Written by Phillip Chin · Licensed Insurance Broker · NPN 8895251 · About Phillip
Updated July 27, 2026

Here is the part the TV ads never say plainly: Colonial Penn’s famous $9.95 plan is guaranteed issue life insurance. So when you search “Colonial Penn vs. guaranteed issue,” you are really comparing one brand-name version of a product against every other version of the same product. That is actually good news, because it turns a confusing question into a simple one: is Colonial Penn’s guaranteed issue policy a good deal next to the others, and do you even need guaranteed issue in the first place?

I am a licensed independent broker. I do not work for Colonial Penn, and nobody pays me to talk you into them or out of them. Here is the honest breakdown.

What Colonial Penn actually sells

Colonial Penn’s headline product is a guaranteed issue whole life policy. “Guaranteed issue” (also called guaranteed acceptance) means what it sounds like: no medical exam, no health questions, and you cannot be turned down for your health. Colonial Penn offers it to people ages 50 to 85 in most states. The wider guaranteed issue market runs 18 to 85, though the exact range varies by carrier.

Because the insurer accepts everyone, including people who are seriously ill, every guaranteed issue policy protects itself the same way: with a waiting period. Colonial Penn’s is the standard two years. It is also whole life, which means as long as you pay, the premium never rises and the coverage never expires. Those parts are genuinely fine. The catch is in the pricing and the wait.

How the $9.95 “unit” pricing really works

This is where people get confused, and it is by design. You are not buying a set amount of coverage for $9.95. You are buying one “unit.” Each unit costs $9.95 a month, and you can buy up to 25 units. How much death benefit each unit buys depends on your age, your gender (except in Montana, where it is based on age only), and your state.

The older you are, the less each unit buys. Using figures reported in 2026, one unit might buy roughly $1,300 in coverage for a 57-year-old man and only around $490 for a 77-year-old man (illustrative – your real number comes from a quote). So the “$9.95” you hear on TV is the price of a single unit, not the price of a funeral-sized policy.

Here is why that matters. A typical funeral runs several thousand dollars. To get, say, $10,000 in coverage, that 77-year-old man would need around 20 units, and 20 units at $9.95 is about $199 a month. The $9.95 got you in the door; the real bill is much higher. Always ask for the total monthly cost and the total death benefit in writing, not the per-unit price.

The two-year waiting period, in plain English

If you die of natural causes (illness, not an accident) during the first two years, Colonial Penn does not pay the full death benefit. Instead, your beneficiary gets back all the premiums you paid, plus 7% interest compounded annually. Accidental death is covered in full from day one. After two years, the full benefit is in force for any cause of death.

This is normal for guaranteed issue – it is how the “no health questions” promise is even possible. It is not a scam, but it is a real limitation you need to understand before you buy. I walk through exactly how it pays out in what happens if you die during the waiting period.

Colonial Penn vs. other guaranteed issue carriers

Here is the uncomfortable truth for Colonial Penn: on price, it usually loses. All that television advertising is not free, and it shows up as smaller coverage per dollar than other guaranteed issue carriers offer for the same money.

An independent comparison updated in June 2026 put it plainly. A 65-year-old man paying about $120 a month to Colonial Penn gets roughly $10,000 in coverage, with the two-year wait. The same man, same health, could get $20,000 to $25,000 for about the same monthly premium from other companies.

Illustrative figures from an independent comparison updated June 2026. Both are guaranteed issue with the same two-year wait – the difference is how much coverage your dollar buys. Your own quote will vary by age, state, and gender.

Guaranteed issue policies from carriers such as Mutual of Omaha, AAA, and Physicians Mutual are frequently cheaper than Colonial Penn for the same guaranteed acceptance coverage. Same product category. Same two-year wait. More coverage per dollar. That is why, when someone truly needs guaranteed issue, Colonial Penn is rarely the first place I look.

The bigger question: do you even need guaranteed issue?

This matters more than which guaranteed issue company you pick. Guaranteed issue is the most expensive way to buy life insurance per dollar of coverage, and it always comes with the two-year wait. It exists for people who genuinely cannot qualify for anything else – someone on dialysis, in active cancer treatment, with congestive heart failure, or with dementia.

If you are in reasonable health for your age, you very likely do not need it, and buying it anyway is a mistake that costs your family money. A simplified issue policy asks a short list of health questions, still takes people with common conditions like controlled diabetes or high blood pressure, and – this is the important part – usually covers you in full from day one, with no two-year wait, at a lower price than guaranteed issue.

So before you call the number on the Colonial Penn commercial, answer one question honestly: do you have a serious health condition that would get you declined by a normal policy? If the answer is no, price simplified issue first. You will likely pay less, get day-one coverage, and skip the waiting period entirely.

Who Colonial Penn is actually right for

Colonial Penn is a real, financially sound company, and for the right person the policy does its job. It makes sense when all of these are true: you cannot pass the health questions on a simplified issue policy; you are comfortable with a two-year wait; you want a small whole-life policy to cover burial or final expenses; and you have compared their quote against at least two other guaranteed issue carriers. If you skip that last step, you are probably leaving coverage on the table.

Where it goes wrong is when a healthy 60-year-old sees the friendly commercial, buys on the $9.95 hook, and never learns they could have had double the coverage – with no waiting period – through a simplified issue policy somewhere else.

How to decide in five minutes

Start with your health, not the brand. If you are reasonably healthy, price a simplified issue policy first for day-one coverage at a lower cost. If you truly need guaranteed issue, get quotes from three carriers, not one, and compare the actual death benefit each one gives you for the same monthly premium. Colonial Penn can be one of the three – it just should not be the only one.

If you want a straight answer without a sales pitch, request a quote and I will compare guaranteed issue and simplified issue options side by side, and tell you honestly if you are better off skipping guaranteed issue altogether.

Reviewed by Phillip Chin

Licensed insurance broker since 2008 · NPN #8895251 · Verify at nipr.com