Colonial Life and Accident Insurance: An Overview for Businesses

Shopping for employee benefit plans is an important task for any good business owner, but it can be overwhelming. A solid benefits package is key to attracting and retaining good workers, but the sense of security is equally important, too. Recent research shows that when employees are stressed out about their personal finances, they don't perform well on the job and that stress can result in more lost productivity than actual sick days.

Not to be confused with Colonial Penn Life Insurance Company, Colonial Life and Accident Insurance was founded in 1937 by Edwin Averyt, after he earned a $2,000 commission check. He then raised $3,000 from investors and formed the Mutual Accident Company. In 1939, the company converted to stock ownership and renamed itself Colonial Life and Accident Insurance Company. Purportedly, Colonial Life's first sales team was all women.

Unum, a Fortune 500 insurance company, acquired Colonial Life for $571 million in 1993. Colonial operates as an independent subsidiary and contributed about 17% to Unum's premium income in 2016. Timothy G. Arnold is currently the president and CEO of Colonial Life and Accident.

Today, Colonial Life and Accident markets and sells its policies through a network of more than 10,000 independent agencies and brokerages and over 1,000 home office professionals. Colonial Life boasts about 3 million clients across 80,000 companies.

What Colonial offers – and doesn't offer

Colonial Life and Accident Insurance offers a full suite of life insurance products to small, mid-sized and large companies. It was one of the first insurance companies to take advantage of a change to the tax code allowing individuals to deduct benefits from their income pre-tax. Colonial Life Insurance was also one of the first insurance companies to offer accident and cancer insurance, and many of its policies are designed to supplement an employee's primary medical insurance policy.

However, Colonial doesn't offer its rates or premiums on its website, and it has no online quoting tool, which could make comparison-shopping tough.

Life Insurance

Colonial offers several options, including term, universal and whole life insurance, as well as dependent coverage.

Dental Insurance

Colonial offers four plan levels of dental insurance and both individual and family plans. Their dental insurance offers immediate benefits for dental wellness visits and x-rays, no deductibles, co-insurance or coordinated coverage, and discounted services using in-network dentists. Colonial's dental also offers an optional rider for orthodontic and vision care, for an additional cost.

Accident Insurance

This policy is intended to help offset unexpected expenses after a fracture, dislocation or another covered accidental injury. Accident insurance can be used for initial care or surgery, transportation, lodging, and follow-up care. Colonial says this policy is available for several levels of coverage, can be employee-paid with no direct cost to the employer, and can be purchased as a stand-alone policy or a family policy. This is not, however, a worker compensation program.

Cancer Insurance

This policy is offered as a complement to medical insurance and is intended to offset other unexpected expenses, like child care, loss of income, deductibles, co-pays, and lodging. Colonial's cancer insurance can also cover certain cancer screening tests.

Disability Insurance

This policy replaces a portion of an employee's income if they become disabled from a covered accident or sickness. Colonial Life and Accident Insurance lets the employer select a benefits period and offers an on/off-job plan, as well as an off-job only plan.

Critical Illness Insurance

This product is also offered as a complement to traditional medical insurance and is paid as a lump sum to affected employees to cover direct and indirect expenses associated with critical illnesses like stroke, coronary, heart attack, end stage renal failure or major organ failure.

Hospital Confinement Indemnity Insurance

This coverage also complements traditional medical coverage and provides a lump sum for covered hospital confinements or outpatient surgery. Hospital indemnity insurance can cover emergency room tests, diagnostic tests, doctors' appointments and other hospital expenses.

Unfortunately, Colonial Life & Accident provides scant details on its website about rates or pricing. Interested parties have to call a representative to find out about pricing. Additionally, because Colonial Life & Accident works through employers, the company does not deal directly with individual consumers. Colonial instead urges individuals to talk to their employers about offering Colonial's products if they are interested in setting up an account.

Strengths and Weaknesses

Colonial Life and Accident Insurance has been in the insurance business for over 75 years, and it enjoys a strong reputation. Colonial is also financially sound, with an A rating from both the rating agencies Fitch and S&P and an A-minus rating by AM Best. Colonial also offers pre-tax payroll deduction of benefits, as well as electronic enrollment, both pluses.

Colonial Life & Accident is not rated with the Better Business Bureau, although its parent company Unum has an A-minus rating. Unum also had 79 customer complaints with the Better Business Bureau, most of which relate to problems with a product or service.

Colonial Life & Accident had 75 customer reviews on ConsumerAffairs.com, the majority of which were negative. Most frequently, customers complained of poor customer service and said the company would exploit any loophole it could to avoid paying for services.

Customers can file claims, make payments, and view claims status, policy status or a copy of their policy on Colonial's website. Colonial offers a number of claims and service forms on its site. If you want to cancel your policy with Colonial, you would fill out a request for service form and fax or mail it to the address on the form. Colonial apparently doesn't offer the ability to cancel a policy online.

Frequently Asked Questions

• How can I claim funeral services if I am the beneficiary?
  You can fill out a loss of life notification form on Colonial's website and mail it in along with a certified death certificate to Colonial. You can also file by telephone, by calling the policyholder service center at 1-800-325-4368.
• Can I switch from one policy to another?
  You would need to talk to your plan's administrator about this.
• Does Colonial Life Insurance use credit scores?
  Colonial Life Insurance does not say it uses credit scores. However, federal law does allow insurance companies to use credit information when underwriting policies and most states allow this. (California, Hawaii and Massachusetts do not.)
• What are Colonial Life Insurance's financial strengths?
  Both Colonial Life Insurance and its parent company Unum are rated favorably by several major rating agencies, including Moody's, Fitch, and Standard & Poor's. The agencies rate insurance companies on their financial strengths and ability to pay their policyholders in a timely fashion.
• How many days will it take my request to get approved?
  When the time comes to claim your annuity, you'll need to begin by finding the appropriate service forms for your insurance company. It may be worth enlisting the help of a professional accountant to work out the precise details, as some parts of your annuity may be subject to tax. Processing times will vary, but many insurance companies say that about 30 days is typical.
• Can I withdraw cash amounts on my policy?
  Yes, you can withdraw cash amounts on your policy by filling out a request for service form. The maximum withdrawal amount will depend on your policy.
• What is Colonial Life BBB accreditation?
  Colonial Life is not accredited with the Better Business Bureau. Its parent company Unum is rated an A- with the BBB, but also is not accredited by the agency.
• What is the maximum loan amount that I can take out on my policy?
  This depends upon your policy. However, if you do not specify an amount when filling out an application to borrow against your policy, Colonial will issue you a loan for the maximum amount.
• Where can I edit the beneficiaries to my policy?
  You can edit the beneficiaries to your policy by finding the appropriate change in beneficiary form here, signing and dating it with a witness, and mailing it into the address on the form.
• How to change beneficiary on my life insurance policy?
  You can change the beneficiaries to your policy by finding the appropriate change in beneficiary form here, signing and dating it with a witness, and mailing it to the address on the form.
• Is there a service fee on monthly auto-payments?
  Colonial does not indicate anywhere on its website that it does charge a fee.
• Can I cash in my life insurance policy?
  You can borrow or withdraw from the cash value of your life insurance policy, and unlike a bank loan, this doesn't have to be repaid. However, your death benefit will be reduced by the amount of the loan, which will continue to accrue interest.
• How long does it take to pay out life insurance?
  There's no set time frame for an insurance company to pay out a life insurance policy, although 30 to 60 days is typical if a death certificate is submitted in a timely fashion. Many states allow insurance companies 30 days to review the claim.
• Can I borrow against my Colonial Life's life insurance policy?
  Yes, you can borrow against your Colonial life insurance policy by filling out a request for service form and mailing it to the address specified. If you don't request a specific amount, then Colonial will issue a loan for the maximum amount possible on your policy. Read the fine print if you're considering this option, however, because this could have negative consequences for your policy.
• How to surrender a Colonial Life insurance policy?
  You can surrender a policy by filling out a request for service form and following the appropriate instructions.
• What should I do if the company has lost my policy and is not willing to compensate me?
  If you have the appropriate documentation in order and believe the company might be violating the law, you should contact your state's consumer protection office.
• Why are my payments still being withdrawn when my policy has lapsed?
  If you have this problem, you should contact Colonial Life and Accident directly at (800) 325-4368.
• Can I check the progress of my claim online?
  Yes, you can check the progress of your claim by logging into your account online.
• What should I do if Colonial Life does not acknowledge the claim I make as a beneficiary?
  Get your documentation in order. If you believe the company is violating the law, you should contact your state's consumer protection office or insurance regulator.
• Can you borrow against Colonial life insurance?
  Yes, you can do so by filling out a request for service form and mail it to the address specified.
• Can you cash out a Colonial life insurance policy?
  You can withdraw from a Colonial life insurance policy by filling out a request for service form and mailing it to the address specified. You should be aware that if you don't specify an amount, Colonial will withdraw the maximum available.
• Does Colonial Life offer health insurance?
  Colonial Life does not offer health insurance.
• Can I combine different policies into one package?
  You will need to discuss this with your plan administrator.

Thinking of going with Colonial Life? – Our verdict

Colonial Life and Accident offers a number of life insurance and supplemental insurance policies that may be attractive to some consumers, plus the option to deduct those premiums from an employee's pre-tax income. Though Colonial Life has some negative reviews online, it appears to have no major red flags on its record. One major downside is the lack of online rate quotes, so we would advise consumers to do a little comparison-shopping to make sure Colonial Life truly offers the best rate.