Provider Life Insurance Review (2024) (2024)

Although Colonial Penn is a stable insurer with an A- financial strength rating from AM Best,* the company received mixed marks in other areas. Part of this is due to limited offerings and a focus on no-exam policies that result in higher policyholder premiums. Low limits on whole life policies and a much higher incidence of consumer complaints are areas of concern as well.

*AM Best ratings are accurate as of June 2023.

Life insurance is a contract between a policyholder who agrees to make premium payments and an insurer that agrees to pay a death benefit to designated beneficiaries when the policyholder dies. The premium costs and policy amounts vary depending on several factors, such as age, gender, health and lifestyle.Term Life Insurance

Colonial Penn sold term insurance policies for many years but discontinued offering term policies in 2021. There are other good term life insurance companies available if this is the type of policy you’re looking for.

Whole Life Insurance

Whole life insurance is a permanent life insurance policy that provides coverage for the policyholder’s entire life as long as premiums are kept up to date. Colonial Penn whole life policies also have a cash value component that term policies do not. You can borrow against the premiums you’ve paid into the policy in most cases.

Colonial Penn’s permanent whole life insurance does not require a medical exam and is available to people ages 40 to 75. Applicants only need to answer health questions on the application. Premiums won’t change during the policy’s life, and coverage can’t be canceled as long as the premiums are paid.

Colonial Penn’s permanent whole life insurance coverage amounts range from $10,000 to $50,000. The policy starts to build cash value after the first year of coverage. At that point, you can borrow against the cash value at a guaranteed interest rate. While your death benefit won’t decrease, outstanding loans and withdrawals will reduce the amount of death benefit paid out if you pass away.

Guaranteed Acceptance Insurance

Colonial Penn also offers guaranteed issue life insurance. Its guaranteed acceptance life insurance policies require no medical exams or health questionnaires. While you can buy this coverage regardless of any pre-existing health conditions, you will pay a higher premium for not having to provide personal information.

The policy has a two-year limited benefit period for death from non-accidental causes. If the insured dies before the two-year period ends, the beneficiary will receive the premiums paid plus 7% compounded annual interest. After two years, the full face amount is paid for death from any cause.

Death from an accidental cause during the first two years will result in the payment of the full face amount of the policy. The accident must occur while coverage is in force, and the death must occur within 90 days of the accident, except in Oregon and Utah, where death must result in 180 days or less.

Applicants can buy from one to 15 units of insurance which correspond to the life insurance benefit amount available to the applicant. The per-unit price is fixed, with pricing starting at $9.95 per unit. The more units a person purchases, the bigger the death benefit will be.

Colonial Penn’s guaranteed acceptance life insurance is available to people ages 50 to 85, except in Minnesota, New Jersey and Pennsylvania. The age range is 50 to 75 in Minnesota and 56 to 85 in Pennsylvania. In New Jersey, the age range is 50 to 82 for women and 50 to 77 for men.

Colonial Penn’s Life Insurance Riders

A life insurance rider lets you buy additional coverage or add features to your policy.

Rider availability can vary based on the policy type. Here are some of the riders Colonial Penn offers.

• Accidental death: This lets someone 40 to 65 years old add an accidental death benefit ranging from $10,000 to $50,000.
• Cancer: This rider gives you up to 25% of your life insurance benefit if you’re diagnosed with cancer.
• Chronic illness: This lets you access up to 50% of your whole life insurance benefit if you’re diagnosed with a chronic or terminal illness.
• Heart attack and stroke: This rider allows you to access as much as 50% of your life insurance benefit if you’re diagnosed with a heart attack or stroke. It also covers terminal illnesses.

Life insurance is competitively priced throughout the industry. While each insurer has its own methodology to arrive at policy costs, several factors are standard across the board. The premium you pay will normally depend on the following:

• Age
• Health and medical history
• Gender
• Lifestyle
• Policy type
• Coverage amount
• Credit standing

Colonial Penn whole life insurance policies are available online or by calling the company’s toll-free phone number. In most cases, you can get an answer about whether your application was accepted the same day you apply.

Colonial Penn was not ranked as part of the J.D. Power 2022 U.S. Individual Life Insurance Study, which is often used as an indicator of customer satisfaction among many of the top providers in the industry.

The National Association of Insurance Commissioners (NAIC) tracks the number of complaints insurance companies receive compared to their size and market share, and the index is used to compare a company’s performance to other companies. The National Complaint Index is always 1.00. The Complaint Index is determined by dividing the company’s share of complaints in the U.S. market by the company’s share of premiums.

In 2022, Colonial Penn’s NAIC average index was 2.98, meaning three times as many complaints were lodged against it as a company its size should receive. That level of complaints was further substantiated on customer review sites such as the Better Business Bureau and Trustpilot. However, some customers did have positive experiences with the company.

“I had Colonial Penn for several years for my father before he passed in 2010. I never had an issue with Colonial Penn, and when my father passed away I contacted them, and within a few days they sent me a check for my father’s burial final expenses. I was very pleased with the customer service. I recommend Colonial Penn. I’m using for myself and husband as well. Very satisfied.” —Tracy W. via BBB

“I’m not sure why Colonial Penn has bad reviews. My experience with the company was great. My mom bought a policy about 5 years ago. She made her monthly payments up until she passed away in May 2022. I called Colonial Penn [the] day after she died. [They] asked me to fax her death certificate, and a coupIe weeks later I received the payout for the amount I was expecting. It was not complicated at all. My mother’s policy [and] all the paperwork associated with her policy had outlined the cost of monthly premium/payments and amount of her policy payout. It was easy to understand. Because I had a good experience with Colonial Penn [and] also the simple process of filing a claim, [my husband and I] are now getting policies for ourselves.” —Cindi T. via BBB

“The company kept charging me based on the age 63 and I’m 53. I canceled my policy by sending in the original policy with a signed receipt with a request to cancel and refund the difference of age over payment. The response I received was a double auto draft from my bank account. I have since filed a cancellation of funds withdrawal and a return of premium but the company has not refunded me the amount paid over my age premium difference.” —Mia C. via BBB

“I contacted Colonial Penn Life on behalf of my Dad (he is in hospice now) for policies covering my mother who [passed] away four years ago. My initial call was about a month ago where I was told ‘claims have already been made.’ I was about to hang up the phone when I asked was a check sent to my Dad. I got transferred to another agent who clarified that a claim was made but that it could not be processed without the death certificate. A copy of death certificate was promptly faxed so we now wait another month. Colonial Penn needs to strengthen its procedures so that a claim does not sit open for years. I will be following up regularly until my Dad receives his claims.” —James C. via BBB

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A Colonial Penn life insurance policy may be a good choice for people having trouble getting insured due to medical issues. Policy choices are limited to whole life and guaranteed issue life options with a $50,000 limit, but no medical exam policies will cost substantially more than other companies who offer regular term and life insurance policy options.

Another area of concern is the high number of customer complaints the company has received through consumer advocate sites and a much higher than average NAIC complaint index. We recommend getting life insurance quotes from at least three different companies to find the best coverage and premiums.

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Our goal at the Guides Home Team is to provide you with comprehensive, unbiased recommendations you can trust. To rate and rank life insurance companies, we created a thorough methodology and analyzed each company by combing through online policy information, speaking to agents via phone, reading customer reviews for insight into the typical customer experience, and reviewing third-party financial reliability scores.

After collecting this data, we scored each company in the following categories: coverage, riders, availability and ease of use and brand trust. To learn more, read our full life insurance methodology for reviewing and scoring providers.