Are you considering buying a Colonial Penn Life Insurance policy? Not really sure about this Alex Trebek life insurance stuff? Do you have some questions you would like answered before doing business with Colonial Penn? If so… we’ve got you covered. Our goal is to provide you with as much information as possible about Colonial Penn Life Insurance Company so you can make your own decision with confidence before buying a senior life insurance plan.
Who is Colonial Penn?
Colonial Penn Life Insurance Company is currently headquartered in Philadelphia, PA. Colonial Penn has been offering senior life insurance products nationwide to families for over 60 years. In 1968, Colonial Penn was the first insurance provider to offer a guaranteed acceptance life insurance product to individuals over 50 years old. Colonial Penn was founded by AARP co-founder Leonard Davis and Alex Trebek is the compensated endorser who currently appears in all Colonial Penn advertisements. Ed McMahon, Lou Rawls and Joe Theismann were also endorsers in the past for the company.
At this time, Colonial Penn markets its products via TV commercials, direct mail, and their company website. Colonial Penn Life Insurance Company is licensed in 49 states and is currently not licensed to sell insurance in the state of New York. Colonial Penn has an A- rating with AM Best and BBB+ with Finch. So overall, Colonial Penn has reasonable financial security. The Better Business Bureau has Colonial Penn currently listed as A+ which is a good rating.
3 Types of Insurance Plans Colonial Penn Offers
Guaranteed Acceptance Life Insurance, Permanent Whole Life Insurance and Renewable Term Life
Guaranteed Acceptance Life Insurance
The Guaranteed Acceptance Life Insurance policy is Colonial Penn’s flagship product. Colonial Penn’s guaranteed acceptance plan is perfect for those who have severe health conditions, past or present, that would effect approval for life insurance. This type of insurance can also be called final expense insurance, burial insurance and also funeral insurance.
Here are a few details about the Colonial Penn Guaranteed Acceptance Policy:
• Available for ages 50 – 85 in most states
• Guaranteed Acceptance
• No medical exam or health questions
• Monthly premium stays the same
• Policy builds cash value
Everyone is approved and the Colonial Penn application process is super easy. However, the Colonial Penn guaranteed acceptance life insurance policy comes with a mandatory two year waiting period. This means you don’t have immediate coverage and your death benefit won’t be paid out until after two years. If you were to pass away within two years of taking out your Colonial Penn guaranteed acceptance policy, your beneficiary would receive all your premiums back plus 7% interest.
However, if you die accidentally your full death amount would be paid immediately without having to wait the two years. Unlike most whole life insurance policies, Colonial Penn’s guaranteed acceptance plan is sold by the unit. So, what is a unit? Colonial Penn describes it this way on their website:
A unit of coverage corresponds to the life insurance benefit amount you can purchase and it depends on age, gender and state. You can only buy up to 8 units total and each unit is $9.95. Your monthly premiums will be determined by how many units you choose to buy. If that sounds confusing, that is because it is confusing. Most consumers are used to purchasing a face value amount of life insurance, not a unit amount that has to be calculated. Instead of asking for a death benefit amount and being quoted a monthly premium, with Colonial Penn you are quoted a monthly rate and given the benefit amount that goes with the $9.95 unit rate.
What about Colonial Penn’s cost?
Here is an example, on a 70- year old female, one unit of coverage would equal $1043.00 in total death benefit. Of course, you can only buy 8 units total. So, the most our 70- year old female could purchase would be $8344.00 of total insurance at a cost of $79.60 per month. Once again, her beneficiary would receive $8344.00 at the time of her passing. Annual premium cost would be $955.20. These rates are taken directly from Colonial Penn’s website:
Here is an example of what some other companies would charge our 70-year old female for THE SAME coverage. We used $8,000 of total insurance in this example:
How does this Colonial Penn plan compare to other companies?
First of all, you should only buy Colonial Penn’s guaranteed acceptance life insurance policy if you currently have severe health problems. But as shown with the examples above, there are less expensive policies available with reputable companies. Plus, you are limited on how much insurance you can buy with Colonial Penn under this program. What if $8000 won’t cover all your final expenses? AIG & Gerber both offer plans up to $25,000 if you are needing more coverage. Plus, whats the deal with the colonialpenn.com rate lock that they highly advertise? It simply means that your monthly payment will never change. Your payments are locked for life. However, ALL whole life insurance policies work this way as well.
Once again, guaranteed acceptance life insurance is the most expensive type of burial insurance you can buy since no health questions are asked. So, YOU SHOULD ALWAYS try to get approved for a life insurance policy that doesn’t have waiting period first before considering this type of plan.
The Guaranteed Issue Policy is the ONLY plan available from Colonial Penn from the ages 76-85 years old.
Permanent Whole Life Insurance
This is the second type of whole life insurance that Colonial Penn offers, is called Permanent Whole Life Insurance. This one differs from their guaranteed acceptance plan, because this plan requires health questions and you have to be approved by their underwriting department. Here are some details about their permanent whole life insurance product:
• Available to ages 40-75
• Policy can’t be cancelled due to age or health
• Policy builds cash value
• Monthly premiums stay the same
• No medical exams
• Immediate coverage – no waiting period
• Coverage available up to 50,000
• Pharmaceutical check
Here are some health questions taken from Colonial Penn’s application. This will give you an idea on what type of questions you will have to answer to be approved for this plan:
1. Are you currently, or have you within the past year used a wheelchair, used oxygen, been confined to a hospital or nursing facility, received or receiving home health or hospice care, or been disabled due to an illness?
2. Have you been advised by a member of the medical profession to have surgery which has not yet been performed or testing that has not been completed, ever had an organ transplant, or are you currently undergoing an evaluation or diagnostic testing for symptoms of an illness?
3. Have you been diagnosed by a member of the medical profession with or received treatment for AIDS (Acquired Immune Deficiency Syndrome) or infection with HIV (Human Immunodeficiency Virus)?
4. In the past 3 years, have you had, been diagnosed by a member of the medical profession with, received treatment or had treatment recommended for:
• Lung disease including chronic obstructive pulmonary disease (COPD), emphysema, chronic bronchitis
• Kidney disease, kidney insufficiency, kidney failure or required dialysis
• Coronary artery disease, heart attack, cardiomyopathy or congestive heart failure
• Heart surgery including valve replacement or repair or required a pacemaker or defibrillator
• Any cancer or recurrence of cancer such as leukemia, malignant melanoma (excluding basal cell and squamous cell skin cancer)
• Liver disease, cirrhosis or hepatitis
• Stroke, transient ischemic attack (TIA) or peripheral vascular disease
• Alzheimer’s disease or dementia
• Bipolar disorder, schizophrenia or psychosis
• Alcohol or drug abuse
• Diabetes requiring insulin, amputations or been hospitalized for Multiple sclerosis, muscular dystrophy, collagen vascular disease such as systemic lupus erythematosus, cystic fibrosis or amyotrophic lateral sclerosis (ALS)
What about the Colonial Penn rates?
Here is an example, on a 64-year old male with $10,000 in coverage. The monthly premium would be $62.96 per month. This rate was pulled directly from Colonial Penn’s website:
Here is an example of what some other companies would charge our 64-year old male for THE SAME $10,000 in whole life insurance coverage:
How does this Alex Trebek Insurance plan compare to other companies?
Looking at the examples above, most companies that offer the same type of coverage will be less expensive. Colonial Penn’s life insurance rates are NOT very competitive. (Same with AARP) So, if you like to save some money you can look for better rates elsewhere. However, the biggest flag that we see is Colonial Penn’s underwriting on this product. The underwriting on Colonial Penn’s Permanent Whole Life Insurance is very strict just looking at their health questions on their application. First, several of the health conditions listed above someone could qualify for immediate coverage through other companies. Plus, most companies only look back 2 years where for several of those conditions where Colonial Penn is looking back 3 years.
For example, let’s say you have a Bi-polar disorder. Unfortunately, with Colonial Penn you would be declined but several other burial insurance companies would approve you Day 1 – immediate coverage with no waiting period. This is just one example but there are several examples just like this one. (COPD, Lupus, Multiple Sclerosis, Hepatitis etc.)
Renewable Term Life Insurance
The last type coverage that Colonial Penn offers is their Renewable Term Life Insurance. THIS PLAN IS TERM INSURANCE. So don’t get confused because it seems a lot of people assume this plan lasts forever but it DOESN’T. Once again, all term life insurance policies expire and ONLY cover you for a set period of time. If you are looking for something more permanent to cover your final expenses, this plan is not for you. Here are some details about Colonial Penn’s renewable term life insurance product:
• Available to ages 18-75
• Policy is renewable up to age 90
• No medical exam
• Rates increase as you enter a new age band
• Term insurance with underwriting
• Coverage available up from 10,000 – 50,000
• Pharmaceutical check and possible phone interview
What about the cost?
Here are some rates that we pulled directly from Colonial Penn’s website. Rates are for both Male and Females on their Renewable Term Life Insurance plan:
How does this Colonial Penn plan compare to other companies?
As you see from the rates this above, Colonial Penn’s term insurance is less expensive than their other plans that they offer. (at least in your younger years) Why is this? Because term insurance expires so you are only paying for a short period of time. Of course, Colonial Penn’s whole life insurance plans don’t expire and your payments remain with you until you die. That’s the reason why whole life insurance is more expensive than term insurance.
So, Colonial Penn’s renewable term insurance might look affordable to you, but just know that this plan expires when you turn 90 years old. I know… I know… you don’t think you will live until you are 90. However, a lot of people do. In fact, more and more people are living longer than they use to. So, what happens if you do live past 90? Well, under this Colonial Penn term life plan your coverage will expire. So unfortunately, you would be left unprotected at a time when you really need it the most. In fact, we don’t know of ANY companies that offer life insurance in the United States after you turn 90 years old.
Also, make sure you understand this… about every 5 years your monthly premium will INCREASE with this Colonial Penn plan. Plus, as you can see on the example above, Colonial Penn’s term insurance gets expensive when you turn 80 years old. I don’t know many seniors who could fit these high payments into their budgets. Also, strict underwriting still holds true on this plan as well.
In fact, you will have to answer the same questions listed above for any policy except guaranteed issue. It is easy to see how people get confused from all of Colonial Penn’s different advertising streams and some assume that they are buying whole life insurance when it’s really is term insurance. I think is could be the main reason why Colonial Penn has gotten some bad reviews over the years from consumers who misunderstood what kind of policy they were buying.
Some Final Thoughts on Colonial Penn…
IF YOU MUST have a Alex Trebek life insurance policy, make sure you know what KIND OF POLICY you are buying. With a few different products available and an endorser such as Alex Trebek leaving an impression of safety and security when choosing Colonial Penn Life, it would be understandable to take the easy path and skip the step of comparing companies. After learning more about Colonial Penn in our review, if you would like assistance in comparing several reputable senior life insurance companies, call Assurance Life at 800-517-0810. Assurance Life Insurance is an independent life insurance broker with access to over 25 of the nations best burial insurance companies so we’ve got you covered on protecting you and your family.
We hope you enjoyed our Colonial Penn Life Insurance review. If you would like to compare additional companies, click the Get Quotes Now button on the left of the page.