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Colonial Penn (55 - 85 years old) life insurance?

I have seen the TV comercials where $7.95 a month will buy life insurance with no health questions asked " waratied aceptance" does anyone know what the catch is? Any feedback would be helpful.

Public Comments

1. the catch is that you're talking about a 5,000 or 10,000 dollar policy, most likely... Would barely cover the cost of putting the deceased in the ground.
2. the catch - you are paying $7.95 for a "unit" of life insurance. at age 55, one "unit" may get you $100,000 coverage. but as you get older, it takes more "units" to get that same coverage. so at 65 it may take 10 "units", at 85 it may take 50 "units" just to keep $100,000 coverage. And if you ever stop paying, your coverage is over, and everything you paid is gone. its a scam.
3. There are a couple of ways that these type of life insurance companies work. One is that the rate is based on a per thousand amount. Meaning that for $7.95 a month you get $1000 of death benefit. Another thing that some will do is if you die the first year your beneficiary gets your premium back and thats it. The second year they give 20% of the death benefit and so on. Just make sure that you fully understand what you are buying.
4. HI, your friendly insurance guy here again. Thjere are two ways this typically works. First, the policy face value is going to be small. SEcond, the policies are configured as Modified Whole Life. that means that in first year, if your insured party passes, you may receive either just your premiums paid or a small percentage of the face value. In the second year you may receive premiums paid plus interest or a slightly higher percentage of the face value. Some number of years after issue, the policy would pay at full face value.
5. What's the catch? The advertise $7.95/month is the cost per unit or $1000 coverage. So, if you wanted a $100,000 coverage, that would cost $795.00/month ($100 x $7.95). Which is $9540/year. That's why there's no health questions asked because you are paying lots or premium for a low amount of coverage. If you don't pay your premiums, you will lose coverage automatically! This company is based in Valley Forge, Pennsylvania. New Jersey Department of Banking and Insurance has been questioning this company because they have received over 100 complaints within one year. AM Best gave a "B" rating (fair) to this company. That is a very low grade to receive. So, shop around for better life insurance companies that has a rating of A or A+.