Maybe Too Good to Be True?
Colonial Penn Guaranteed Acceptance Insurance
Colonial Penn
Many of us have heard the Alex Trebek insurance commercial more than a few times and now you're wondering what it is all about?
As the host of Jeopardy for years plenty of consumers see him as someone who is articulate and probably trustworthy.
Maybe you agree?
While that all sounds nice, it is important to note that Mr.Trebek is not an insurance person, but a paid spokesman for Colonial Penn Life Insurance Company.
Consumers need to proceed with caution with this particular life insurance product.
Without having a background in life insurance and a thorough insurance education, his judgement of what the average senior needs for life insurance is really limited.
The insurance Alex Trebek refers to is a guaranteed issue whole life insurance product. This type of policy is available from a number of life insurance companies and not proprietary to Colonial Penn.
It is a pure, high risk life insurance product for those who cannot qualify medically for better coverage such as someone who may be suffering a terminal illness.
The focus of these advertisements has been to promote a Colonial Penn whole life insurance policy that offers guaranteed acceptance, a “rate lock” and premiums that will never go up and a death benefit which will never go down.
This product, titled Colonial Penn Guaranteed Acceptance Whole Life is nothing unique. It is simply high risk life insurance on steroids.
How?
It does not ask any health questions for starters.
That sounds pretty good right? Nice and easy.
Wrong!!
That is going to cost the consumer dearly. It could also hurt the policy beneficiary.
You must understand that life insurance companies cannot evaluate the risk level of a person without asking health questions. What do you think they do in response to offset the risk of not having a clear picture of whom is requesting life or burial insurance from them?
You got it. They jack those rates up for starters…
And…
They also insert a veiled 2 year limited benefit period for natural death into the policy.
Here is what you need to understand about that.
For the first 2 years of approved coverage with “Alex Trebek Life Insurance,” there is no real death benefit for end of life due to cancer, stroke, heart attack…any “natural” cause. Now, a car wreck for example would be covered in full to the limits of purchased coverage as it is an accident.
Colonial Penn Life Insurance offers 3 different life policies. All 3 of these are marketed to senior citizens in general. The “Guaranteed Acceptance Life Insurance” is Alex Trebek’s endorsed product you hear so much about. The Col Penn Guaranteed Acceptance insurance is a lifelong, whole life policy with critical caveats.
It is important you understand these clearly before ever purchasing any guaranteed issue life insurance. This could end poorly for your loved ones or any other goal you had in mind before you purchased.
We’re going to stay focused on the Alex Trebek insurance product as that is what most seniors are curious about here.
I’m going to forgo the term life insurance product which is low quality anyway and the Colonial Penn standard whole life product which has tough underwriting and it only available to seniors up to age 75.
No medical exams, no health questions. Your acceptance: guaranteed.
The above quote was taken directly from colonialpenn.com.
However, the truth is, Alex Trebek life insurance is simply a whole life insurance policy with carefully, glossed over limitations and high premiums.
It is also supposed to be “affordable.”
After all, $9.95 gets you this product, right?
Wrong!! If you are wondering if the price per month was not accurate, you were just not aware of of how Colonial Penn prices their Guaranteed Acceptance life insurance. We will get to that specifically later in the article.
If you watched the video above, you may have noticed that the cost has increased nearly 50% in the last 20 years or so. Coverage was once $6.95 per unit.
While funerals have gone up in price over the years, I can tell you that in the late 90’s, the average, burial policy was about $7000. Nowadays, it is about $8300 on National average for a full funeral.
Why such a big increase in cost for insurance?
People are living longer than ever before.
Ed McMahon used to advertise $6.95 per unit for Colonial Penn and their Guaranteed Acceptance coverage. Today, the Alex Trebek commercial for life insurance comes in at $9.95 per unit. Same product as well folks.
That my friend, is a huge increase in cost for life insurance especially with people living longer than ever!!
If you want to have a significant death benefit for your loved ones, $9.95 per month isn’t going to help out very much. That is a very small policy if you are planning for final expenses.
Remember, you are paying for permanent, lifelong coverage with this product. This is not term life insurance which expires often by age 80.
For $9.95 a month what you can purchase is one “unit” of the Colonial Penn Life Insurance Guaranteed Acceptance offering, the Alex Trebek insurance endorsement.
How Much is a Unit of Colonial Penn Life Insurance Anyway?
This is the problem with Colonial Penn “units.” $9.95 sounds quite enticing but…
One unit does not buy enough insurance to scratch the cost of a cremation let alone a full funeral.
The first key point to remember is that you are buying units, not a death benefit amount. The more units you purchase the larger the value of your policy.
You need to know the value of the units.
This is variable.
Stay with me here. I will elaborate on “units” in just a bit.
Units are not typical in the life insurance business.
We work with dozens of the top carriers so I can attest to this fact.
With Colonial Penn Guaranteed Acceptance insurance, you can purchase more units than one, which I would recommend.
Consumers age 50-85 are allowed to buy up to 8 units so the maximum premium you would have per month is just under $80.
Now some folks look at that and say, sounds like a good price.
Not really. Run a quote on the final expense quote tool on this page. You will see why quite quickly. Take a look at the competition out there. Be prepared to be shocked!!
Now, here is the kicker.
As mentioned earlier, you are buying a unit of insurance not a death benefit amount. Selling life insurance in “units” is not common in the industry at all.
With the Alex Trebek, Guaranteed Acceptance insurance ad, the older you are, the less insurance you get for each $9.95 unit you buy.
So a 75 year old is going to be penalized regardless of excellent health over a 65 year old who may have congestive heart failure and type 1 diabetes with complications. At 65, the value of each unit is much higher which translates into more death benefits than the healthy individual. In fact, there is no way for a good health 75 year old to obtain the same amount of financial coverage if both purchased the maximum number of units. This can pose a major problem for some families for being underinsured.
What to understand about Colonial Penn Insurance units…
The minimum value of one “unit” is currently $400 while the maximum is $2100. That is why the maximum policy value is $17,000. Again, it depends on the value of each “unit” at application. If you are age 80 the value of the unit is very low compared to age 55. Take a at the Colonial Penn life insurance rates for this product in the tables below for specifics. We have provided rates by gender and age.
For many seniors, the guaranteed acceptance whole life policy advertised will not provide enough funding for a simple funeral.
What you need to remember about the Guaranteed Acceptance program from is that it is for high risk life insurance applicants.
They don’t tell you that do they?
Just because you are a senior does not mean that you are one of these candidates. In fact, here at out agency, roughly 90% of seniors are not!
Yes, the other 10% of seniors life insurance policy holders have some very serious medical issues which impair them whereby they cannot medically qualify for standard, no exam senior whole life insurance, which is much more affordable and does not have all the limitations.
Guaranteed Acceptance coverage from any life insurance company that offers it,
will take high risk individuals.
Why?
Because they do not ask any health questions. Health questions will eliminate a select number applicants who are in poor health for their age that can’t qualify for medically underwritten, full and immediate benefit insurance.
Specifically, this advertisement is for a final expense, whole life insurance policy designed primarily for seniors who cannot qualify for standard, senior no exam, whole life insurance.
Does Colonial Penn life insurance accept all seniors on this plan?
Yes, as long as the insured is legally competent and can consent to coverage. Power of attorney is acceptable by the way.
Colonial Penn Insurance company is banking on you not knowing your options to save money and that you will be drawn in to purchase the Guaranteed
Acceptance life insurance plan even if you can medically qualify for better coverage.