TV advertisements are often too good to be true. Show
So, is the Colonial Penn life insurance you see on TV legitimate, a scam, or a ripoff? Their commercials tell you to shop for the 3 P’s: Price, Price, and Price. And yet they have one of the most overpriced life insurance products. Most informed seniors are also concerned about the high number of negative reviews and complaints about Colonial Penn. How It WorksPolicy OptionsColonial Penn offers two types of final expense life insurance plans targeted at seniors:
Colonial Penn won’t price shop other companies to get you lower rates because they only sell their life insurance products. Neither the Colonial Penn 995 plan nor their permanent whole-life insurance should be your first choice, as both are overpriced. $9.95 PlanIf you die in the first two years for health or medical reasons, this plan won’t pay your loved ones a single penny of life insurance. Colonial Penn uses persuasive terms to describe its 995 life insurance plan.
The pricing structure on this plan is based on each unit that costs $9.95. The number of units purchased determines your death benefit. Ten units would cost $99.95. Your age determines the cost of each unit, and the older you are, the more each unit costs you. Some would say the 995 plan was designed to do two things:
The truth is that their $9.95 plan is terrible for consumers because rates are often 30-40% higher than other companies, and you have to pay those bloated premiums for the rest of your life.  Whole Life PlanColonial Penn’s permanent whole life insurance policy for seniors is NOT the same as their $9.95 plan. With this whole life plan, there is no medical exam, but you must answer many health questions and have your prescription records reviewed by them to qualify. They have strict underwriting, so often, only healthy applicants can qualify, and you will most likely be offered the Colonial Penn 995 guaranteed acceptance plan with a two-year waiting period. Pros & ConsThere are other pros and cons to selecting a 995 plan or a whole life plan from Colonial Penn. PROS$9.95 Plan
Whole Life Plan
CONS$9.95 Plan
Whole Life Plan
Coverage Facts$9.95 PlanIf you die in the first two years, your beneficiary will only receive your premiums paid plus 7% interest in the first two years. A $9.95 unit of Colonial Penn life insurance coverage will never be enough to pay for their burial expenses. Even people who want to be cremated likely won’t have enough money to pay for it with a single coverage unit. Colonial Penn knows a single unit provides insufficient coverage, so they encourage seniors to buy more exorbitantly priced life insurance with a 2-year waiting period. Whole Life PlanColonial Penn life insurance for seniors is a permanent life insurance policy with no medical exam, but you need to answer many health questions to qualify. This plan has strict underwriting, so only healthier applicants can qualify. If you qualify, your rates will be higher than those of other insurance companies like Funeral Funds of America offer.
Riders$9.95 PlanNo riders are included with this plan. Whole Life Plan“Living Insurance” is the marketing term for Colonial Penn’s life insurance riders. These riders are not unique, and many other insurance companies offer identical or slight variations of these benefits. These riders allow policyholders to access 25-50% of the policy face amount while alive and diagnosed with a serious illness.
Other BenefitsPolicy LoansYou can borrow up to 100% of your cash value, but you will have to pay 8% interest on your outstanding loan balance (which will lower your face or coverage amount if not paid each month. This is a tax-free benefit but not an interest-free benefit. Loans reduce your cash value amount and are subtracted from your death benefit, and the interest rate on policy loans varies by state. Health Niches$9.95 PlanThis plan accepts everyone with no health questions asked. The only reason to consider this 2-year waiting period is if your health is so bad that you don’t qualify for first-day coverage. Even if your health is so bad that you don’t qualify for a better first-day coverage plan, this 995 plan insurance is not one you should purchase. You can review what health conditions qualify for 1st-day coverage on our A-Z Health page. Whole Life PlanSee the underwriting info section below for a list of all health questions and medical conditions not accepted. Additional Health NichesYou can view our A-Z Health issue chart to see what health conditions qualify for first-day coverage with other companies at Funeral Funds of America. Underwriting Info$9.95 PlanThere are no health questions with the 995 plan. This means that you could be in hospice and have a life expectancy of days, and they would still approve you, but that would be a mistake. Remember that this plan won’t pay for any health or medical-related death. Only accidental death is covered in the first two years. So, Colonial life insurance is a terrible option if you have serious health issues or a terminal illness. Whole Life PlanWith Colonial Penn’s strict underwriting for their permanent whole life insurance, only a smaller percentage of applicants will qualify. There are two processes to determine if you will medically qualify for a whole life insurance policy from Colonial Penn:
An underwriter may request to speak with you over the phone to ask some follow-up questions. These are the health questions you will find on the application:
If you answer any of these questions “Yes,” your application will be declined. If that happens, you will likely be offered the Colonial Penn 995 guaranteed acceptance plan with a two-year waiting period.
A “yes” answer to any of these medical conditions will automatically decline your request for coverage. If you were declined, you would typically be offered the Colonial Penn guaranteed acceptance 995 plan with its undesirable two-year waiting period. Pricing Examples$9.95 PlanCheck out the Colonial Penn life insurance 995 rate charts below to see how inadequate their coverage amounts are for $9.95.
Whole Life PlanLook at the pricing table below to estimate coverage amounts with the Colonial Penn whole life insurance policy.
*Pricing is for illustration purposes only and is subject to change without notice. Getting Approved$9.95 PlanYou will be approved without being asked any health questions. With this plan, your rates will also be 30-40% more expensive than 1st-day coverage with no waiting period. Whole Life PlanYou will have to answer a detailed health questionnaire and have your prescription medication records checked. You will be approved or declined based on your health and prescription medication records. Company OverviewSales ProcessColonial Penn is a “Captive Carrier.” This means their agents can only sell Colonial Penn products. Their insurance agents will never tell you about other companies’ lower rates. Informed buyers know that almost all other life insurance companies offer better coverage and rates, and most come with no waiting period. Operational HistoryThe Colonial Penn Life Insurance Company was founded in 1968 by AARP co-founder Leonard Davis to provide insurance coverage to the American Association of Retired Persons members. FPL Group acquired the company in 1985. FPL sold the company to Leucadia National in 1991. After several ownership changes, in 1997, it became a subsidiary of Conseco, now known as CNO Financial Group. In 1998, Colonial Penn was renamed Conseco Direct Life to show Conseco ownership. But, in 2001, the insurance name reverted its name back to Colonial Penn. The company is based in Philadelphia, Pennsylvania. Colonial Penn is not serving New York, but it’s covered by Banker’s Conseco Life Insurance Company, another CNO subsidiary. Colonial Penn399 Market Street Colonial Penn ClaimsLife Claims Dept Consumer ComplaintsThe Better Business Bureau gives Colonial Penn 1.18 stars out of 5, citing many consumer complaints. Investopedia states, “Some 90% of the companies we reviewed received a higher grade than Colonial Penn from AM Best.” They rate Colonial Penn as 2.4 out of 5 stars. The National Association of Insurance Commissioners (NAIC) states that the national median of complaints is 1.00, while Colonial Penn’s complaint ratio is 3.06. Colonial Penn has 300+% more complaints than other insurance companies, according to the NAIC. Some NAIC-reported complaints filed against Colonial Penn:
Their $9.95 advertising creates a lot of interest, phone calls, and possibly thousands of negative consumer reviews and complaints annually. It would be wise to research their many complaints to see if this is the company you want to buy insurance from. Financial RatingBased on its financial stability and record of paying claims, Colonial Penn Insurance Company has received an A- (Excellent) rating from A.M. Best. Before You BuyIf you need burial, cremation, final expense, or funeral insurance coverage and want to ensure you get the lowest premium possible, Funeral Funds of America can help you shop and compare companies, policies, and prices. Just fill out our quote form on this page or call us at (888) 862-9456. Common QuestionsColonial Life Some people say this as a shortened version of Colonial Penn Life Insurance. 995 Coverage Colonial Penn’s $9.95 plan. Some people mistakenly call it the 996 plan, 997 plan, 998 plan, or 999 plan. Rate Lock The Colonial Penn rate lock for life insurance means your premium will be locked in at your current age and will not increase in price later in life. A rate lock is a stardard feature with every company that offers whole life insurance. Colonial Penn replacement Colonial Penn policy are often replaced with lower cost final expense life insurnance that offers first-day coverage. Guaranteed Acceptance A policy offered by Colonial Penn and other insurance companies that asks no medical questions and comes with a mandatory 2-year waiting period for any health or medical related death.Sources Cited In This Article
What does Colonial Penn give you for $9.95 a month?The Colonial Penn life insurance plan for $9.95 per month is a guaranteed acceptance whole life policy with a waiting period of two years. It offers permanent lifelong coverage with a premium that will never increase and builds cash value. There are no health questions or exams to determine your eligibility.
How much do you get for the 995 plan?With this plan, you can receive a coverage maximum of $50,000, and it is available to anyone between the ages of 18 and 75.
Is Jonathan from Colonial Penn an actor?No, Jonathan Lawson is not a paid actor in the Colonial Penn commercials. He is an actual employee featured in their commercials since losing Alex Trebek.
How much is a unit of life insurance?The unit price is what you pay per bucket of coins. Life insurance will commonly price out their death benefit in $1,000 units. So when you're buying a policy with a $250,000 death benefit, what you're really buying is 250 buckets of coins.
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