When someone searches for life insurance, it’s easy to believe that the only options are no exam or guaranteed life insurance.
After all, Colonial Penn Life Insurance and other big names spend millions each year on marketing and seem to dominate the life insurance landscape.
How Colonial Penn Life Insurance Works
Upon further examination of what Colonial Penn offers, it becomes blatantly obvious that it’s hoping aging consumers will be swayed by the company’s household name and not look closely at the policy details.
While these plans are decent options for some applicants, for the vast majority of people, there are much better options out there. Thankfully, there is a myriad of life insurance companies that provide far better coverage than Colonial Penn’s meager offerings.
Colonial Penn: Preying on the Fears of the Elderly?
Colonial Penn is one of the leading life insurance companies in the United States offering guaranteed acceptance life insurance policies, which are simply policies with high premiums and small face amounts that don’t require a medical exam.
The company’s unscrupulous marketing is aimed at life insurance coverage for senior citizens and older people with families who have neglected to obtain life insurance in the past. Colonial Penn’s marketing strategy involves using well-known celebrities, such as Alex Trebek and Ed McMahon, in highly-stylized and over-dramatic TV commercials to sell its products to an unsuspecting audience, neglecting to mention the company’s absurdly high cost of premiums and lack of coverage.
These policies tend to be drastically higher than any other policy type and have lower coverage amounts.
Company Lawsuits and Disgruntled Customers
Colonial Penn has been sued countless times for charging ridiculously high premiums that are not risk justified or fully disclosed to consumers. Consumer advocacy websites are also flooded with complaints from consumers stating that the death benefits they received from the insurer were lower than they were told or expected.
There are also numerous reports of people having trouble collecting the benefits that are owed to them.
So, anyone considering Colonial Penn should keep this in mind and thoroughly read the contract before signing on the dotted line. While none of this should keep you from getting a life insurance policy through Colonial Penn, you should consider it.
The credibility isn’t a make or break factor, but it should play a huge factor in your decision. Even if they have the lowest rates, it isn’t worth some of the possible frustration you could run into.
Alternatives for No Exam Policies
While it is reasonable for any major life insurance company has customer complaints, if the complaints about Colonial Penn make you hesitant, these are three top options to consider:
Colonial Penn Premium Pricing
Colonial Penn bases its life insurance premiums on a unit system. A single unit costs $9.95 and depending on an individual’s age, gender, and location of residence, a single unit of insurance is valued anywhere from $500 to $2500, which is incredibly low.
For example, a 38 year old male living in Texas must pay $9.95 per month over twenty years for a life insurance policy worth $5,000. For $25,000 in coverage, he must pay considerably more over the same 20 year period.
At other life insurance companies, the same monthly payment over a 20 year period would get him an astounding $500,000 in coverage, which is an impressive upgrade from the paltry $25,000 that may or may not be handed out by Colonial Penn.
Limited Benefits During the First Two Years of Policy
Unlike other life insurance companies that do not have stipulations regarding when a benefit can be received, Colonial Penn clearly states in its terms and conditions that life insurance benefits may not be paid out if the person insured passes away within 24 months of signing up for coverage.
Not surprisingly, many beneficiaries from people with life insurance policies from Colonial Penn have been outraged when they learn that there is no life insurance to claim because the insurance holder passed away within two years of signing up for coverage from Colonial Penn.
Once again, their limited benefits for the first two years aren’t necessarily going to be a deal-breaker, but it’s something that you and your loved ones should be aware of. There are a lot of companies that hold these limit benefit clauses for people with serious pre-existing conditions, but they are rarer with traditional life insurance policies.
Guaranteed Life Insurance is Not Ideal
Unless someone has a serious health condition and cannot obtain coverage from any other insurer, guaranteed life insurance is a terrible option.
However, Colonial Penn markets these policies as the best thing since the invention of the Internet. The company also pushes the fact that life insurance should primarily be about covering a person’s funeral costs so family members do not have to pay for the final expenses of their loved ones.
Life insurance, however, is about much more than covering funeral costs. As stated earlier, by paying the same amount per month, a person can receive up to $500,000 or more in life insurance coverage from a non-guaranteed life insurance policy.
Life insurance should really be about securing the financial futures of loved ones, which guaranteed life insurance obviously does not do. In all actuality, very few people benefit from Colonial Penn’s guaranteed life insurance products.
There is a myriad of better life insurance options available for people of all ages. Whether you are a young father or mother that wants to provide your family with financial security in the event of your death or an elderly individual who would like to leave behind added financial assets to your progeny, there are other life insurance companies that can provide you with the coverage you need.
ColonialPenn.Com Rate Lock
There are a lot of unique advantages to all of the life insurance companies out there. For Colonial Penn, one of the best benefits is their rate lock-in. This means that as soon as you purchase your life insurance plan, the insurance rates are never going to change.
A few insurers will actually increase your rates each year as you age. In some cases, a company will guarantee to not increase your rates, but only for a certain number of years, and after that, they will raise your premiums.
With Colonial Penn, they will never raise your rates, regardless of how long you have the plan.
Yes, Colonial Penn’s rates are probably going to be a lot more expensive than other companies you can buy form, but at least the premiums will never get higher. Honestly, this isn’t a big enough benefit for me to say they are a good choice.
Another advantage of Colonial Penn’s plans is that the benefit will never decrease. Similar to the premium lock, you won’t have to worry about the payout from the plan ever being cut down. It’s important that you have the insurance protection that your family deserves.
With some carriers, they are going to lower the amount of death benefit the closer the policyholder gets to the maximum age. For every year, they will trim down the coverage amount. Colonial Penn has a locked in coverage amount when you pay the plan. Once again, you can find other companies with the same advantage without the massive premiums.
All of this is assuming Colonial Penn actually pays out what they say they will. As we mentioned earlier, they have been sued for not paying what was agreed upon.
How Much Life Insurance Do You Need?
A key thing to spend a few extra minutes on is how much life insurance you actually need.
Did you know one of the most common ways people overpay for coverage is because they simply buy too much?
Especially in the case of buying a final needs policy, just get what you need. Save money on premiums now, and still get the best coverage by putting together the numbers of what your funeral (and other expenses) will cost you. That’s all the coverage you need.
If you need a policy for final expenses, look at some of those bills. Will your family be responsible for any housing bills? Have you already paid for your funeral or will they have to pay for it?
Simply add up those expenses and make sure you will give them enough money without having to pay for additional protection you don’t need.
Colonial Penn Alternatives
If you couldn’t tell from this article, we aren’t a huge fan of Colonial Penn’s. if you have one of their policies, or you’re looking for a plan, we highly recommend looking elsewhere.
Yes, having a plan from Colonial Penn is better than having no life insurance at all, but it’s still not the best choice. Who do we recommend instead?
Here are the Top 3 from our 10 Best Life Insurance Companies of 2020 article.
- Haven Life – For quick coverage
- AIG Direct – For strong company reputation
- Banner Life – For flexibility and customer service. Read our in-depth Banner Life review.
Thankfully, we’ve made it simple for you to discover the answer to that question and many more!