Legally, yes – any policy you own can be sold, and Colonial Penn’s permission is not required. Practically, no: a Colonial Penn final expense policy is almost always too small for the life settlement market, and you deserve that answer straight rather than after three phone calls. Settlement buyers generally start at $100,000 of death benefit. Final expense coverage is usually a fraction of that.
Here is why. Colonial Penn Life Insurance Company, based in Philadelphia, is part of CNO Financial Group, which also owns Bankers Life and Washington National and was itself named Conseco until 2010. Colonial Penn is best known for guaranteed acceptance whole life sold in units – the familiar plan priced at a fixed dollar amount per unit per month, with the actual death benefit per unit depending on your age and gender at issue. Guaranteed acceptance plans also typically carry a graded death benefit for roughly the first two years, meaning a death from natural causes in that window returns premiums plus interest rather than the full benefit.
Small face amount, unit-based pricing, graded benefit period: those are the exact features that keep a policy out of the secondary market. The rest of this page is about what actually helps you instead. Pine Lake Life Solutions is not affiliated with Colonial Penn or CNO Financial Group.
In This Article
- Why Buyers Skip Final Expense Policies
- How Unit-Based Pricing Confuses the Face Amount
- The Graded Death Benefit Period
- What to Do Instead: Five Real Options
- When a Colonial Penn Owner Does Have a Settleable Policy
- Guarding Against Bad Deals on Small Policies
- Medicaid and Small Policies
- Frequently Asked Questions
Why Buyers Skip Final Expense Policies
Institutional buyers spend real money on every policy they evaluate: independent medical underwriting reports, legal review of the contract, escrow costs, and then years of premium payments and policy administration. Those costs are largely fixed. They are the same for a $20,000 policy as for a $2,000,000 policy.
That is why the market has settled around a $100,000 minimum death benefit, with many buyers preferring $250,000 or more. A final expense policy designed to cover a funeral – commonly in the $5,000 to $25,000 range – simply cannot support those costs. This is not about your policy being bad. It is arithmetic on the buyer’s side.
How Unit-Based Pricing Confuses the Face Amount
Colonial Penn’s guaranteed acceptance product is sold by the unit rather than by the death benefit. You choose how many units to buy at a fixed monthly cost per unit, and the amount of coverage each unit provides is set by your age and gender when you applied. Someone who bought at 55 gets more benefit per unit than someone who bought at 78.
The result is that many owners genuinely do not know their death benefit. If you are unsure, look at your policy schedule or annual statement for a stated benefit amount, or call the service number on your premium notice and ask directly: what is my current death benefit as of 2026? That single number determines whether any of the settlement conversation applies to you.
The Graded Death Benefit Period
Guaranteed acceptance policies do not ask health questions, and the way insurers manage that risk is with a graded or limited death benefit in the early years – commonly the first two policy years. If the insured dies of natural causes during that period, the policy typically returns the premiums paid plus a stated rate of interest rather than the full death benefit. Accidental death is usually covered in full from day one.
Two implications. First, if your policy is brand new, the effective benefit today is smaller than the number on the schedule. Second, once you are past the graded period, that value is earned – dropping the policy and buying another guaranteed acceptance plan would restart the clock. Check where you stand before you cancel anything.
| Option | What You Get | Coverage Afterward | Best For |
|---|---|---|---|
| Keep the policy | Nothing today | Full death benefit for the funeral | Premium is affordable and coverage is wanted |
| Surrender for cash value | Small cash amount, if any has built | None | Premium is unaffordable and cash is needed now |
| Reduced paid-up | No cash | Smaller paid-up benefit, no more premiums | Cannot pay premiums but want a benefit to remain |
| Accelerated death benefit rider | Part of the benefit during terminal illness | Reduced by the amount advanced | Insured is terminally ill and needs funds fast |
| Life settlement | Generally not available under $100,000 | N/A | Only if a larger policy also exists |
What to Do Instead: Five Real Options
One: keep it. Final expense coverage does a specific job well – it gives the family cash for a funeral without probate delays. If the premium is manageable, keeping it is often the right decision, full stop.
Two: ask about the accumulated cash value. Whole life final expense policies build modest cash value; the carrier can tell you the current surrender figure. Three: ask about reduced paid-up insurance, which converts that cash value into a smaller fully paid-up benefit with no more premiums. Four: check whether the contract includes an accelerated death benefit rider for terminal illness. Five: if there are multiple small policies across the family, add up the total – occasionally the combined picture changes the analysis on a different, larger policy.
When a Colonial Penn Owner Does Have a Settleable Policy
Sometimes the final expense policy is not the only policy in the drawer. People who bought guaranteed acceptance coverage in their seventies often still hold an older universal life or convertible term policy from their working years – the one with a $250,000 or $500,000 face amount that nobody has looked at in a decade.
That is the policy worth reviewing. If a premium notice arrives for something other than the final expense plan, pull it out. The profile buyers want is an insured 65 or older, or younger with a serious health change, a death benefit of $100,000 or more, and a policy in force past its contestability period. Offers across the market commonly run 10% to 35% of face value.
Guarding Against Bad Deals on Small Policies
Because small policies do not fit the regulated settlement market, they attract informal offers – a company proposing to buy Grandma’s $15,000 policy for a few thousand dollars, or an assignment arrangement tied to a funeral home. Be careful. Regulated life settlements involve licensed intermediaries, written disclosures, escrowed funds, and a state rescission period. Informal deals often involve none of that.
Rules to keep: never pay an upfront fee to learn what a policy is worth, never sign an assignment you have not read, insist on written disclosure of anyone’s compensation, and get a family member or attorney to read any document before an elderly owner signs it. If something feels rushed, that is the signal to stop.
Medicaid and Small Policies
This comes up constantly with final expense coverage, so it is worth stating carefully. Medicaid eligibility rules generally count the cash surrender value of life insurance as a resource, though many states exclude policies whose total face value falls under a small threshold. Some states also allow certain irrevocable funeral arrangements to be treated differently from ordinary assets.
The rules vary by state and they change, so do not act on a general article – including this one. An elder law attorney or your state’s Medicaid agency can tell you how your specific policy is treated and whether surrendering it would help or hurt an application. Get that answer before you cancel a policy that might already be exempt.
Frequently Asked Questions
Can I sell a Colonial Penn final expense policy?
In almost all cases, no. Life settlement buyers generally require a death benefit of at least $100,000, and final expense policies are typically written for $5,000 to $25,000. You are legally free to sell any policy you own, but there is rarely a buyer at that size.
How do I find out my actual death benefit?
Guaranteed acceptance plans are sold in units, so the benefit depends on your age and gender at the time you applied. Check your policy schedule or annual statement, or call the service number on your premium notice and ask for the current death benefit as of 2026.
Who owns Colonial Penn?
Colonial Penn Life Insurance Company is part of CNO Financial Group, which also owns Bankers Life and Washington National. CNO was named Conseco until it changed its name in 2010. Your policy rights are unaffected by corporate branding.
What is the two-year graded death benefit?
Guaranteed acceptance policies typically limit the benefit for death from natural causes during roughly the first two policy years, returning premiums paid plus interest instead of the full amount. Accidental death is generally covered in full immediately. Check your contract for the exact terms.
Should I cancel it to qualify for Medicaid?
Do not decide that on your own. Medicaid generally counts the cash surrender value of life insurance as a resource, but many states exclude policies under a small total face value threshold, and rules vary by state. Ask an elder law attorney or your state Medicaid agency before canceling anything.
Someone offered to buy my small policy. Should I take it?
Be cautious. Regulated life settlements involve licensed intermediaries, written disclosures, funds held in escrow, and a state rescission period. Informal offers on small policies often have none of those protections. Never pay an upfront fee, and have a family member or attorney read any document first.
What if I also have a larger old policy?
Then that policy is the one worth reviewing. A universal life or convertible term policy of $100,000 or more from your working years may well qualify for a settlement. Send that policy’s cover page for a free review; there is no cost or obligation. Call (305) 209-7183.
Find out what your policy is worth — free, confidential, no obligation.
A 15-minute educational review covers your eligibility, every alternative, and a realistic view of what each path would net you.
Related Reading
- What Policies Qualify For Life Settlement
- Cash Surrender Value Life Insurance
- Education Center
- What Is The Medicaid Look Back Period
- What Is Cash Surrender Value
- Sell My Gerber Life Whole Life Policy
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.