Colonial Penn Life Insurance Review: Life Insurance Policies

Colonial Penn Life Insurance:

Colonial Penn offers a range of life insurance products that combine simplified underwriting with a limited death benefit. They’re best suited towards shoppers that don’t necessarily want a large payout, perhaps just enough to cover expenses associated with their passing, and would typically have trouble obtaining coverage elsewhere due to their age or a medical history.

Colonial Penn Life Insurance Review

Life insurance provides for loved ones and family members after you’re gone. If your spouse wouldn’t be able to pay the mortgage without your income, a life insurance policy payout could be used to pay off the house.

If a parental co-signer on a student loan might struggle after you’re gone, the policy could help them. Buying life insurance isn’t about you, but about the ones you love.

Even though life insurance is often marketed to the young, Colonial Penn knows that even people in their 50s, 60s and beyond want to buy life insurance. They’ve been selling to customers in higher age brackets for over 60 years, when other companies might not cover you.

This article focuses on:

Where Is Colonial Penn Offered?

Colonial Penn is available in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. However plan features and restrictions may differ by state.

For instance, in New York, Colonial Penn is underwritten by Bankers Conseco Life Insurance Company. Additionally, its renewable term life insurance plan is not offered in Montana, New York, or the U.S. Virgin Islands.

Pros and Cons of Colonial Penn

Pros

  • No medical exam required
  • Potential ability to borrow against cash value
  • Guaranteed rate

Cons

  • $50,000 maximum insurance payout
  • Two-year limited benefit period

Colonial Penn Life Insurance Products

Depending on your financial needs, Colonial Penn offers 3 types of life insurance policy:

Term Life Insurance Guaranteed Acceptance Program Whole Life Insurance
Monthly Premium Range $12.49 – $56.46 $9.95 – $79.60 $29.65 – $133.24
Changes in Premium? Yes, premiums increase with age No No
Death Benefit $10,000 – $50,000 Approx. $400 – $17,000 $10,000 – $50,000
Underwriting Application with health questions, no medical exam No health questions, no medical exam Application with health questions, no medical exam

Sample premiums are for 50 year old male, with the range representing difference between minimum and maximum coverage offered

Colonial Penn Guaranteed Acceptance Life Insurance

Guaranteed issue products typically don’t have coverage higher than $25,000, and they also have a graded benefits clause, which means the carrier won’t pay the full benefits if you die within 2 years after you bought the policy. You may be entitled to 10%–15% interest depending on the company.

With Colonial Penn Life, the guaranteed policy is a little different. They don’t have benefits up to $25,000 like the others do; what they have are the “units of coverage”.

These represent the face amount or a benefit amount we are all familiar with when shopping for a life insurance policy. This is permanent life insurance with a cash saving component that requires no health questions or exam. The issue ages are 50–85 in most states.

Colonial Penn Term Life Insurance

Term life is the easiest policy to understand. You pay per month for coverage that lasts for a specific amount of time or contract. If you die within this period, your beneficiaries will collect the face amount you bought. There are no cash benefits, and the premium is lower than with other types of policies such as whole life.

It’s a very different case with Colonial Penn Life. The initial premium is based on your age you’re your coverage takes effect and will increase as you enter a new “age band.” Let me explain: Say you bought a policy when you were 42 years for 35 per month.

When you reach 46, the same policy will cost you $45 per month, and when you reach 51, it will be $57. Coverage can only be renewed up to the age of 90. You aren’t buying a “leveled premium policy”; you are buying a policy that changes every 5 years. How great is that?

The issued ages are 18–75 years (renewable up to 90). There is no physical exam requirement, but they do ask health questions. The benefit amounts are $10,000, $20,000, $30,000, $40,000 and $50,000 only.

Colonial Penn Whole Life Insurance

As the name implies, whole life will last for the rest of your life. There is a cash value to a whole life policy, which you can borrow against.

Most financial advisers recommend that their clients buy term and invest the difference, and I tend to agree. However, I do recognize that some individuals want whole life and nothing else.

So let’s look at some of the details in Penn’s whole life policy. The issued ages are 40 to 75 years old. The benefit amounts are $10,000, $20,000, $30,000, $40,000 and $50,000 only.

There is no medical exam, but you will have to answer some health questions and could be denied. The premium is based on age and gender when the coverage is obtained.

Premiums are payable to age 121 or as long as the insured is living, and coverage matures and becomes payable at age 121. The premium remains the same and will not increase; coverage can’t be canceled as long as premiums are paid.

Based on Colonial Penn Life’s site, you begin to build cash value after a year of coverage and can use that for a loan.

Colonial Penn Life Insurance Review

Who’s Colonial Penn Life Insurance for?

Colonial Penn targets life insurance buyers who are later in life. You might not have been able to afford a policy when you were younger and in better health but still want to provide your family some protection now.

For this reason, no policies require medical exams. You might have to answer a few health-related questions from an underwriter, however.

Colonial Penn does not exclude applicants based on preexisting conditions, which is rare in the life insurance industry. Even if you just received an upsetting diagnosis, you can purchase coverage.

Be aware, however, that there is a limited death benefit during the first 2 years of the policy’s life.

Conclusion

Colonial Penn Life Insurance Review

If you are healthy, avoid Colonial Penn at all costs. There are better options out there. Even if you need a guaranteed issue policy, you will find better policies with Gerber, AIG or even AARP.

Buying life insurance was never intended to be done the same way as buying airline tickets for the reasons above. Consider working with a broker to avoid any pitfalls.

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