When seniors are searching for life insurance, two prominent providers often come up for comparison: Colonial Penn and AIG. Both companies offer life insurance policies tailored to older adults, particularly for those looking for guaranteed acceptance and final expense policies. This article will break down the key differences: Colonial Penn vs AIG, focusing on policy types, premiums, customer satisfaction, and who might benefit most from each provider.
Colonial Penn and AIG Policy Types
Colonial Penn: Simplified and Guaranteed Acceptance
Colonial Penn is known for its Guaranteed Acceptance Whole Life Insurance, which does not require medical exams. This makes it an appealing option for seniors who might not qualify for traditional life insurance due to health concerns. The most widely marketed product from Colonial Penn is its $9.95 per unit plan, where customers purchase “units” of coverage. However, each unit provides only a small death benefit, especially for older individuals.
AIG: More Coverage Options
AIG offers a broader range of policy types, making it a more flexible option. AIG provides Guaranteed Issue Whole Life Insurance similar to Colonial Penn’s, but it also offers Term Life and Universal Life policies. These additional policy types can provide more substantial coverage amounts and lower premiums for individuals in good health. AIG’s guaranteed issue policy also does not require a medical exam and is available for individuals aged 50 to 85, just like Colonial Penn.
Premiums and Coverage Amounts
Colonial Penn
Colonial Penn’s pricing structure is unique. The $9.95 plan advertises a low monthly premium, but the death benefit varies significantly by age. For instance, an 85-year-old purchasing one unit will receive just $418 in coverage, while a 50-year-old would receive $1,669 per unit. This makes the coverage for older seniors particularly low for the premium paid.
Example: For an 85-year-old buying three units, the total coverage would only be around $1,254 for about $30 per month.
AIG
AIG’s Guaranteed Issue Whole Life Insurance offers higher coverage amounts compared to Colonial Penn. The premiums are still competitive, and the coverage amounts can go up to $25,000, which is more than enough to cover final expenses like funeral costs, medical bills, or outstanding debts.
Example: AIG’s policy for an 80-year-old provides up to $25,000 in coverage, offering far more substantial financial protection than Colonial Penn’s units for a similar price.
Waiting Periods
Colonial Penn
Colonial Penn’s guaranteed acceptance policies come with a two-year waiting period. This means that if the policyholder dies from natural causes within the first two years of the policy, the beneficiaries will only receive a refund of the premiums paid, plus interest. The only exception to this is if the death is due to an accident.
AIG
AIG’s Guaranteed Issue Whole Life policy also has a two-year graded death benefit period, similar to Colonial Penn. However, AIG’s coverage amounts and flexibility in other areas, like policy riders, make it a better value overall.
Riders and Customization Options
Colonial Penn
Colonial Penn offers limited rider options. The main rider available is the accidental death benefit, which provides additional coverage if the policyholder dies in an accident. Beyond that, Colonial Penn does not offer many customizable options to enhance its policies.
AIG
AIG offers a wide variety of riders, including:
- Accelerated Death Benefit Rider: Allows the policyholder to access part of their death benefit if diagnosed with a terminal illness.
- Chronic Illness Rider: Provides additional funds if the policyholder becomes unable to perform daily living activities.
- Accidental Death Benefit Rider: Similar to Colonial Penn, but AIG offers this rider for more substantial policies.
This added flexibility makes AIG’s policies more versatile and adaptable to individual needs.
Customer Satisfaction and Complaints
Colonial Penn
Colonial Penn has received mixed reviews from customers. While the company markets heavily to seniors with no medical exam requirements, many customers report dissatisfaction with the small coverage amounts relative to the premium they pay. The company also has a higher complaint index according to the National Association of Insurance Commissioners (NAIC), with complaints often focused on the $9.95 plan’s misleading marketing.
AIG
AIG, on the other hand, has a better reputation in terms of customer satisfaction. While it also has its share of complaints, they tend to be fewer than those against Colonial Penn. AIG is better rated for its claims processing and flexibility in coverage options.
Best for Seniors: Colonial Penn or AIG?
Choose Colonial Penn if:
- You have serious health concerns and may not qualify for traditional life insurance.
- You are looking for a simple, no-medical-exam policy, and are willing to accept a low coverage amount.
- You are mainly interested in having minimal coverage to cover final expenses only.
Choose AIG if:
- You want more substantial coverage
- You are healthy enough to consider AIG’s term life or universal life options.
- You want more customization options with riders, such as accelerated death benefits or chronic illness coverage.
FAQs:
What’s the main difference between Colonial Penn and AIG?
The primary difference is that Colonial Penn offers smaller coverage amounts and has fewer policy options, while AIG provides more flexibility, higher coverage, and additional rider options.
Is the $9.95 plan from Colonial Penn worth it?
For older seniors, the coverage per unit can be very low. If you are looking for more substantial protection, other providers like AIG may offer better value for money.
Which company has better customer reviews?
AIG generally has better reviews and a lower complaint index than Colonial Penn, especially regarding policy options and claims processing.
Can I add riders to my Colonial Penn policy?
Colonial Penn offers limited rider options, primarily focusing on accidental death benefits. AIG, however, provides a broader range of riders for more comprehensive coverage.
Conclusion:
In summary, both Colonial Penn and AIG offer valuable life insurance options for seniors, but AIG comes out ahead in terms of flexibility, coverage amounts, and customer satisfaction. While Colonial Penn’s no-medical-exam policies may suit those with severe health conditions, AIG’s broader product range and better pricing for healthy individuals make it the better option for those seeking more substantial protection.
