Colonial Penn or Farmers
Where to Get Life Insurance
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Last Updated: June 5, 2023
Insurance is an investment for now and the future. And life insurance is a heavyweight of personal security.
So, where should you get your life insurance policy from? You can prepare a list of your requirements and your budget, but still have to sieve through the many insurance companies that offer life insurance. Among the options you have, which are the best?
To make things easier, we’re comparing two insurance big names—Colonial Penn Life Insurance and Farmers Insurance—to make it easier for you to have the final say.
Colonial Penn Life Insurance Overview
Colonial Penn has been providing affordable life insurance since 1963. It is renowned for its simplified underwriting processes and low-cost policies. You might be familiar with its TV ads that air nationwide.
Colonial Penn’s target market is people aged 50 and above, offering term and whole life insurance. In recent years, Colonial Penn has started offering annuities and long-term care insurance. You don’t need a medical exam for any of its life insurance policies, but you do have to answer a few health questions to see if you are eligible for coverage.
You get a variety of insurance options that combine simplified underwriting with a limited death benefit. They’re excellent options for people who don’t need large payouts and might struggle to buy coverage elsewhere due to age or medical history. It should be enough to cover funeral costs.
Farmers Life Insurance Overview
Farmers Insurance is one of the biggest insurance companies in the U.S. It has established its roots in the American insurance industry for over a century with a large client base and a wide array of insurance products.
You can get Farmers term, whole, and universal life insurance policies in every state except New York. It also includes a term life policy that doesn’t need a medical exam.
Colonial Penn vs. Farmers Insurance Head-to-Head
|Colonial Penn||Farmers Life|
|Availability||47 states (all except Minnesota, New Jersey and Pennsylvania)||36 states|
|A.M. Best rating||A||A|
|Better Business Bureau (BBB) rating||A+||A|
|S&P Global Ratings||A-||A|
Colonial Life Insurance Products
Term Life Insurance
You can get this policy in all states except California, Montana, New York, and the Virgin Islands. It is a policy for ages 18 to 75, with a maximum death benefit of $50,000. You don’t need a medical exam to get this policy but will need to answer some health questions to confirm eligibility. You start with a one-year term and start a new plan every term.
Whole Life Insurance
This policy is available for ages 40 to 75, except for New York or the Virgin Island. You don’t need to get a medical examination for this policy either. This policy will cover you throughout your life. You can purchase a maximum coverage of up to $50,000. You’ll get a fixed coverage, but the premium cost may vary depending on age and gender. If you’re in Montana, they rate your premium based only on age.
Guaranteed Whole Life Insurance
You can apply for this coverage if you’re between 50 and 85 years old. This doesn’t require a medical exam either, but there is a two-year limited benefit period if you want guaranteed coverage. This means your policy will not pay out a total death benefit within the first two years of owning the plan.
Pros and Cons
- After the first year of coverage, the policy builds cash, and lets you choose the death benefit limit.
- The policy will continue to cover you as long as you continue paying the premium. The fixed rate means you will always pay the same premium.
- The death benefit is restricted to senior citizens who want to lessen the financial burden on their families upon death.
- Although you don’t need a medical exam, you’re paying a heavy fee for not providing personal information.
Colonial Penn markets its rider as “living insurance.” You can receive up to 50% of your whole life or term life death benefit if you are diagnosed with cancer or other chronic illnesses. You can also get an accelerated death benefit rider with whole permanent life and renewable term life policies.
- Heart attack or stroke: It provides up to 50% of the death benefit should you get a heart attack or stroke diagnosis.
- Cancer: It provides up to 25% of the death benefit upon a cancer diagnosis (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 get a diagnosis of a terminal or chronic illness (with a year or less left to live).
Farmers Life Insurance Products
Term Life Insurance
You can get two term life policies from Farmers, which you can convert to whole life insurance:
- Farmers Simple Term is a policy for 18- to 65-year-olds for 10, 20, or 30 years. You don’t need a medical exam and can get approved for coverage within 24 hours. The term life coverage starts at $75,000 and premiums will stay constant throughout the term.
- Farmers Value Term lasts up to 30 years with premiums remaining level throughout your term. This policy is available for those between 18 and 75 years of age but it requires a medical exam or lab test. The coverage starts at $150,000 without a set maximum.
Whole Life Insurance
Farmers Insurance also offers two types of whole life insurance:
- Farmers Essential Life Simple Whole Life for people aged 15 days to 80 years old starts at $15,000 and guarantees a death benefit and premiums at a constant level. You will need to take a life insurance medical exam and answer a health questionnaire to apply for this policy.
- Farmers Graded Benefit Whole Life for people from 18 to 80 covers health issues they can’t otherwise take care of without requiring a medical exam to qualify. Farmers guarantees you earn enough cash value over time with premiums that remain level. You can withdraw money or take out loans against your policy once you accumulate enough cash value. You also get a graded death benefit, meaning beneficiaries will receive a payout equal to 110% of paid premiums if the policyholder dies of natural causes within the first two years.
Universal Life Insurance
Farmers offers flexible premiums with cash value that earns interest over time. Coverage ranges from $50,000 to $20 million for people aged 15 days to 80 years old.
Indexed Universal Life Insurance
This policy is a type of permanent insurance. The cash value can be linked to multiple market indexes, like the S&P 500, so you have the potential for growth if the market does well. Even if the index falls, your account is protected against losses since the money isn’t directly invested.
Final Expense or Burial Insurance
This policy covers your final expenses, such as funeral costs, medical bills, and outstanding debts with a maximum coverage amount of $30,000.
|Guaranteed Insurability||You can purchase additional coverage without getting a medical exam. It helps you if your health changes over time and you can’t qualify for additional coverage.|
|Child Rider||This gives you the option to add temporary coverage for your children. You can convert this rider to a permanent policy when the child reaches adulthood.|
|Premium Waiver||This rider helps you get continued coverage if you become disabled or can’t work to pay your premiums. It is a valuable option if you want to protect your family financially in case of injury or illness.|
|Accidental Death Benefit||It will pay an additional death benefit if you die due to accident.|
|Terminal Illness Rider||With this rider, you can get a certain portion of your death benefit if you have a terminal illness that may result in death soon. Some policies include this rider at no cost.|
|Chronic Illness Rider||Some Farmers policies may include this rider at no cost. You can access your life insurance death benefit if you have a chronic illness or an injury that impacts your daily life.|
|Critical Illness Rider||With the critical illness rider, you can access your life insurance benefit if you’re diagnosed with cancer or a heart attack. It can help your family financially during your treatment and recovery process.|
Colonial Penn vs. Farmers: Pros
- Excellent financial ratings—with an A from A.M. Best and A+ from BBB.
- No medical exam for the term life policy.
- Offers guaranteed acceptance coverage.
- Multiple insurance options—term and whole policies.
- Online quote and application platforms
- Live chat
- One of the biggest and best insurance companies in the U.S.
- Excellent financial ratings—with an A+ from A.M. Best and an A from BBB.
- Multiple insurance options—term, whole, and universal life insurance.
- Existing customers can apply for life insurance discounts.
Colonial Penn vs. Farmers: Cons
- Do not offer universal life insurance.
- Can be expensive compared to other insurance companies.
- Term and whole life plans have a $50,000 coverage maximum limit.
- Low maximum coverage amount.
- You can only choose 10, 20, or 30 years of term insurance.
- Since they are a captive insurance company, you can only get their branded products.
- High volume of customer complaints
- You need to get a quote from a life insurance agent for permanent insurance.
- Requires medical exam and personal information to get quotes.
- Low maximum age limits on certain policies.
- You can only choose 10, 20, or 30 years for term insurance.
- Coverage maximum amounts are limited.
- Only offers Farmers life insurance products.
- No online applications.
Reviews and Complaints
The National Association of Insurance Commissioners (NAIC) tracks customer complaints and uses that data to create its Complaint Index, which compares companies of similar sizes by the volume of complaints by policyholders.
An insurance company is given a number based on how many complaints it receives each year. So, companies with an expected number of complaints receive an index of 1. A number higher than one indicates it received more complaints. For example, an index of 2 means twice the expected number.
Colonial Penn Life Insurance
For a company its size, Colonial Penn has an unusually high volume of customer complaints compared to its competitors. In 2022, Colonial Penn had an NAIC average index of 3.39, which means it had three times as many complaints for a company its size should receive. It is significantly higher compared to the national average. Customer satisfaction is also well below the industry average.
Financially, Colonial Penn has better ratings from companies like A.M. Best and BBB. Both A.M. Best and the Better Business Bureau (BBB) gave Colonial Penn an A and A+ rating respectively. However, BBB has received a few complaints against Colonial Penn over the years, mostly stemming from advertising, billing, and sales concerns.
Farmers Life Insurance
Farmers Insurance has received far fewer expected customer complaints compared to its competitors. Given its size, Farmers had an expected complaints index of 0.42. A.M. Best and BBB deem it to be financially strong with both awarding it an A rating.
Colonial Penn vs. Farmers: Which One is Best for You?
Both Colonial Penn and Farmers Insurance are large, established insurance companies in the U.S. While Farmers New World Life has a good reputation, its parent company, Farmers, is better known for home and auto insurance. But many of its customers are happy that they can combine all their insurance and have consistent customer service.
However, many individuals seek out other options because Farmers is only licensed to sell life insurance in 36 states.
Colonial Penn, on the other hand, offers three life insurance products, but if you’re healthy you can avoid it. You may consider Colonial Penn for guaranteed issue policy, but you’ll have no trouble finding other options. You’ll also find that Colonial Penn sells units of coverage. You can buy between one and eight units, each costing $9.95 with a constant premium. And it will cost you $45.12 per month for its max term life benefit.
Regardless of choice, make sure you do some homework to ensure you’re getting the right rates on your insurance.
Frequently Asked Questions
Is Colonial Penn’s life insurance good?
Colonial Penn is a viable option for seniors who want coverage for funeral expenses rather than complete coverage. It is also a good option for people having trouble getting insurance elsewhere because of advanced age or a complicated medical history.
How fast does Farmers Insurance pay claims?
Based on customer reviews, the company takes about two to six weeks to pay claims after a settlement. Please note that reaching a settlement after an accident might take longer.
What other insurance can I get from Farmers Insurance?
Farmers Insurance is widely known for its home and auto insurance. Apart from life insurance, other Farmers products include:
- Auto insurance
- Boat and watercraft insurance
- Business insurance
- Condo insurance
- Collectible auto insurance
- Earthquake insurance
- Flood insurance
- Homeowners insurance
- Landlord and rental property insurance
- Mobile home insurance
- Motorcycle insurance
- Recreational vehicle insurance
- Renters insurance
- Umbrella insurance
How much does Colonial Penn’s whole life insurance cost?
The cost of whole life insurance can vary depending on the policyholder’s age and health, required amount of coverage, and the length of the policy term. Whole life policies are generally more expensive than other types of life insurance.
- Colonial Penn Life Insurance Overview
- Farmers Life Insurance Overview
- Colonial Penn vs. Farmers Insurance Head-to-Head
- Colonial Life Insurance Products
- Pros and Cons
- Additional Riders
- Farmers Life Insurance Products
- Additional Riders
- Colonial Penn vs. Farmers: Pros
- Colonial Penn vs. Farmers: Cons
- Reviews and Complaints
- Colonial Penn vs. Farmers: Which One is Best for You?
- Frequently Asked Questions
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