2021 Reviews: Colonial Penn $9.95 per unit – As seen on TV
last updated on April 20, 2021
- 399 Market Street
- Philadelphia, PA 19106
- Toll-Free: (800) 523-9100
- colonialpenn.com
- Founded in 1968
- AM Best Financial Strength Rating: A-
$9.95 for Final Expense Insurance might not be what you think it is, but if you are looking for the lowest cost you are in the right place.
We talk to many seniors every day, and a large number of them compare our best rates to Colonial Penn’s $9.95 a month final expense insurance.
Seniors all over the country are lured into believing that Colonial Penn is defending their best interest with their one-of-a-kind $9.95 a month fixed payment plan that can not turn them down due to health issues. Their message is conveyed by very respectable and popular figures and reinforces that the benefit never ends, premiums never go up, and with as little as $9.95 you can start protecting your family from your final expenses.
Everything is true, but what it doesn’t say makes all the difference. It fails to disclose that the value of a unit in US$ goes down with age and so does the benefit. It does not explain what a unit really is and how much coverage you can buy with $9.95 a month (by the way many think it is around $10,000). The undisclosed information may represent a loss of a staggering 75% or more of the death benefit value in US$ during a 30 year period when compared to another A-rated guaranteed issue life insurance company, and even more if you could qualify for a better health profile.
Life Insurance Unit = Death Benefit + Risk
Life insurance is a very traditional financial instrument that has grown in sophistication over the years and is offered in many different types like term-life, whole-life, universal-life, renewable, variable, indexed, etc. The different types of Life Insurance were created to better fit the specific needs of customers during different life stages. However, I can’t imagine a fit for life insurance by units, except maybe as a misleading marketing strategy. Selling life insurance using units is extremely uncommon, and because it is one of a kind, it would generally be difficult to compare, but we did and you’ll be glad we did.
In a nutshell, a life insurance unit is the death benefit plus the risk, which is the cost of insurance that is linked to the probability of death. The cost of insurance goes up with age so, in order to keep a fixed premium, Colonial Penn’s $9.95 per unit death benefit has to go down. How much down? For a male, more than 75% down from 50 to 80 years old.
Guaranteed Issue Life Insurance should be the last resort.
Guaranteed issue is for seniors (50 years old or more) with very serious health issues or shortly after having serious health issues; for instance, two years after cancer remission or open-heart surgery already put you into a new risk category. Every guaranteed issue life insurance policy requires a wait for the full coverage of 2 years or more. The flip side is that no health questions are asked and the company does not check your medical history. The application is the simplest possible and you can get your policy in force in as little as 10 minutes.
Simplicity and convenience translate into an unnecessary 2-years-wait for full coverage and higher premiums (in case you do not have any serious health issues). If you are willing to go through a 15 minutes health assessment by phone, with no medical exams, you could get instant approval, a lower premium and the full coverage could start with your first payment and even during the call.
Let a Licensed Field Underwriter Present Your Options!
Less than 10% of our clients in 34 states require guaranteed-issue. We normally can do much better at qualifying our clients for first-day coverage and lower rates. In case you do need a guaranteed-issue policy after a 15 minutes interview, we have 3 of the best guaranteed-issue life insurance companies in the USA and they do not issue life insurance policies in units. Our whole life insurance policies are always in US dollars and they cost less.
Lowest Final Expense Life Insurance Rates Instantly!
How much life insurance can I buy with $9.95 per unit a month?
If you are a male 50 years old, $9.95 buys $1,786 of life insurance, that should be enough for direct cremation. However, because there is a 2 years wait, the most benefit your family will eventually get is $1,676 at 52 years old. At 65 years old your family would receive $932, $560 at 75, and $426 if you die at 80. It never expires but it keeps going down.
The average cost of a funeral with burial or cremation in your state
How does $9.95 per unit by Colonial Penn compare to Guaranteed Issue policies from other companies?
If you have a serious health issue, Guaranteed-Issue life insurance may be the difference between getting life insurance or not. We work with 3 pure guaranteed-issue and from the 3 I picked Company X (*). Company X has AM Best’s financial strength rating of A (Excellent), which is slightly better than Colonial Penn’s A- (Excellent), and processes death claims just as quickly. So the comparison will be based on the coverage you can get for a similar premium. The answer is simple: $9.95 per unit costs more on premature death and the premium per benefit is 4 times or more after 30 years or more for a male.
Let’s say you are a 50-year-old male and you want a benefit of at least $5,000 at age 80, so you have to go for the max number of units at 50, which is 12. So your monthly premium is calculated by 12 * $9.95 = $119.40. 12 units at 80 years old equal a death benefit of $5,112.
$9.95 per unit vs Company X(*) for a 50-year-old male
| Male Age | Monthly Premium (12 units x $9.95 ) | Death Benefit (12 units) | Monthly Premium Company X | Death Benefit Company X |
| 55 | $119.40 | $18,072 | $117.19 | $21,000 |
| 60 | $119.40 | $14,568 | $117.19 | $21,000 |
| 65 | $119.40 | $11,184 | $117.19 | $21,000 |
| 70 | $119.40 | $8,604 | $117.19 | $21,000 |
| 75 | $119.40 | $6,720 | $117.19 | $21,000 |
| 80 | $119.40 | $5,112 | $117.19 | $21,000 |
| 85 | $119.40 | $5,016 | 0 (**) | $21,000 |
| 90+ | $119.40 | keeps going down | 0 (**) | $21,000 |
But what if the death occurs during the first 2 years?
If the death occurs during the first 2 years and it is not by an accident then Company X is better also. The graded benefit for Company X is a 10% bonus over paid-premiums. Colonial Penn’s graded benefit is 7% annual interest compounded monthly. So let’s say you made 10 payments of $100, then Company X will write a check to your beneficiary of 10 * $100 * 110% = $1,100. Colonial Penn’s formula is too complex to show here, but the result is $1,032 for the same payment and period. Colonial Penn’s compound interest formula grows faster, but during the first 20 months, the compound interest is just $126 compared to the $200 bonus from Company X.
At 25 months (or if death is by an accident), both full benefits kick in, except that Company X would pay your beneficiary the face amount. In contrast, Colonial Penn will pay the units, which are adjusted by age according to a table in the policy (for a male the loss is about 6% from 50 to 52 years old). Their website only shows the benefit till 85 years old.
Please contact Noreen Neves (888) 966-2539 for a different scenario and Company X’s brochures. By the way, check the rates on this website for an instant quote. 15 minutes could save you 75%
Disclosure: We are a life insurance agency, we have companies A to Z and we only recommend Company X if you really need it (about 10% of the cases only). You could get much lower rates and first-day coverage most of the time.
