Colonial Penn Life Insurance Review

No-Exam Policies With Limited Coverage

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Colonial Penn

 Colonial Penn

Investopedia’s Rating
2.4

Our Take

As a relatively new company with limited offerings, a low coverage cap, and a history of customer complaints, Colonial Penn will appeal primarily to applicants with pre-existing conditions who desire whole life insurance without a physical exam and/or medical questions. If that’s you, you should be able to get a quote and apply fairly easily online. But you should get quotes from other companies as well.

  • Pros & Cons
  • Company Overview
  • specifications
Pros & Cons
Pros
  • Guaranteed-issue coverage available

  • Same-day decision

  • Online quote and application platforms

  • Live chat

Cons
  • Few policy types available

  • High number of customer complaints

  • Low maximum coverage amount

Company Overview

Colonial Penn Life Insurance Company was established in Philadelphia in 1957 by philanthropist and AARP co-founder Leonard Davis. In 1968, it helped pioneer guaranteed-issue life insurance exclusively for people age 50 and over, and it still specializes in those policies and others that don’t require a medical exam. 

Colonial Penn is now a part of CNO Financial Group, a network of insurance companies that together provide more than 3.2 million policies to working and retired Americans. Colonial Penn sells insurance directly to consumers, meaning you can’t buy its policies through an agent.

  • Year Founded 1957
  • Kinds of Policies Whole life, guaranteed issue
  • Payment Options EFT transfer, check, money order, credit card
  • Customer Service Live chat or phone (877-877-8052 for sales; 800-523-9100 for service)
  • Official Website www.colonialpenn.com
specifications
AM Best Rating
A-
NAIC Score (avg.)
N/A
Years In Business
65 Years
Policy Types
Final Expense, Whole
Accepts Credit Cards
Yes
Why Trust Us
91
Companies reviewed
55
Features considered
5,005
Data points analyzed
We collected over 5,000 data points from 91 life insurance companies to measure financial stability, customer satisfaction, product and feature variety, and the overall buying experience. We then evaluated each company based on 55 metrics to develop unbiased, comprehensive reviews.
Colonial Penn

 Colonial Penn

Investopedia’s Rating
2.4

Pros Explained

  • Guaranteed-issue coverage available: Colonial Penn provides whole life coverage with no health questions or physical exam required, which may appeal to applicants who would be turned down for other types of coverage. Only about one-third of the insurers we reviewed offer this type of coverage. 
  • Same-day decision: In most cases, you can get an answer about whether your application was accepted the same day you apply. 
  • Live chat: Colonial Penn customers have access to real-time chat with policy specialists. 
  • Online quote and application platforms: Customers can request quotes and submit policy applications online.

Cons Explained

  • Few policy types available: Colonial Penn’s life insurance offerings are limited to two types of whole-life policies: a low-coverage traditional whole-life policy and a guaranteed-issue policy. 
  • High number of customer complaints: Colonial Penn received an average of five times the annual number of customer complaints expected for a company its size over a three-year period.
  • Low maximum coverage amount: Colonial Penn’s traditional whole life policy coverage is capped at $50,000. In contrast, most of its competitors offer at least $200,000 in maximum coverage, while several are in excess of $1 million or uncapped.

Complaint Index

Colonial Penn received an unusually high amount of customer complaints for a company of its size, compared to competitors. We base that on information from the National Association of Insurance Commissioners (NAIC). It tracks customer complaints and uses those numbers to create its Complaint Index, which compares companies of similar sizes by the number of complaints filed by policyholders.

An insurance company is assigned a number based on how many customer complaints it receives in a given year, whereby 1.0 represents the expected number of complaints based on its size. A company with the expected number of complaints is given a complaint index of 1. A number less than 1 means the company received fewer complaints than expected, while a number greater than 1 means it received more. An index of 2, for example, would indicate twice the expected number of complaints.

Over three years, Colonial Penn’s NAIC average index was 3.06, meaning that three times as many complaints were lodged against it as a company its size should receive. This number denotes customer satisfaction well below the industry average. (For context, most of the best life insurance companies have an index below 1, and only eight other companies among the 91 we researched received an index average worse than Colonial Penn’s.)

Third-Party Ratings

Colonial Penn fares better when it comes to financial strength ratings provided by AM Best. The credit rating agency has a grading system for indicating the ability of a life insurance company to pay claims. Grades range from A++ to D. In 2021, Colonial Penn was assigned an A- rating, indicating an excellent but not exceptional level of financial strength. Some 90% of the companies we reviewed received a higher grade than Colonial Penn from AM Best.

Policies Available

Colonial Penn currently offers two whole life insurance policies, neither of which requires a medical exam. These are described below.

Whole Life

Whole-life insurance pays a benefit to beneficiaries when the policyholder dies. It is guaranteed to remain in place for the insured’s entire lifetime if the premiums are paid. Over time, the policy builds cash value, which the insured can borrow against as necessary. Premium rates are locked in for the life of the policy.

Permanent Whole-Life Insurance: Although this is a traditional whole-life policy, it does not require a medical exam. However, with this policy, applicants are required to answer health questions to determine eligibility. The policy can be used to supplement existing insurance coverage, is capped at $50,000, and can be issued from the ages of 40 to 75. Rates are locked in for the duration of the policy, and cash value begins to accrue after the first year.

Final Expense or Burial Insurance

Guaranteed-issue policies are a type of whole-life insurance that doesn't require you to take a physical exam or answer medical questions. As long as you fit the age requirements, you’re guaranteed coverage. However, these policies have a graded death benefit, which limits the death benefit during the first two years of coverage to a return of the premiums you paid plus a small percentage. 

Guaranteed Acceptance Whole-Life Insurance: Colonial Penn’s guaranteed-issue policy is available in most states to applicants between the ages of 50 and 85. After the first year, the cash value begins to build, but there is a two-year waiting period before full benefits can be paid, unless the death is from an accident. During this time, beneficiaries will receive a return of the premiums you paid plus 7% if you die of natural causes. This policy is best suited for people with preexisting health conditions who might not be eligible for traditional policies. Healthier individuals can likely get a less expensive policy elsewhere by undergoing a medical exam.

Available Riders

Riders are provisions in an insurance policy that extend protection or provide additional coverage. Colonial Penn’s riders cost extra on top of any regular policy premium. However, they can also be purchased on their own.

Living Benefit Riders

Marketed as “Living Insurance,” Colonial Penn’s life insurance riders provide for what are called accelerated death benefits. These enable policyholders to access up to 50% of the face value of their policy while they are still alive in the event of a qualifying health event. Election of one of Colonial Penn’s living benefit riders increases the premium, and riders are subject to administrative fees and partial repayment of any policy loans or interest.

  • Heart Attack or Stroke: This is similar to critical illness riders offered by other companies. It provides up to 50% of the death benefit upon diagnosis of heart attack or stroke. 
  • Cancer: This is another type of critical illness rider. It provides up to 25% of death benefit if you’re diagnosed with cancer (except skin cancer).
  • Chronic Illness: This is both a chronic illness and terminal illness rider. It provides up to 50% of death benefits if you are diagnosed with a qualifying chronic or terminal illness (with 12 or fewer months left to live).

Customer Service

The Colonial Penn website can be accessed anytime at colonialpenn.com. Sales assistance (877-877-8052) is available Monday through Friday, from 8:30 a.m. to 10 p.m. ET, and on Saturday from 9 a.m. to 5:30 p.m. ET.  A policy service hotline (800-523-9100) is open Monday through Friday, from 8:30 a.m. to 5:30 p.m. ET. (Please note that New York residents must use different numbers, available here.)

Real-time online help can be reached via the website’s pop-up chat window, or through the website’s “Chat With A Specialist” banner. Customers can get quotes or file applications online but must send downloaded claim forms through the mail.

Who Is Colonial Penn Best For?

Colonial Penn was among the first insurance companies to offer guaranteed-acceptance life insurance policies to customers aged 50 and older. However, because this kind of coverage has low coverage limits and is more expensive than policies that require an exam, it is best suited to people with preexisting health conditions who may not be eligible for traditionally underwritten policies. It may also be useful for those seeking to supplement existing coverage.

Our Methodology: How We Review Life Insurance Carriers

We designed a comprehensive ranking methodology based on consumer priorities and life insurance company fundamentals to rank more than 90 insurers across five general categories: financial stability, customer satisfaction, product and feature variety, the overall buying experience, and cost.

In order to do this, we collected over 5,000 data points and scored each company based on 55 metrics. We grouped metrics by category to see how insurers performed in each; we then weighted category scores to determine how companies performed overall.

To learn more, read our full Life Insurance Methodology.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. National Association of Insurance Commissioners. "Colonial Penn Life Ins Co

    National Complaint Index Report."