Colonial Penn Life Insurance Review 2020

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Colonial Penn has been in the life insurance business for more than six decades. The provider offers life insurance policies in 49 states, the District of Columbia, Puerto Rico and the Virgin Islands. Colonial Penn sells life insurance to folks 18 to 85 years old – and offers a special plan for people over 50.

People buy life insurance for a variety of reasons. Young parents often buy life insurance to ensure their surviving spouse and children can pay off any debts that are left behind and cover the funeral. Business partners buy life insurance policies to ensure that the surviving partner can continue to run the business when one partner dies. Life insurance is an important investment. But does Colonial Penn offer the right life insurance for you?

Colonial Penn life insurance

Life insurance policies have a death benefit, which pays a predetermined amount of money to a beneficiary when the insured dies. For example, if you purchase a $50,000 life insurance policy and pass away during the policy term, your beneficiary will receive the $50,000 death benefit. Life insurance policies fall into two categories:

Term life insurance

Term life policies provide coverage for a specified amount of money and term, usually 10 to 30 years. For instance, if you take out a 20-year mortgage on a new home, you may decide to buy a policy with a 20-year term, just in case you die before paying off the loan. Some term life policies offer level term coverage, which maintains the same death benefit throughout the term, while others decrease the death benefit throughout the term.

Most term life policies allow you to renew them at the end of the term. If you continue to pay the premium, the policy will continue to provide protection. However, most life insurance companies only extend term life coverage to a specified age, usually 85.

If you don’t renew a term life policy at the end of its term, you’re no longer covered. And most term life policies don’t return any of your premium payments if you decide to discontinue coverage. Nonetheless, term life policies offer the most affordable type of life insurance coverage.

Whole life insurance

Whole life policies also pay a specified death benefit, but they provide coverage your entire life as long as you continue to pay the premium. That’s why insurers often refer to whole life insurance as “permanent life” coverage.

Over time, whole life insurance policies build a cash value, which you can borrow from to purchase a home, catch up on bills or help send your kid to college. Or, if you decide to drop the coverage down the line, you can cash out to receive a lump sum payment. But if you continue paying your premium, your whole life policy will continue to provide protection.

Whole life policies don’t discontinue coverage at a certain age. Traditional whole life policies maintain the same death benefit and premium throughout the life of the policy. Modern whole life policies, like universal and variable life insurance, offer more flexibility, allowing you to increase your death benefit or choose how to invest the cash value portion of your coverage.

Types of life insurance policies offered

Colonial Penn offers term life and traditional whole life insurance policies. All policies feature flexible payment options, enabling you to pay every month, quarter, six months or 12 months.

Guaranteed Acceptance Life Insurance

In most states, people aged 50 to 85 years of age can apply for Colonial Penn’s Guaranteed Acceptance Life Insurance policies. This whole life policy doesn’t require a medical examination but has a two-year limited benefit period meaning that your policy won’t pay out a death benefit in the first two years. The policy builds a cash value, beginning the first year of coverage, and allows you to choose the death benefit limit.

A Colonial Penn Guaranteed Acceptance policy covers you your entire life if you continue to pay the premium. It features a fixed rate, so you’ll pay the same premium throughout the life of the policy.

Permanent Whole Life Insurance

Colonial Penn’s Permanent Whole Life Insurance policy is available to customers aged 40 to 75 years old, except for applicants in New York or the Virgin Islands. The policy doesn’t require a medical examination, but you will need to complete a questionnaire to determine your eligibility.

This whole life coverage covers you throughout your life and has a maximum death benefit of $50,000. It builds a cash value starting the first year of the policy. The coverage features a fixed rate, but the premium cost will depend upon your age and gender, except in Montana, where Colonial Penn rates premiums based only on age.

Renewable Term Life Insurance

Colonial Penn’s Renewable Term Life Insurance policy is available in all locations except Montana, New York and the Virgin Islands. It’s available to people aged 18 to 75 years old, renewable to age 90 and carries a maximum death benefit of $50,000. Colonial Penn bases rates on your age and gender and premiums increase as you grow older.

Your term life policy may earn a cash value, depending on how long you keep the coverage. Colonial Penn doesn’t require a medical exam for its term life policies, but determines your eligibility based on a medical questionnaire.

Living Insurance

Colonial Penn offers a Living Insurance option with its Permanent Whole Life Insurance and Renewable Term Life Insurance policies. This accelerated death benefit rider enables you to receive up to 50% of your whole life or term life death benefit if you are diagnosed with cancer or another chronic illness, or if you suffer a heart attack or stroke.

Colonial Penn ratings, reviews, customer satisfaction and complaints

Colonial Penn didn’t make the cut in J.D. Power’s 2019 U.S. Life Insurance Study but the Better Business Bureau gives Colonial Penn an A+ rating. In the last three years, 88 consumers have filed BBB complaints against Colonial Penn, most centered on advertising, billing and sales issues.

AM Best gives Colonial Penn an A- (Excellent) financial rating. AM Best has analyzed Colonial Penn since 1969 and the provider has maintained an A- rating for the last five years.

Reasons why Colonial Penn is a great option

If you’re looking for one-stop insurance shopping, Colonial Penn isn’t the right insurer for you. While some life insurance providers can also cover your business, car and house, Colonial Penn keeps it simple by only offering quality life and supplemental health insurance policies.

Colonial Penn also falls short with its death benefit limits. Both term and whole life policies provide a maximum death benefit of $50,000, much lower than policies offered by many other insurers.

Colonial Penn is a good option for people looking for a whole life policy. If you have a preexisting condition that might prevent you from purchasing life insurance from another carrier, Colonial Penn’s Guaranteed Acceptance Life Insurance might provide just the coverage you need.

Colonial Penn’s term life policies offer a few advantages over many of its competitors. They don’t require a medical exam and if you continue to renew your term life coverage, your policy may build a cash value. And, while many providers only offer term life policies that cover you to age 85, Colonial Penn extends coverage to age 90.

All Colonial Penn policies also come with a 30-day trial period. If you decide to cancel or change your policy during the first 30 days of coverage, the provider will issue a full refund.

Additional policies offered by Colonial Penn

Unlike many major insurers, Colonial Penn doesn’t offer a broad portfolio of insurance products, like business, car and home insurance. However, the carrier’s Active Care supplemental health insurance can complement your life insurance policy by providing asset protection when you need it most.

Today’s high healthcare costs can cause a serious financial burden, even if you carry medical insurance. Colonial Penn’s Active Care coverage can help pay expenses related to a variety of health conditions, including:

  • Accidental injuries
  • Alzheimer’s disease
  • Cancer
  • Diabetic complications
  • Heart attacks
  • Strokes

Active Care pays up to $60,000. And unlike your health insurance coverage, this supplemental policy pays the benefit directly to you. You can use the payment to pay copayments and deductibles required by your healthcare coverage, or to pay medical bills and everyday expenses such as car payments, groceries, mortgage payments or rent.

Colonial Penn offers Active Care to adults and children. If you don’t file a claim before the end of the policy term, Colonial Penn will return a portion of your premium. Availability of Active Care and the cash return benefit may vary by state.

Frequently asked questions

How much insurance do you get from Colonial Penn for $9.95 per month?

In its TV ads, Colonial Penn advertises life insurance coverage starting at $9.95 per month for its Guaranteed Acceptance Life Insurance. While the policy doesn’t require a medical exam, it only offers limited benefits for the first two years. But the price you’ll pay for the policy may depend on your age, amount of coverage and location.

What is the best life insurance company?

According to J.D. Power’s 2019 U.S. Life Insurance Study, Northwestern Mutual, State Farm and Mutual of Omaha rank among the top life insurance companies. In the 2019 survey, Colonial Penn didn’t earn a ranking. However, choosing the best life insurance company will depend on your personal needs. Some insurers offer a wide variety of insurance products, like auto, business and home coverages, while others, including Colonial Penn, don’t offer such a broad portfolio. If you’re only looking for life insurance, Colonial Penn might provide the right fit, but if you need a wide range of coverages, you’ll need to find another insurer.

How do I file a life insurance claim with Colonial Penn?

Colonial Penn only accepts claims through the mail. To file a claim, the named beneficiary must submit a claim form, the original insurance contract and a certified copy of the deceased death certificate.