What Is a Unit for Colonial Penn Life Insurance?

Colonial Penn Life Insurance uses a “unit” system for its coverage. This system offers a unique method for policyholders to acquire coverage, differing from the traditional model where a specific death benefit amount is chosen directly.

Understanding the Unit System

A “unit” signifies a fixed premium amount an individual pays, rather than a predetermined amount of coverage. For instance, a common advertised unit premium is $9.95 per month. This fixed premium remains constant for the life of the policy, providing predictability in monthly payments. This structure contrasts with many other life insurance products where the premium often varies based on the desired death benefit.

While the premium for each unit is consistent, the actual death benefit provided by that unit adjusts based on specific factors. This adjustment is primarily influenced by the policyholder’s age and gender at the time of policy issuance. Therefore, a single unit does not guarantee a uniform coverage amount across all policyholders.

How Units Translate to Coverage and Cost

The unit system involves an inverse relationship between the policyholder’s age and the death benefit amount provided by each unit. For a fixed monthly premium per unit, the death benefit coverage decreases as the insured individual’s age increases. This means a younger applicant receives a higher death benefit for the same unit premium compared to an older applicant.

To illustrate, one unit purchased by a 50-year-old male might provide approximately $1,669 in coverage, while the same unit purchased by an 85-year-old male might only yield around $418 in death benefits. Similarly, a 57-year-old male might receive about $1,313 in coverage per unit, whereas a 77-year-old male would get approximately $493 for the identical premium.

Policyholders can increase their total coverage by purchasing multiple units. The total premium is a multiple of the per-unit cost, and the total death benefit is the sum of the coverage from each unit, adjusted for age and gender. For example, purchasing eight units means paying eight times the fixed monthly premium, and the total death benefit is eight times the age-adjusted coverage of a single unit.

Policy Types Offered with Units

Colonial Penn primarily utilizes its unit-based structure for specific types of life insurance policies. The most recognized is their Guaranteed Acceptance Whole Life Insurance. This policy is designed for individuals generally between the ages of 50 and 85. It does not require medical exams or health questions for approval, and acceptance is guaranteed regardless of an applicant’s health status, making it an accessible option for many seniors.

Colonial Penn also offers other whole life insurance products. These policies are structured around the unit system and offer permanent coverage, building cash value over time. Their specific features and availability may vary.