Choosing the right life insurance plan can be daunting, especially with so many options tailored for different needs. One popular option that often comes up in conversations, especially among seniors, is the Colonial Penn 995 Plan. In this article, we’ll explore what this plan entails, its benefits and drawbacks, and whether it might be the right choice for you and your family.
What is the Colonial Penn $9.95 Plan?
The Colonial Penn $9.95 plan, also known as the “995 Plan,” is a guaranteed acceptance life insurance policy marketed primarily to seniors aged 50 to 85. This final expense plan is unique in its pricing model, advertising a flat rate of $9.95 per unit of coverage. However, the amount of coverage each unit represents varies significantly based on the policyholder’s age.
How Does the 995 Plan Work?
The 995 Plan is designed to be straightforward and accessible, particularly for those who might not qualify for traditional life insurance due to age or health conditions. Here’s how it works:
- No Medical Exam: One of the most appealing aspects of the 995 Plan is that it requires no medical exam or health questions. This makes it an attractive option for those who may have pre-existing conditions or other health concerns.
- Guaranteed Acceptance: As long as you are within the eligible age range (50-85), you are guaranteed to be accepted into the plan. This can provide peace of mind for seniors who have been denied coverage elsewhere.
- Unit-Based Coverage: The cost of the plan is $9.95 per unit of coverage, but it’s important to note that the amount of coverage you receive for each unit varies based on your age. Younger policyholders receive more coverage per unit than older applicants.
Coverage Amounts Based on Age
To better understand how much coverage the 995 Plan provides, it’s essential to look at the breakdown of coverage amounts by age. Below is a comparison of Colonial Penn’s rates for a $10,000 guaranteed issue life insurance policy for a male non-smoker, alongside three other more affordable providers:
| Applicant Age | Colonial Penn | Gerber Life | AIG | Great Western |
|---|---|---|---|---|
| 50 | $59.70 | $44.09 | $55.99 | $59.56 |
| 60 | $89.55 | $63.89 | $68.14 | $75.39 |
| 70 | $149.25 | $99.18 | $106.00 | $119.54 |
| 80 | Not available | $247.32 | $206.32 | $227.83 |
As seen in the table, the coverage amount you receive for the $9.95 plan decreases significantly as you age, highlighting the importance of understanding what you’re purchasing.
Pros and Cons of the 995 Plan
Before deciding whether the 995 Plan is right for you, it’s essential to weigh its benefits against its drawbacks.
Pros:
- Easy Application Process: With no medical exams or health questions required, the application process is simple and hassle-free.
- Guaranteed Acceptance: For those within the eligible age range, acceptance is guaranteed, making it a reliable option for seniors.
- Fixed Premiums: The cost of the plan does not increase with age, ensuring that premiums remain affordable and predictable over time.
Cons:
- Limited Coverage Amounts: The amount of coverage provided by each unit is relatively low, particularly for older applicants.
- Higher Cost per Coverage Unit: Compared to other life insurance options, the 995 Plan may offer less value per dollar spent.
- Two-Year Waiting Period: There is a two-year waiting period before the full death benefit is available, which means if the policyholder passes away within this period, the beneficiaries may only receive a limited payout.
- Potential for Misleading Advertising: The marketing of the $9.95 plan can be misleading, giving the impression that $9.95 buys a significant amount of coverage when, in reality, the actual coverage amount varies greatly based on age.
Common Misconceptions About the 995 Plan
One of the biggest misconceptions about the Colonial Penn 995 Plan is that the $9.95 monthly rate provides substantial coverage. However, as shown earlier, the coverage amount for this price is not a flat rate and varies significantly by age. It’s crucial to understand that the $9.95 rate per unit might not provide the amount of coverage you need, especially if you are older.
Who Should Consider the 995 Plan?
The 995 Plan can be a suitable option for certain individuals, particularly those who:
- Have Health Concerns: If you have pre-existing health conditions that make it difficult to qualify for traditional life insurance, the guaranteed acceptance of the 995 Plan could be beneficial.
- Are Looking for Simple, No-Hassle Coverage: The ease of application and guaranteed acceptance make this plan an attractive option for those seeking straightforward coverage without the complications of medical exams or extensive paperwork.
- Need Minimal Coverage: If you’re seeking a small policy to cover final expenses and do not need a large death benefit, the 995 Plan might meet your needs.
However, it might not be the best option for those who:
- Are in Good Health: If you’re in relatively good health, you might qualify for other life insurance policies that offer more coverage at a lower cost.
- Need Substantial Coverage: Those looking for a more significant death benefit might find that the 995 Plan does not provide adequate coverage, especially as they age.
Comparison with Other Life Insurance Options
When comparing the Colonial Penn 995 Plan with other life insurance options, several factors should be considered:
- Term Life Insurance: Typically offers more coverage at a lower cost but requires a medical exam and is not guaranteed issue.
- Whole Life Insurance: Provides lifelong coverage and builds cash value but is generally more expensive and may require a health exam.
- Final Expense Insurance: Similar to the 995 Plan, final expense insurance is designed to cover end-of-life expenses and typically offers smaller death benefits but may come at a lower cost per unit of coverage.
Customer Reviews and Experiences
Customer feedback on the Colonial Penn 995 Plan is mixed. Some policyholders appreciate the ease of obtaining coverage and the guaranteed acceptance, while others express dissatisfaction with the low coverage amounts and the two-year waiting period for full benefits.
Many customers also highlight frustration with misleading advertising, which suggests more extensive coverage than what is actually provided for $9.95 per month.
FAQs about the 995 Plan
What is the maximum coverage available with the 995 Plan?
The maximum coverage amount varies depending on the age and gender of the applicant. It’s essential to get a personalized quote to understand your specific coverage.
How does the two-year waiting period work?
If the insured dies within the first two years of the policy, the beneficiaries typically receive a limited payout, often a refund of premiums paid plus interest, rather than the full death benefit.
Can policyholders increase their coverage after purchasing the plan?
No, the coverage amount is fixed once the policy is purchased. However, additional policies may be purchased, subject to the company’s rules and restrictions.
What happens if a policyholder dies within the two-year waiting period?
If a policyholder dies within the two-year waiting period, the beneficiaries usually receive a refund of the premiums paid plus interest, rather than the full death benefit.
Are there better options for someone in good health?
Yes, individuals in good health may find more affordable and comprehensive coverage options through other life insurance policies that require a medical exam and offer higher death benefits.
Conclusion
The Colonial Penn 995 Plan is an accessible and straightforward option for those seeking guaranteed life insurance coverage without the need for a medical exam. However, it’s important to understand the plan’s limitations, particularly the lower coverage amounts and two-year waiting period. Before deciding, consider all your options and consult with an insurance expert to ensure you choose the best policy for your needs.
If you’re interested in learning more about the Colonial Penn 995 Plan or exploring other life insurance options, use our life insurance quoter on the side of this page to get started.
