Colonial Penn is undoubtedly popular among the many different guaranteed life insurance programs available to consumers.
You’ve likely seen the face of Alex Trebek endorsing their products on television, but there is more to the company than one product and one stream of advertising. Before you purchase a product from them, you may want to read our Colonial Penn life insurance review below.
As with all of our life insurance carrier reviews, let our research and opinion be a supplement to your own due diligence. This Colonial Penn Life Insurance Company review is our own opinion, based on product comparisons, customer reviews, and more. Let’s begin.
Our Colonial Penn Life Insurance Company Review
Based in Philadelphia, and one of the younger life insurance carriers in the United States, Colonial Penn has still been around for more than 50 years. This half century old company is not among our best life insurance companies for the year, but they certainly have put their stake in the ground with more than 750,000 policies which boasts in excess of $3.2B of in force insurance.
Colonial Penn helped lay the foundation for guaranteed products being among the first companies to bring this type of insurance plan to the market. This is still a strong backbone of the company as they continue to market to mature and senior audiences.
With their core and largest piece of business being in the senior market, Colonial Penn advertises in many different ways, including direct mail, call centers, and, of course, television. They’ve been known to have several paid endorsers, including Alex Trebex, Ed McMahon, and Joe Theismann.
Colonial’s Financial Stability
Colonial Penn is a subsidiary of CNO Financial Group, Inc., based out of Carmel, Indiana. CNO and its subsidiaries, unfortunately, have slipping ratings, which don’t always reflect well on the company and its ability to meet its financial obligations in the long run.
A.M. Best dropped Colonial Penn from an “A” to an “A-“, which is now it’s only remaining rating of “A” or better. Both Fitch and Standard & Poor’s have pushed Colonial down to a “BBB+” rating, and Moody’s has them at a “Baa1” currently. (Note: This is the same parent company of Bankers Life and Washington National.)
Now, there have also been several accounts of Colonial Penn being sued over claims having not been paid, and consumer activism groups continue to raid the doorsteps of Colonial Penn for targeting seniors and elderly with outrageous premiums for too little coverage.
This could be due to the fact the guaranteed policy carries a two year waiting period, much like many other guaranteed products. This usually results in returned premium payments, plus possible interest, but the full death benefit can be denied. In some instances, based on the time elapsed, a partial payment may be paid.
Obviously, if there truly was an issue of non-payment, the major rating agencies wouldn’t be able to continue awarded “A” or better ratings. Just make sure you understand exactly what product you are buying, and how it works. However, the drop in rankings can be concerning for the long term out look of a company.
Life Insurance Products From Colonial Penn
Colonial Penn Life Insurance Company offers three main products:
Guaranteed Issue Life
As noted previously, the most prominent product Colonial Penn offers is their guaranteed acceptance life insurance.
The program features no medical exams, minimal information is required, and you can not be declined with a proper application. This, of course, comes with a few strings.
The product offers very low face amounts, or death benefits, and the cost per thousand is relatively high because of the lack of underwriting. Companies like Gerber and AARP have better access to death benefits, and are more competitively priced.
As mentioned above, you also need to understand how the policy will payout, especially if you pass away within the first few policy years. Guaranteed products don’t pay exactly like a fully underwritten term or whole life, so be prepared should this occur.
Colonial Penn also offers other products which aren’t quite as highly advertised. Among them are a both a term and whole life insurance policy, neither of which require exams and only a few health questions.
Term life insurance from Colonial Penn sounds good at first, but it is very limited. Here are some of those limiting features:
- Maximum death benefit of $50,000
- Rates increase in age bands
A solid term product should allow you to choose how many years you want to lock in your rates, but Colonial Penn’s term does not. This is a big limiting factor when matching your life insurance coverage to your needs.
If this weren’t enough, you’re limited to $50,000 in death benefit, whereas many other no exam carriers are $250,000 and even up to $1,000,000.
Whole life insurance offered by Colonial Penn isn’t much prettier than it’s term option. You get the same maximum death benefit, though the pricing structure is based more on your true age and gender, and not so much a group band.
Rates are also guaranteed to remain the same.
There are much better, more reputable companies available to you, regardless of your health, and it may be in your best interest to look elsewhere. While the company name is highly recognized and branded, it’s largely due to the extraordinary amount of marketing Colonial Penn does, rather than product prowess.
You can simply get a better value from another company who offers life insurance, whether it’s term or whole. In addition, financial ratings have slipped over the past year, so it’s a good idea to go with a carrier who is stronger financially, and more likely to make good on its promises in the decades to come.
A Company Summary
|Company Name (and Subsidiaries)||CNO Financial Group, Inc.|
Colonial Penn Life Insurance Company
|Company Ratings||A.M. Best (A-)|
Moody’s Investors Services (Baa1)
Standard & Poor’s (BBB+)
|Headquarters (Address, Phone, Web)||399 Market Street|
Philadelphia, PA 19106
|Policy Types Available||Term|