I called Colonial Penn at the above number to request their free information. An agent picked up right away and took my name and information. The call lasted ~90 seconds and the materials arrived in 6 business days.
Who Is Colonial Penn?
Founded in 1957, Colonial Penn is a life insurance company based in Wyomissing, Pennsylvania. The company offers life insurance products to consumers primarily through direct mail and television (an advertisement for the well-known Colonial Penn 995 per month plan is shown above).
|Type||Life Insurance Carrier|
|Address||399 Market Street |
Philadelphia, PA 19106
|A.M. Best Rating||A-|
In 1968, Colonial Penn became one of the first life insurance companies to offer a guaranteed acceptance plan for those 50 and over. It is currently the largest provider of burial insurance coverage in the United States, competing with companies like Globe Life, Mutual of Omaha, and AARP.
This review will focus on Colonial Penn’s burial insurance plan (i.e., the Colonial Penn 9.95 plan).
Burial Insurance Policy Comparison
Below is a comparison of burial insurance plans from Colonial Penn and its three major competitors (listed above).
Burial Insurance 101
If you’re new to burial insurance or could use a refresher, this section will provide a quick primer on burial insurance.
What Is Burial Insurance?
Burial insurance is an informal name for whole life insurance policies with death benefits sized to help with burial and funeral costs (typically under $25,000).
People refer to these policies as “burial insurance” because of the typical use of funds (to cover final expenses and ease the financial burden on the next generation). These include burial or cremation costs, embalming services, or paying outstanding medical bills.
Burial insurance policies do NOT restrict how you use the funds.
If your beneficiary wants to use the funds on vacation for her family, nothing stops her from doing so.
Finally, note that policies like these are also called “funeral insurance” or “final expense insurance”; we will use these names interchangeably throughout this review.
Burial Insurance = Whole Life Insurance
Burial insurance is nothing more than whole life insurance.
You are purchasing a payout when you die (similar to all life insurance). If you have a $100,000 policy, your life insurance company will pay your beneficiary $100,000 when you die.
Whole life insurance policies provide you lifetime coverage (i.e., your whole life). This differs from term life insurance, which covers you for a pre-determined period of time (called the “term”), usually between 10 and 30 years.
Colonial Penn Whole Life Insurance
Before we dive into the Company’s well-advertised $9.95 guaranteed acceptance plan, let’s review Colonial Penn’s standard whole life insurance offering.
See below a summary of the policy’s features.
Eligibility & Coverage Period
Regarding eligibility, any U.S. resident ages 40-75 can buy a policy (50-75 years old in New York).
As suggested by its name, whole life insurance provides coverage for your entire lifetime (as long as you keep paying your premiums, of course).
Your benefits will never terminate, no matter how old you are.
Most burial insurance policies do not require medical exams, and this holds for Colonial Penn as well.
There are health questions, though, which is how Colonial Penn decides whether or not to approve you.
Because this policy has health-based underwriting, these policies do not have a waiting period.
Colonial Penn Guaranteed Issue Life Insurance
The most popular Colonial Penn life insurance product is its guaranteed acceptance whole life insurance policy.
See below a summary of the policy’s features:
Eligibility & Coverage Period
Regarding eligibility, any U.S. resident ages 50-85 can buy a policy (50-75 years old in New York).
As stated above, because burial insurance is a whole life policy, coverage lasts for your entire lifetime (as long as you keep making your life insurance payments).
Guaranteed Acceptance (No Underwriting)
The key draw of this product is its “guaranteed acceptance” feature. No matter what, you cannot be denied coverage for health-related reasons.
Colonial Penn life insurance = NO medical exam or health questions.
Two-Year Waiting Period
If you wondered how a life insurance company could afford to guarantee acceptance to everyone, regardless of medical history, and remain profitable, you’re right that something is missing.
Colonial Penn can guarantee approval because of a two-year limited benefit period (or “waiting period”). Only after this two-year waiting period is the full death benefit paid.
Suppose the insured person dies (in a non-accidental death) during the first two years of coverage. In that case, the beneficiary receives a limited death benefit (the premiums paid to that point, plus 7% interest).
If this non-accidental death occurs after the two-year waiting period, the beneficiary receives the full payout. Note that this goes for death from any cause (including suicide and drug overdose).
This protects Colonial Penn from fraudsters who might buy a policy knowing that they will die soon. Otherwise, these individuals could receive the full life insurance benefit for only a few months’ worth of premium payments.
Note that accidental death always receives the full death benefit, regardless of when it occurs.
Colonial Penn Life Insurance $9.95 Per Month
Colonial Penn life insurance commercials are among the most recognizable (and frequent) examples of final expense insurance marketing you’ll encounter. And their promise to offer you coverage for only $9.95 in monthly premiums is always featured front and center.
Is this too good to be true? Why would Colonial Penn quote everyone the same life insurance rates?
A Fixed Price For Variable Amounts Of Coverage
Colonial Penn isn’t afraid to buck the trend when selling burial insurance coverage.
A typical life insurance provider lets you choose how much insurance coverage you want. They then tell you the monthly premium price they can offer you.
Colonial Penn’s life insurance does it in reverse. They allow you to choose your monthly payments (in multiples of $9.95 per month) and then let you know how much coverage they can offer you.
$9.95 always buys you one “unit” of coverage.
Table: Life Insurance Benefit Amount Available For $9.95
How much coverage does that one unit buy you? That depends on your age and gender. Feel free to use Colonial Penn’s quote form to find out the exact amount you would be offered!
Colonial Penn “Coverage Quote” Calculator
How Much Does Colonial Penn Burial Insurance Cost?
Colonial Penn approaches life insurance pricing differently from its competitors. Most life insurers will ask you how much coverage you want and then quote you a price when purchasing life insurance.
Colonial Penn looks at it the other way. They assume that customers want to leave their families with as much money as they can afford.
With Colonial Penn, you choose your monthly premium payment. Then, they tell you how much life insurance coverage you can buy for that price.
$9.95 always buys you one “unit” of this Colonial Penn Guaranteed Acceptance policy, and customers can buy up to 8 units.
Colonial Penn Pricing: An Example
An example may make it easier to understand.
Let’s say the customer is a 55-year-old male named Derek who lives in California. Derek wants to buy a policy so his end-of-life costs won’t burden his family.
He wants a simple direct cremation, so he doesn’t need a large policy. He selects the option for “one unit” of insurance (at $9.95 per unit). Colonial Penn then lets him know that he can buy $1,560 of coverage at this price.
If this is enough coverage for Derek, he can fill out a short, one-page application, make his first payment, and Derek will have life insurance. If this is NOT enough coverage:
He can buy up to eight units at the same rate. E.g., if he need 5 times the coverage ($7,800), he can buy this for 5 times the $9.95 price ($49.75).
How many units should you buy? That depends greatly on your state, as average funeral expenses vary by geography. Check out our full article on funeral costs to hear more on this topic.
Colonial Penn Life Insurance Policy Application
The application for Colonial Penn’s funeral insurance product could not be more simple.
The Paper Application
If you prefer to apply by mail, it may take longer to get your policy, but the application shouldn’t be too hard…
Colonial Penn’s burial insurance application is just one page.
Third-Party Colonial Penn 995 Plan Reviews
When you can’t find many of them, it’s tough to know how much weight to give customer reviews. Unfortunately, this was the place we found ourselves in when it came to third-party Colonial Penn reviews.
Colonial Penn Life Insurance Review (TrustPilot)
On TrustPilot, a third-party site that aggregates customer reviews, Colonial Penn has an average rating of 2.9 from 2 reviews.
You can find screenshots of these reviews at the top of the page.
Concerns raised include: poor customer service, a pushy sales experience, and difficulty getting a refund during the 30-day no-obligation period.
Better Business Bureau (BBB) Rating & Reviews
Colonial Penn Life Insurance Company, a member of the Better Business Bureau since 1985, currently holds an A+ BBB rating. (To understand how this rating was determined, see the BBB’s ratings elements page.)
Over the past three years, Colonial Penn has had 161 customer complaints filed with the BBB, with 98 of these closed in the last 12 months.
Financial Strength Ratings
Colonial Penn has strong financial strength ratings, which indicate that they are almost sure to have the funds to pay out on your life insurance claim, regardless of the economic environment.
Colonial Penn Life Insurance Company currently holds the following ratings:
- A.M. Best: A-
- S&P: A-
- Moody’s: A3
- Fitch: A-