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Most people who watch any television have likely been exposed to life insurance advertising by Colonial Penn Life Insurance Company. As an independent insurance agency that represents many life insurance companies, we certainly don’t believe life insurance advertising on television is a bad thing. In fact, we’re delighted that the American public is routinely exposed to the need for life insurance. Our only concern is that the public could misunderstand a life insurance offering when the insurance company only has a few minutes to advertise a single product.

Life insurance is very important and we believe that prospective clients should understand the pros and cons associated with a particular type of life insurance so they can make an informed purchase decision.

Our intention in this article is an attempt to educate the reader about Colonial Penn and the products they offer. We do not represent Colonial Penn and have no affiliation with this insurance company.

 

About Colonial Penn Life Insurance Company

 

Colonial Penn was founded and established back in 1968 by Leonard Davis who was a co-founder of AARP. They are owned by CNO Financial Group and currently based in Philadelphia, Pennsylvania.

Colonial Penn specializes in offering their life insurance products using direct mail, internet advertising, and television advertising. They claim that since they are selling directly to the consumer, they can offer life insurance cheaper than companies who depend on independent agents to sell their products.

Their most popular life insurance product is their guaranteed acceptance life insurance that they market to people age 50 to 85. This is the product that they advertise on television and is quoted and sold by the unit rather than by a particular face amount.

Colonial Penn’s insurance rating is currently A- (Excellent) by A.M. which indicates that the company is financially stable and will not have difficulty paying claims or operating expenses.

 

Colonial Penn’s Product Selection

 

Since Colonial Penn does not use an agency distribution system and only sells directly to consumers, the product selection is limited to three types of life insurance: Guaranteed Acceptance Life Insurance, Permanent Whole Life Insurance, and Renewable Term Insurance. Here, we’ll discuss what most people will not learn by seeing a two or three-minute television advertisement.

 

Guaranteed Acceptance Life Insurance

 

Colonial Penn’s Guaranteed Acceptance Life Insurance Product is a guaranteed issue whole life insurance policy that Colonial Penn sells by the unit for $9.95 per month. What consumers are not told in the television commercials is how much life insurance coverage is provided in a unit of coverage.

And, to make things even more confusing, a unit of final expense life insurance coverage is based on the age of the applicant. We have found after doing some research, that a UNIT of coverage under the guaranteed acceptance plan starts at $1,786 coverage amount at age 50, and then decreases to $418 of coverage for an 85-year-old applicant. So then, a 50-year-old wanting 10 units of coverage would have a total death benefit of $17,860 and would pay $99.50 per month for the policy.

 Here is a comparison of Colonial Penn with our two most affordable carriers. The rates listed are for a $12,000 guaranteed issue life insurance policy for a male non-smoker: 

Applicant Age

Colonial Penn

Gerber Life

AIG

50

$66.85

$52.73

$61.91

60

Not available $76.49

$75.40

70

Not available

$118.84

$117.41

80

Not available

$296.60

$295.33

We used a $12,000 policy for our comparison because the average funeral cost in America is between $8,000 and $12,000. Unfortunately for consumers who need life insurance to cover funeral expenses, Colonial Penn does not offer $12,000 in coverage if you are 60, 70, or 80-years-old but Gerber Life and AIG does.

As you can see from the chart shown above, Gerber Life and AIG are priced lower than Colonial Penn. These rates certainly indicate that eliminating the agent advocate from the transaction will not save the consumer money unless the applicant is 80-years-old or older.

Applicant’s who apply for life insurance with either of the company’s listed will not be required to have a medical exam nor will there be any health questions on the life insurance application.

Other red flags that we discovered are the way Colonial Penn sells by the unit which is very confusing, and that they make a big deal out of their 30-day money back guarantee when every company offers it. It’s standard in the life insurance industry and most companies refer to it as a “30-day free look.”

 

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Colonial Penn Term Life Insurance

 

Term life insurance is a straightforward life insurance product. You pay for the cost of insurance for a period of time that you prefer like 5, 10, 15, 20, 25, or 30-years. Term is the lowest cost life insurance available because it is temporary and builds no cash value. With most term insurance policies (all the companies we represent) the monthly payment for your term insurance is level for the life of the policy, however, with Colonial Penn term insurance, such is not the case.

The Colonial Penn term insurance is not a level term product but is more like a 5-year renewable term product because the rates will change every five years but only lasts until the insured reaches age 90. Colonial Penn will issue policies to applicants age 18 to 75 with no medical exam but like all other companies, they will ask medical questions on the application.

Unfortunately, their highest face amount is only $50,000 which we feel is insufficient coverage for adults who need to replace their income when they die. Finally, the rates for Colonial Penn’s term life insurance are very expensive compared to companies we represent that do not require a medical exam.

 

Colonial Penn Whole Life Insurance

 

Like most whole life insurance products in the market today, Colonial Penn’s whole life insurance provides coverage for a lifetime (as long as the premium is paid) and builds cash value over time that can be accessed by the policyholder using policy loans or withdrawals.

The issues we have with Colonial Penn’s whole life insurance are as follows:

  • The issue age starts at age 40 which is unusual compared to most insurance companies
  • The largest face amount available is $50,000 which is highly unusual
  • Although there is no medical exam requirement, an application can be denied because of your answers to the health questions on the application.
  • Their rates for whole life insurance are extremely high compared to the carriers we represent

When we say that their premiums are too high, we mean they are ridiculously too high. For example, a $50,000 policy for a 65-year-old male is $317.24 from Colonial Penn is about $317 a month but with Foresters Life Insurance sells the same policy for about $224 a month. This makes Colonial Penn’s whole life insurance $93 per month higher than Foresters.

 

In Conclusion

 

It is not our intent to bash the products or prices offered by Colonial Penn Life Insurance Company. It is only our intention to educate our readers on the pros and cons of their insurance products because folks who buy directly from a life insurance company rather than using an experienced and reputable independent agent should understand that they are at a disadvantage.

 

We're Here To Help
For more information about Burial Insurance for Seniors and to get a free and confidential quote, call the insurance experts at BurialPolicy360 at (800) 712-8519 during normal business hours, or contact us through our website at your earliest convenience.

 

 

Doug Mitchell Ogletree FinancialDoug Mitchell, President of Ogletree Financial, holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent over 20 years in the life insurance industry and has also held licenses to sell securities, long-term care insurance, and home and auto insurance. For two years, Doug served as President of the Auburn Opelika Association of Financial Advisors and has been a member of the Million Dollar Round Table. He obtained Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award. Later in his career with New York Life, he was an Executive Council Member. Doug currently serves as President of Ogletree Financial, a life insurance marketing organization with over 1000 life insurance agents. Today, Doug’s main focus is servicing 1000s of policyholders and growing his agency through the reach of several insurance-related websites.