1.5 million |
Rate* | $149.25 per month | $10.83 per month (15-year term) | $27.12 per month * * (10-year term) |
* Rate based on a 50-year-old female in good health living in Idaho with $30,000 coverage
** Rate based on $250,000 minimum coverage amount
Methodology
Our analysis begins with customer feedback on the company under review from J.D. Power and studies from Life Happens and LIMRA. Next, we look at the following metrics:
- Cost relative to the company’s competitors
- Financial strength and ability to meet obligations
- Policy types, features, and riders
- Customer satisfaction
Frequently asked questions (FAQs)
Is Colonial Penn legit?
Yes, Colonial is a legitimate life insurance company providing permanent insurance. They have a number of complaints, however.
Who is Colonial Penn insurance backed by?
Colonial Penn backs its policies and has an A rating from AM Best.
Does Colonial Penn insurance require a medical exam?
No, you don’t need an exam. Acceptance is guaranteed.
Does Colonial Penn have a waiting period?
Coverage begins immediately. However, there’s a two-year limited benefit period, which means that if you pass within two years of getting the policy, your beneficiaries won’t receive the full payout amount.
This story was written by NJ Personal Finance, a partner of NJ.com. The information presented here is created independently from the NJ.com editorial staff, and purchases made through links in this article may result in NJ.com earning a commission.
