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Colonial Penn – That’s Some Expensive Insurance!

By JLP | February 8, 2008

You see their commercials n TV all the time. Colonial Penn pretty much monopolizes cable TV with their insurance dramas. One of their commercials cracks me up. It opens with a middle-aged guy sitting up in bed in the middle of the night. He can’t sleep because something is on his mind. He gets up to go check on his kids and then he makes his way downstairs to the kitchen. He’s sitting at the table when his wife comes down and asks him what he’s doing. He tells her that he is looking at the application for some life insurance.

Here’s the clincher:

It’s for a $25,000 whole life insurance policy!

This guy was unable to sleep because he was worried about his family and $25,000 of life insurance is the answer.

Anyway, the commercial piqued my interest so I went to the Colonial Penn website to look around. I found out that they also offer term insurance so I ran a quote for the heck of it. Here’s the quote I got for both a 5-year and 20-year term insurance policy for a 38 year-old man:

A $25,000 20-year term life insurance policy runs $37.25 per month. Doesn’t seem too bad does it? Well, it’s not too good when you shop around. I went to IntelliQuote.com and did a quick quote and found out that a $25,000 20-year term policy runs around $10 per month. The same $37 monthly premium would buy you a $500,000 policy!

The only difference is that there is no medical exam required with the Colonial Penn policy, which most likely is not the case with the IntelliQuote companies. Still, I don’t think the extra $27 per month is worth not having to take a medical exam.

I guess Colonial Penn has to charge so much to pay for all those commercials.

Topics: Insurance | 24 Comments »


24 Responses to “Colonial Penn – That’s Some Expensive Insurance!”

  1. Deltablues82 Says:
    February 8th, 2008 at 7:41 am

    JLP,
    It costs so much because of A) the TV spots you mention and B) no medical underwrtiting. People who are not healthy enough to buy standard insurance buy this type. More risk equals higher price.

    Good post!

  2. Jeremy Says:
    February 8th, 2008 at 8:03 am

    That is quite expensive. We actually just picked up an additional $500,000 policy on my wife, 30-year term, for somewhere around $120/year, but did require a medical exam, through AIG. They had $250,000 with no medical exam for around $85/year.

    Of course, this is even cheaper than usual because it was a discounted group rate for being a member of the American Bar Association.

    But those term rates you pointed out above are simply outrageous.

  3. Ernesto Says:
    February 8th, 2008 at 8:49 am

    The problem with shopping on the internet or direct sellers for insurance is the health issue. You’re

    a) going to get a quote for a policy you can’t medically qualify for
    or
    b) have medical issues and go immediatly for Colonial Penn of Globe Life or the other dozen or so companies that direct market with guaranteed issue.

    In my agent days, it was rare for me to qualify someone for ultra-preferred or preferred rating. Unless your a non-smoker who works out regularly (or young), fuhgetaboutit.

    If you can qualify for a 30 term at $500K for $120/year (that’s very cheap) then toast your good health. If you’re among the 85% of the country with SOME medical issues, then your better off shopping with an insurance agent with access to a life brokerage and access to the 2000 or so life companies in the USA.

    It’s even sadder when someone in their 40s or 50s is ‘losing sleep’ over $25K. I’m hoping when I’m in my mid 50s, I’ll have outgrown my need for life insurance.

  4. Neith Says:
    February 8th, 2008 at 8:50 am

    Interestingly, I was thinking about this today. I called my State Farm agent and they quoted me an upper range for a 34yo non-smoker woman in VA of $32.21/mo for 20 year $250,000 coverage. It is based on the physical, and if I were in perfect health, with no family history risk factors, etc., the rate could go as low as $18.28/month for the same coverage.

    Obviously, I didn’t shop this around, it was just something I asked my agent about this morning (and how random is it that the topic came up today?!).

    N

  5. Hadley Says:
    February 8th, 2008 at 8:53 am

    That’s right.

    People who choose no exam life insurance usually pay more for their coverage.

    If you’re healthy and young, it definitely saves you money by comparing quotes online from a life insurance quote provider that has a network of insurers to offer you instant quote comparisons.

  6. Mrs. Micah Says:
    February 8th, 2008 at 8:55 am

    Wow, $25,000 is the answer? I mean it’s better than nothing, anything is better than nothing. But that’s not really enough to set one’s mind at ease. And as you say, that’s a higher price.

  7. Jason J Says:
    February 9th, 2008 at 9:36 pm

    Once again you’ve provided great information. This time the timing couldn’t be better as I’ve been investigating the purchase of life insurance. I’ve also found the Colonial Penn commercials amusing. Thanks for the head’s up.

  8. Canada life insurance Says:
    February 18th, 2008 at 8:35 am

    Aggressive marketing campaigns could bring some short term earns, but I think they do harm to company when considering long term impacts on customer’s confidence. Anyway, there are so many easy to use (and easy to understand) tools on the web, which could be used by people to avoid unfair dealing. It is just matter of being informed. I use simple calculator on my website instant quote term life Canada to help people with their decision.

  9. Laura Says:
    June 24th, 2008 at 8:57 am

    Regarding those Colonial Penn ads, doesn’t that couple seem way too old to have kids living at home, certainly children they might need to check on during the night? I’d suggest they kick their 30 year old deadbeat kids out of the house and invest in a better insurance policy with the money saved.

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  11. Earl Biswell Says:
    November 3rd, 2008 at 6:26 pm

    I have found this website and the info very helpful however my biggest concern with many of these “special offers” for insurance even those through AARP is I’m never sure if when the time comes to use it whether or not I’m going to get the service and help from the insurance company. It seems that the only true colors of these insurance companies become exposed is when someone needs it and the insurance company suddenly has exceptions or provisions. So has anyone out there who has Colonial Penn or AIG etc., tried to use or claim on your policy and if so how were you treated and how quickly did they settle with you? I’ve used our local State Farm agent many times over the years and they are right there when you call them and help you every step of the way no questions asked but these other companies that are not “local” can be difficult to deal with in times of crisis, so please give me some feedback on these companies if you’ve had to deal with them during times of crisis. Thank you.

  12. Joan Collins Says:
    November 30th, 2008 at 2:29 pm

    I’m shopping life insurance for my mom who is 70yrs old and a dialysis patient. As a family we don’t we don’t have money to deal with funeural expenses when the time comes and neither do we have funds for an expensive policy. Any advice?

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  14. Claire Says:
    February 21st, 2009 at 11:51 am

    This insurance is a scam. My father purchased $3270 worth of insurance and has paid out over $8000. Colonial Penn says he has to pay until he is 100 years old or he will lose all the paid up dividends (which don’t equal the value of the policy + the additional amount paid).

  15. tammi wilson Says:
    February 26th, 2009 at 7:56 pm

    Help!!my husband had a kidney transplant in july,does anyone know if and where we could get life ins? after 10 yrs with ins. on our house (50,000.00 would be given to surviving spouse) now after we refinanced our home,they tell us we CAN’T get that ins anymore because of his kidney transplant!!! so for the whole 10 yrs. we paid in now they can just boot us?Insurances are only GOOD for Insurance companies. Can anyone recommend anything for us?

  16. DD Says:
    April 10th, 2009 at 10:42 am

    Did Colonial Penn get bought out by another Insurance company?

  17. Linnet Doe Says:
    January 8th, 2010 at 12:26 pm

    To me the funniest commercial is the one withthe son talking about when the Dad died and the mother had to pay for the funeral..”I’m making sure this doesn’t happen to Mom.

    I think he means that he’s making sure it doesn’t happen to HIM. He went and got her CP insurance, which she pays for, so now she doesn’t have to worry.

    Yeah, right. What a standup guy.

  18. Justin Says:
    February 6th, 2010 at 2:01 pm

    I am actually a colonial penn rep, colonial penn is a subsidiary of Bankers Life and Casualty Co. who (if you contact) can generally get you a better rate then colonial penn for similar programs. Rather than having NO health underwriting you can have LOW health underwriting I.E. major conditions like kidney disease or congestive heart failure. Colonial penn programs are NOT designed for healthy people, they are designed for sick (very sick) people to help pay funeral costs. Don’t be upset by premiums, what insurance company wants to insure someone who is likely to die in the next couple of years? Count yourself lucky if your that sick to have insurance at all

  19. Marion Says:
    February 26th, 2010 at 10:35 pm

    Thanks Justin for the voice of reason. If you are healthy, turn the channel. For those like my husband who are very sick and have NO life insurance and can’t afford conventional, Colonial Penn is a life raft in this choppy ocean. It’s something and I thank God for them!

  20. Cathy Says:
    May 6th, 2010 at 12:54 pm

    My did have have a heart attack at age 50, had to go into early retirement and lost his life insurance he had through his employer, Life insurance for him was not even possible through most insurance companies. He bought a policy through AARP. The cost was 83.00 Quarterly for 20,000 policy. He died at age 65. We filed his insurance through the mail and got the insurance check back in 10 days with no hassels. I was impressed. So for people with health problems there is peace in knowing that your burial can at least be paid for.

  21. Robin Says:
    June 25th, 2010 at 6:45 pm

    Many people do not understand that there are different types of life insurance products. The whole life product that you refer to is issued without any medical questions or exams and is to be used to help the family with final expenses. Term life, which terminates is for younger people with families and is good to have when you have your greatest financial risk. You would be hard pressed to get a 500,000 term life insurance policy for a 70 year old man; I would love to see those premiums. Term insurance is only good if you die within the term. If not money is gone and customer is often left with no life insurance because they are too old at the end of the term and at age 70, it is way too expensive. You should always have a combination of both and remember to speak with an expert whose company offers all insurance products not just pushing term life because it is cheap. You get what you pay for :)

  22. Lillian Says:
    March 10th, 2011 at 6:17 pm

    Some of Justin’s information is incorrect. Colonial Penn IS NOT a subsidiary of Banker’s Life. They are both two separate companies owned by the same corporation (Conseco). While it is true that the advertised plan is for sick individuals, Colonial Penn also offers other programs with a few underwritten health questions. In fact to qualify for their Term insurance you have to answer health questions. People call Banker’s Life when they want to work with a local agent and Banker’s agents are also authorized to sell Colonial Penn Guaranteed Acceptance product. However, if the customer is truly interested in applied for Colonial Penn insurance they usual prefer to deal directly with the company.

  23. Ms. Roz Says:
    January 26th, 2012 at 3:01 am

    Thanks Lilian. Justin was partially correct but sounded more like a ‘bankers’ agent.

  24. Mr. D Says:
    February 10th, 2012 at 11:54 am

    I’m a former employee of Colonial Penn and yes, it is expensive. But this is “Substandard Whole Life”, which means its for people who aren’t healthy and can’t receive insurance through other companies. Its expensive because they do not ask any health questions. You are guaranteed the insurance if you live 2 years past the application date. There arent too many other companies that guarantee you life insurance so if you have diabetes or previously had a heart attack Colonial Penn is probably the only company you can go to. And NO, Banker’s Life does NOT own Colonial Penn. They are a sister company. They are both owned by Conseco so if you hear anyone say thay Banker’s Life owns Colonial Penn they are A) misinformed or B)a Banker’s Life agent trying to steer you away from Colonial Penn. Theres a HUGE rivalry between the two companies!

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