Colonial Penn $9.95 Plan: 2026 Rate Chart & The Unit Catch Revealed

The 2-Year Waiting Period Explained

Perhaps the most important detail about the Colonial Penn $9.95 plan is one that’s easy to miss in the TV commercials: the 2-year graded benefit period.

If the insured person dies from natural causes within the first two years of the policy, Colonial Penn does NOT pay the full death benefit. Instead, beneficiaries receive a refund of all premiums paid, plus 7% annual interest.

What Does Graded Benefit Mean in Practice?

Suppose a 70-year-old man buys 10 units ($99.50/month) in January 2025. In October 2026, just 21 months later, he passed away from a heart attack. His family will not receive the $7,000 death benefit he purchased.

Instead, they receive: 21 months × $99.50 = $2,089.50, plus 7% interest = approximately $2,235.

This is the cost of guaranteed acceptance: because no medical questions are asked, the insurer limits its risk for the first two years. It’s a standard feature of guaranteed-issue life insurance, but Colonial Penn’s version is less generous than many competitors, which typically pay back premiums plus 10% interest during the waiting period.

Important Exception

Accidental death is generally covered from day one, even during the waiting period. If death results from a qualifying accident, the full benefit is typically payable immediately. Check your specific policy for state-specific terms.

Pro Tip: If you’re in reasonably good health, you may qualify for a Level Benefit simplified issue policy from another carrier—with no waiting period and often lower costs. Always shop before defaulting to a guaranteed acceptance plan.

Colonial Penn vs. Mutual of Omaha 2026 Rate Comparison

To understand the true cost of Colonial Penn’s $9.95 plan, it helps to compare it directly to a leading competitor. Mutual of Omaha’s Living Promise is one of the most popular final expense policies on the market—and it works very differently.

Guaranteed Issue vs. Simplified Issue: The Key Difference

Colonial Penn’s $9.95 plan is a guaranteed-issue policy: no health questions, no medical exam, universal approval for ages 50–85. The trade-off is a 2-year waiting period and a high cost per dollar of coverage.

Mutual of Omaha’s Living Promise is a simplified-issue policy: you answer a short set of health questions, but no medical exam is required. Most seniors in average health qualify—and they get day-one coverage at a significantly lower cost.

Side-by-Side: $10,000 Coverage for a 65-Year-Old (2026)

Feature	Colonial Penn $9.95 Plan	Mutual of Omaha Living Promise	Advantage
Coverage	$10,000	$10,000	—
Monthly cost (F, 65)	~$90–$120 (10–12 units)	~$38–$50	Mutual of Omaha
Monthly cost (M, 65)	~$110–$130	~$50–$65	Mutual of Omaha
Waiting period	2 years (natural death)	None (Level Benefit)	Mutual of Omaha
Health questions	None	Short questionnaire	Colonial Penn
Medical exam	None	None	Tie
Max coverage	$10,450 (25 units, age 65)	$25,000	Mutual of Omaha
AM Best rating	A- (Excellent)	A+ (Superior)	Mutual of Omaha
Waiting period payout	Premiums + 7% interest	Full benefit from day 1	Mutual of Omaha

For a healthy 65-year-old woman seeking $10,000 of coverage, Mutual of Omaha’s Living Promise typically costs less than half the monthly premium of Colonial Penn, with no waiting period and a stronger financial strength rating. Independent research consistently shows Colonial Penn’s rates run 40–50% higher than comparable competitors for the same coverage amount.

Pros & Cons: Is Colonial Penn Right for You?

Pros

•       Guaranteed acceptance: No medical exam, no health questions—anyone ages  50–85 is approved
•       Predictable pricing: $9.95 per unit, forever. Your premium will never increase
•       Cash value: The policy builds modest cash value over time, which you can borrow against
•       Simplicity: Easy to apply online or by phone; no paperwork or agent required
•       Reputable company: Colonial Penn has been in business since 1968 and holds an A- (Excellent) rating from AM Best

Cons

•       The unit model is confusing: Very few seniors understand how little a single unit covers until after they’ve enrolled
•       Low coverage per dollar: At older ages, the cost-per-dollar of coverage is among the highest in the industry
•       2-year waiting period: Natural-cause deaths in years 1–2 do not pay the full benefit, and the interest rate (7%) is lower than most competitors (10%)
•       Maximum coverage is limited: Even with 25 units, seniors over 75 may be unable to purchase $10,000 of coverage
•       Better options exist for most seniors: Anyone in average health can likely qualify for more coverage at a lower price with day-one benefits

Conclusion

Colonial Penn’s $9.95 plan offers real value for a narrow group of seniors: those who have been declined by other insurers, those with serious pre-existing conditions, or those who simply need the most streamlined possible application process. For that group, the guaranteed acceptance and predictable pricing can be genuinely helpful.

For everyone else—the majority of seniors ages 50 to 75 who are in average or better health, the $9.95 plan is almost certainly not the best value available. The unit pricing model creates confusion, the 2-year waiting period limits near-term protection, and the cost per dollar of coverage is significantly higher than the competition.

“Before purchasing any Colonial Penn unit plan, get at least one quote from a simplified-issue final expense carrier. A five-minute health questionnaire could save you $50 to $100 per month and provide full coverage from day one”.

Quick Decision Guide

•       If you’ve been declined by 2+ insurers → Colonial Penn may be your best option
•       If you are in average health, ages 50–74 → Compare simplified-issue policies first
•       If you need coverage over $25,000 →, Colonial Penn cannot meet this need
•       If you are over age 80 with health conditions → Compare Colonial Penn with Mutual of Omaha guaranteed issue