Quick tip: Before you make that phone call to Alex Trebek, remember: He is in the business of entertainment- not life insurance. Call the experts at Heart Life Insurance instead.
In 90% of cases we are able to find lower prices on policies with more benefits than Colonial Penn.
What criteria should you use to decide on a life insurance company? What should you be looking for beyond the basics- great rates and comprehensive coverage?
Let’s take a closer look at Colonial Penn — How it began, what market ratings does it receive, and what can it offer to you, the policy holder. You can also just skip to the section that is most interesting to you here:
Colonial Penn Life Insurance Company Overview
Their headquarters are located in the United States, and they have been located in the country since its founding.
Colonial Penn Life Insurance Company
399 Market Street
Philadelphia, PA 19106
In the late 1960s, Colonial Penn pioneered new insurance products to meet the needs of the market. They became one of the first insurance companies to offer plans for people over the age of fifty. The policy was known as the Guaranteed Acceptance Life Insurance Plan.
Colonial Penn Financial Ratings
The insurance industry relies on the firm of A.M. Best to rate the financial stability of insurance carriers.
When choosing a life insurance company, it is important to choose one that is able to remain strong and financially sound.
[table id=AMBestColonialPEnn /]
Their financial ratings are improving, and A.M. Best notes that the company has largely shifted to selling short-term products versus long term care. Many of the financial declines were attributed to the costs that their parent company CNO Financial took on the chin related to long term care insurance.
Colonial Penn hasn’t experienced growth in their workforce or clientele over the past years, resulting in the company remaining fairly stagnant overall. So their future ratings may be affected by this trend
How does colonial penn’s financial ratings stack up against the market?
With an AM best rating of A- and a 60 year history, it is likely that Colonial Penn will be able to meet their financial responsibilities in the future. If you have a policy with them, it is reasonable to assume they will pay your death benefit.
However, we have companies in our portfolio with higher ratings and longer histories than Colonial Penn.
Click below to find a company with higher ratings, a longer history and lower rates.
Life Insurance Products Offered
Colonial Penn is able to offer life insurance policies for people between the ages of 18 and 85. However, their most popular plan is still their Guaranteed Acceptance Life Insurance, designed for people over the age of fifty.
The company also promotes its easy term life insurance policies and policies they refer to as “permanent, whole life insurance.”
This is another case of buyer beware
Colonial Penn has a low maximum coverage amount — only $50,000 max. This makes the company extremely uncompetitive, because the majority of clients will need more coverage than that in order to protect the household primary wage earner or mortgage.
Heart Life Insurance strongly recommends another insurance carrier that offers the same no-exam policy, but with much higher coverage.
Colonial Penn does offer a no exam/ no health questions option, and this is still considered their flagship product. The small monetary amount that comes with this policy is primarily an insurance plan to cover burial and other final expenses.
Additionally, they offer a guaranteed issue whole life insurance, that come with a two-year graded death benefit. This means that your premium will be returned in whole, with a slight additional percentage, if you die within the first two years of holding the policy.
Many companies have a cutoff age of eighty, but Colonial Penn has extended their cut off age to eight five.
The death benefit remains the same and does not decrease over the life of the policy, as long as you make the premium payments. There is no medical exam, but there are a few medical questions, which some applicants feel uneasy answering.
The company offers term life for applicants between the ages of eighteen and seventy-five, and whole life insurance for ages forty to seventy-five. With all of these policies, they frequently mention their money-back guarantee within the first 30 days of the policy.
However, this 30-day offer is not exclusive to Colonial Penn. It is commonly offered throughout the entire industry. Often, it is referred to as a free look period. All states require this cash back guarantee, and by law, all companies offer it. Therefore, it should not be a deciding factor when choosing Colonial Penn.
Colonial Penn does not offer competitive pricing in any policy category when compared to all other companies in the industry
There are far better policies out there for you. Unfortunately, some of Colonial Penn’s premiums increase with your age, meaning the older you get, the more you pay. Although other companies do this, Colonial Penn is notorious for it.
It is important to be able to predict what your policy cost you down the road, and it is desirable for that prediction not to cause a financial worry.
The additional costs and increased expenses can be a burden to any policy holder, but particularly policy holders that are nearing retirement which usually results in a decrease in monthly income. Many of Colonial Penn’s clients have had to drop their policies because of the increased cost of premiums years down the road.
Let’s discuss the graded death claim a bit more
Certainly, you will be paid out if you die within the first two years, but not, however, if you die of natural causes. Most customers are unaware of those stipulations, and Colonial Penn has yet to address this lack of clear communication and understanding.
A graded death benefit means the death benefit pays out the full face amount after two years, or in the event the policyholder dies suddenly. In order for the policy to pay out on a death due to natural causes, the policy must have been held for over two years.
An underwriter will work with you during the application process to determine your health class and the type of policy that would suit you best.
They have an amazing underwriting system that will ensure you get the maximum coverage possible, although the process does take a few days. If you’re declined, it is typically because you failed to disclose information that would fall in the categories below.
Colonial Penn is rated low by financial rating institutions, they’re also only rated a B with the Better Business Bureau. The BBB scale runs from A+ to F, but what does this scale mean? What exactly is a company graded on?
Here are some of the BBB’s 13 criteria
- Trust: Establish and maintain a positive track record in the marketplace.
- Honesty: Adhere to established standards of advertising and selling. Honestly represent products and services, including clear and adequate disclosures of all material terms.
- Transparency: Openly identify the nature, location and ownership of the business, and clearly disclose all policies, guarantees and procedures that bear on a customer’s decision to buy.
- Honor promises: Abide by all written agreements and verbal representations.
- Responsiveness: Address marketplace disputes quickly, professionally and in good faith.
- Safeguard privacy: Protect any data collected against mishandling and fraud, collect personal information only as needed, and respect the preferences of customers regarding the use of their information.
- Integrity: Approach all business dealings, marketplace transactions and commitments with integrity.
In conclusion, there are many downsides to selecting Colonial Penn Life Insurance. Especially, when there are many more reliable companies to select in the market.
Customers who chose Colonial Penn feel misled to believe they are selecting an established and trusted company that offers benefits not widely offered elsewhere in the industry. When in reality, Colonial Penn is offering their customers the same if not less than other companies. There is a better insurance provider for you out there if you are willing to continue your search.