Colonial Penn $9.95 Life Insurance Review: Buyer Beware
The Colonial Penn $9.95 life insurance plan has piqued the interest of many shoppers in the life insurance market, and it’s easy to see why: the company boasts a guaranteed acceptance plan at a low monthly rate.
While there are benefits to such a plan, there are drawbacks, too. This review may help you navigate the confusing waters of selecting the best life insurance plan for your situation.
Problems With the Colonial Penn $9.95 Plan
Death Benefit Waiting Period:
One major issue is that the policy imposes a “two-year limited benefit period,” meaning that if you pass away due to non-accidental causes within two years of signing the policy, your beneficiary will not receive the death benefit.
At a glance, low-rate guaranteed acceptance life insurance sounds appealing, but a closer look reveals the fine print. As advertised, it is not readily apparent that the $9.95 price tag is a starting price. Let’s investigate.
Colonial Penn life insurance pricing is based on the purchase of “units.” A unit represents a specific amount of coverage or benefit. Pricing on these units varies by age, gender, and state of residence.
When you increase the benefit amount on your policy (or your “units”), the premium increases likewise. For example, let’s say you are a 63-year-old male who wants to leave $10,000 to your beneficiary.
If the $9.95 monthly premium buys you a $1,000 death benefit (one unit), you will buy ten units ($1,000 x 10 = $10,000) and pay a monthly premium of $99.50 ($9.95 x 10). You can see where the $9.95 advertised premium is quickly irrelevant.
According to the Better Business Bureau website, Colonial Penn carries a high number of customer complaints.
What Does It Cover?
When you apply for Colonial Penn’s guaranteed acceptance life insurance coverage, you can request one or multiple units. The maximum allowable purchase is 15 units.
Using the previous example, if one unit equals a death benefit of $1,000, the most coverage you can buy is $15,000. In that case, at $9.95 per month per unit, your monthly premium would be $149.25 ($9.95 x 15).
The company imposes a “two-year limited benefit period,” meaning that your beneficiary will not collect the death benefit if your death is non-accidental and occurs within the first two years of the policy.
To help clarify, this means that if the death is:
Accidental in the first two years: If the death occurs within 90 days of the accident, the insurer pays the total policy amount.
Non-accidental in the first two years: the insurer will not pay a death benefit to your beneficiary. Instead, the designated beneficiary receives a refund of all premiums paid plus interest compounded annually.
Any cause after the first two years: the insurer will pay the total policy amount to the beneficiary.
You only need a “guaranteed acceptance life insurance policy” if you are at a higher risk of death. Many other companies offer first-day coverage (with health questions) and do not impose a two-year limited benefit period.
How Much Do Colonial Penn Units Cost?
Colonial Penn sells units, which are predetermined increments of benefit instead of a fixed dollar amount on the policy.
The policyholder can decide on the number of units to buy depending on the coverage they need. Your age and gender will determine how much death benefit is provided per unit.
By consulting the table below, you can see the predetermined amount of death benefit to be paid per unit purchased. For example, a 65-year-old male purchasing one unit of coverage can expect an $896 payout from that unit to his beneficiary. In comparison, a 65-year-old female purchasing one unit can expect a payout of $1,258 from that unit.
|Age||1 $9.95 Male Unit||1 $9.95 Female Unit|
As you can see, the advertised low rate may seem attractive, but examining it closely to determine its value is essential. If you would like a higher level of coverage, you will need to purchase the corresponding number of units and increase your monthly premium by that amount.
Colonial Penn Customer Complaints
The Better Business Bureau A+ rating and accreditation are encouraging. However, customer feedback is not a contributing factor in the assessment; the BBB states that their rating does not consider customer reviews.
The Colonial Penn average star rating from 153 customers is 1.2 out of 5. The BBB reports 297 complaints closed in the last three years, with 102 complaints in the past 12 months alone.
Pros and Cons of the $9.95 Plan
- There is no prerequisite medical exam, and the insurance carrier will not ask you health questions.
- Once coverage begins, health conditions do not impact your monthly rate or death benefit.
- Premiums do not increase with age (as long as you stay current on premium payments without interruption).
- The application process is simple: download and submit a one-page, seven-question enrollment form.
- The $9.95 monthly premium advertised is only a starting price.
- Customer complaints on the BBB site may indicate poor customer service.
- A two-year waiting period applies before benefits kick in unless you meet the criteria for accidental death.
- In most states, the policy is only available to applicants aged 50 to 85.
Weighing the pros and cons of Colonial Penn’s guaranteed acceptance insurance, it becomes clear that research is critical. Other life insurance companies may offer coverage with no waiting period, a straightforward pricing approach, and better value overall.
Suppose your priority is easing the financial burden on your family by finding coverage for funeral costs and other final expenses. In that case, you may want to explore final expense life insurance (also known as burial insurance).
In conclusion, Colonial Penn’s $9.95 life insurance plan may be appealing as you research your options, but several drawbacks make it less attractive than other products.
The two-year waiting period for non-accidental death benefits and customer complaints regarding poor service should give potential customers pause when considering this policy.
Weighing the pros and cons of Colonial Penn’s guaranteed acceptance insurance, it pays to shop for better value elsewhere.
You may consider contacting one of our licensed insurance agents, who can help you explore other options and insurance carriers. We are here to help.
What is the death benefit on the Colonial Penn $9.95 Plan?
The Colonial Penn guaranteed acceptance life insurance policy provides a death benefit with a two-year waiting period. Suppose the policyholder passes away within the first two years of the policy. In that case, the beneficiary will receive a payment equal to the total premiums paid, along with 7% interest on those payments. The total death benefit will only be given to the beneficiary if the policy has been in force for two years.
How much coverage do you get with a $9.95 Plan?
The Colonial Penn $9.95 permanent whole-life plan offers up to $50,000 in coverage.
What is a "unit" with the Colonial Penn $9.95 Plan?
When you apply for Colonial Penn’s guaranteed acceptance life insurance coverage, you can request one or multiple units. The maximum allowable purchase is 15 units. Using the previous example, if one unit equals a death benefit of $1,000, the most coverage you can buy is $15,000. At $9.95 per month per unit, your monthly premium would be $149.25 ($9.95 x 15).