Colonial Penn $9.95 Life Insurance Review - Buyer Beware (2023)

It’s easy to see why the Colonial Penn $9.95 life insurance plan would pique your interest. 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 filter the best life insurance to suit your needs.

Key Takeaways:

• They impose 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.
• More expensive than other Final Expense insurance companies.
• High customer complaints, according to the BBB.

The Problem With the Colonial Penn $9.95 Plan

Death Benefit Waiting Period:

One major issue is that the policy has a “two-year limited benefit period, ” implying 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.

More Expensive:

At a glance, low-rate guaranteed acceptance life insurance sounds appealing, but looking closer, you may question the policy’s value. As advertised, it is not readily apparent that the $9.95 price tag is a starting price based on units. A unit represents a specific amount of coverage, which varies by age, gender, and state of residence.

When you increase the benefit amount, 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, you will buy ten units ($1,000 x 10 = $10,000) and pay a monthly premium of $99.50 ($9.95 x 10).

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. 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. Instead, the designated beneficiary receives a refund of all premiums paid plus interest compounded annually.

The insurer pays the total policy amount in the case of accidental death if death occurs within 90 days of the accident. The beneficiary receives the full death benefit after the first two years the policy is in force, regardless of the cause.

Pro tip:

The only time you need a “guaranteed acceptance life insurance policy” is if you are at higher risk, many other companies offer first-day coverage (with health questions) that does not impose a two-year limited benefit period.

How Much Do Colonial Penn Units Cost?

Colonial Penn sells units; it signifies that the coverage is provided in predetermined increments or units instead of a fixed dollar amount. 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 of a death benefit you can get per unit.

Here’s what the cost of each unit looks like:

The low rate may seem attractive, but examining it closely to determine its value is essential. The stated price of $9.95 is starting price based on units, representing a specific coverage amount that varies depending on age, gender, and state of residence.

If you want to increase the amount your beneficiary will receive, your monthly premium payment will also increase.

For example, if you are a 63-year-old male and you want to leave $10,000 to your beneficiary, and your current monthly premium of $9.95 gets you a death benefit of $1,000, then you would need to buy ten units of coverage ($1,000 x 10 = $10,000) and pay a monthly premium of $99.50 ($9.95 x 10).

Pros and Cons

Pros

• 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 your entire life.
• The application process is simple: Download and submit a one-page, seven-question enrollment form.

Cons

• The $9.95 monthly premium advertised is only a starting price.
• Customer complaints on the BBB site are indicative of 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 it pays to shop around. Other life insurance companies will offer coverage with NO waiting period, with a straightforward pricing approach and better value. If your priority is coverage of funeral costs and other final expenses, you may want to explore final expense life insurance, otherwise known as burial insurance.

Colonial Penn Customer Complaints

The Better Business Bureau A+ rating and accreditation is encouraging. However, customer feedback is not a contributing factor in the assessment. The BBB states that the rating does not take customer reviews into account. 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, 102 complaints in the past 12 months alone.

Bottom Line

In conclusion, Colonial Penn’s $9.95 life insurance plan may be appealing at first glance. Still, upon closer inspection, there are a number of drawbacks that make it less attractive than other options on the market. 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 around for better value elsewhere.

One of our licensed insurance agents can help you explore other options and insurance carriers.

Articles sources: The Annuity Expert – Better Business Bureau – Final Expense Direct

FAQ's

• What Is The Death Benefit of Colonial Penn $9.95 Plan?

  The Colonial Penn Guaranteed Acceptance life insurance policy provides a death benefit with a two-year graded 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 be given to the beneficiaries only after two years of the policy.

• 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).