Colonial Penn or Farmers

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.

Let’s begin.

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 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.

Additional Riders

Living Insurance

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.

Additional Riders

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.

Read full Colonial Penn review>>

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.

Read full Farmers life insurance review>>

 

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.