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Suppose you’re one of the over 98 million people with a Costco membership. In that case, you’re probably used to stopping in for wholesale prices on frozen food, bottled beverages, books, electronics, and even an eye exam.
Other than the cost of your membership and the deal you got on a 48 pack of water, you’ve probably never thought about Costco for your financial needs. So you might be surprised to know that Costco offers life insurance.
Yes, life insurance. Costco, the second-largest retailer globally, has offered life insurance to its members since 2014 under Costco Insurance Agency Inc. In fact, life insurance is just one of many insurance options available to you as a Costco member.
Insurance options available from Costco includes:
- Life
- Health
- Dental
- Vision
- Home
- Auto
We’ll be focusing on life insurance in this article, but it’s good to know that other insurance types are available, especially if you already have a Costco membership.
The idea behind Costco is that your membership allows you to get discounts on the everyday items you’d need anyway. The discounts should add up to more than your membership cost saving you money in the long run.
The same principle applies to Costco’s insurance offerings. Costco claims that members can save an average of 15 percent on their premiums for the first five years of the policy.
Plus, Costco’s life insurance policies are backed by Protective Life, a trusted name in the life insurance industry.
So, if you’re a Costco member, should you look into Costo life insurance? Is it really a good deal? As is the case with many things in financial planning, there’s no one size fits all answer. It comes down to your needs and personal circumstances.
Read on to see if Costco insurance makes sense for your situation.
Costco Term Life Insurance
The first thing you need to know is that currently, Costco only offers term life insurance. So if you’re looking for permanent life insurance plans such as universal life or whole life insurance, Costco will not be an option for your life insurance needs.
Term insurance is a temporary life insurance policy covering you for a set period of time, also referred to as contract length. At the end of your term contract, your policy will expire. Term life policies have no cash value. You won’t get any money back from a standard term life policy if you outlive the coverage.
However, term life policies are the most affordable type of life insurance, making it a popular choice for most people, including young families.
You can often get a large death benefit amount that will be paid to your beneficiary if you die during the contract length. Term policies are generally much cheaper than universal or whole life policies because they have an end date and don’t require a higher premium that is typically needed to help grow cash value.
Costco’s term policy is called Member Advantage Life Term, and it is exclusive to Costco members only.
You can choose between either a 10 or 20-year term duration. Death benefits between $100,000 and $5 million are available. According to Costco, you can make changes to your policy over the years, including your death benefit amount, by reaching out to Protective.
Member Advantage Life Term
by Protective Life
Costco/Protective Member Advantage Term Life provides the following benefits:
- Term life insurance made exclusively for Costco members
- Streamlined application process completed entirely online
- Up to 15% discount on premiums for first 5-years
- Easy to understand term life insurance coverage
- Convertible to permanent life insurance
- Competitive rates
Company: Protective Life
AM Best Rating: A+ (Superior)
Policy Name: Member Advantage Life Term
Issue Ages: 18-75
- 10-Year Term Period: 18-75
- 20-Year Term Period: 18-65 (18-62 Tobacco)
Minimum Amount: $100,000
Maximum Amount: $5,000,000
Approval Classifications: Select Preferred, Preferred, Non-Tobacco and Tobacco
Conversion Option: Yes. The term insurance is convertible to a Protective permanent life insurance plan. If you have a 10-year term length, you have up until policy year 8 switch to permanent coverage and policy year 18 if you have a 20-year term plan.
Medical Exam Requirements: A medical exam will be required for most applications for coverage.
Available Policy Riders:
- Accidental Death Benefit Rider provides an additional death benefit in addition to your base death benefit if death was caused by a qualifying accident. The rider is available to applicants ages 18-60 and expires at age 65.
This rider is available at an additional cost.
- Children’s Term Life Insurance Rider provides all eligible children of the insured with life insurance protection up to age 25. Coverage options include your choice of $1,000 up to a maximum of $25,000 in death benefit protection. When the child reaches 25, the term rider can be convertible to permanent life insurance for up to five times the amount of the original term rider protection.
This rider is available at an extra cost.
- Income Provider Option Endorsement is an option that allows the policyholder to determine how the death benefit would be paid if the insured passes away. Rather than a lump-sum payment, the death benefit can be paid out in installments providing a guaranteed income stream for up to 30 years after the insured has passed.
This rider is available at no additional cost.
- Terminal Illness Accelerated Death Benefit Endorsement provides an early payout of the death benefit if the insured is diagnosed with a terminal illness. The maximum amount that can be accelerated is up to 60% of the full death benefit, not to exceed $1 million dollars. Any remaining death benefit would be paid out after the insured has passed.
This rider is available at no additional cost.
- Waiver of Premium waives all premium payments after six months of being medically diagnosed as being total disability. Premiums can continue to be waived until age 65.
This rider is available at an extra cost.
State Availability: All states except NY
Costco Life Insurance Rates
Protective Life and Costco’s term life insurance plans offer some of the most competitive term life insurance rates in today’s market. Add the 5-year discount, and in many cases, Costco could very well be the lowest price among their competitors.
The below table provides you with a quick sample of how affordable Costco’s Member Advantage Life can be. These are actual rates taken from Costco’s life insurance calculator representing the monthly cost for a 10-year, $500,000 for both a male and female considered to be in excellent health.
The monthly rates show both the 5-year discounted price with an Executive membership and the coverage cost after policy year five.
$500,000 Costco Term Life Insurance Sample Rates
| Male | 10-Year (Years 1-5) | 10-Year (Years 6-10) |
|---|---|---|
| Age 30 | $12.09 | $13.60 |
| Age 35 | $12.36 | $14.03 |
| Age 40 | $15.97 | $18.28 |
| Age 45 | $24.45 | $27.63 |
| Age 50 | $36.21 | $41.23 |
| Age 55 | $59.86 | $68.43 |
| Age 60 | $95.92 | $109.65 |
| Age 65 | $169.46 | $193.80 |
| Age 70 | $285.20 | $325.98 |
| Age 75 | $555.32 | $634.95 |
| Female | 10-Year (Years 1-5) | 10-Year (Years 6-10) |
| Age 30 | $10.39 | $11.90 |
| Age 35 | $11.28 | $12.75 |
| Age 40 | $14.48 | $16.58 |
| Age 45 | $21.33 | $24.23 |
| Age 50 | $30.07 | $34.00 |
| Age 55 | $44.71 | $51.00 |
| Age 60 | $65.19 | $74.38 |
| Age 65 | $105.80 | $120.70 |
| Age 70 | $172.95 | $197.63 |
| Age 75 | $432.25 | $494.28 |
*Rates shown in the above table are based on a male/female considered excellent health and do not use tobacco. Rates are current as of 02/10/2021, representing the cost of a $500,000 Costco Members Advantage Life 10-Year plan with an Executive membership.
Buying A Life Insurance Policy With Costco
When you buy a policy through Costco, you’re really purchasing it through Protective Life. Although the Member Advantage Life Term policy is only available exclusively to Costco members, it is a Protective Life policy.
That means Costco doesn’t decide whether your application is approved and does not assign your premiums. Their job is to provide you access to getting coverage, almost like an insurance broker. The actual underwriting and issuing of your policy are done entirely by Protective Life.
How does applying for a policy work?
Costco insurance options can be found on the Costco website under the “services” tab located on the homepage. From there, you will want to navigate to the life insurance tab, where you will be taken to a dedicated Members Advantage Life Term page that has all the details about the term life insurance coverage.
If you’re interested in viewing rates and applying for coverage, you can do all of it online by completing a short application. There is no paperwork required at all.
To begin the online application, you will need to have either your Costco Gold Star or Executive membership number before you can proceed with the application.
After you complete the online portion of the application, a few things will happen:
Telephone call – Followed by the online application, you will need to complete a telephone interview with a Protective Life representative. The interview takes about 20 minutes, and the questions will be based on your medical history.
You’ll undergo a medical exam – You will need to take a medical exam to get covered. Protective will arrange for a medical professional to your home or office to complete the exam at a time that’s convenient for you. There is no added cost for the medical exam, and you will have access to the results.
Protective will make a decision – Protective will look over your application, exam results, and other details to decide if they’re able to approve you for a policy and what premium rate you qualify for.
Protective will notify you of their decision – Once you have completed the online application, telephone interview, and medical exam, your application will be underwritten. You’ll be notified of Protective’s decision as soon as they’re ready. If you’ve been approved, you can choose to accept your policy and rate or decline coverage.
Your Costco discount will apply to your policy – Your Costco discount will be applied to your policy once you accept it. The discount will continue for the first five years of your policy. After the fifth policy year premium will automatically change to the regular cost of the life insurance coverage and remain that price through the remainder of the term duration.
Pros & Cons of Costco Life Insurance
With Protective Life’s help, Costco can offer its members an excellent term life insurance plan with many pros. However, with all good things, there can often be negatives to be aware of.
To provide you with an honest review, the next section will lay out all the pros and cons of Costco Life Insurance.
| Pros of a Costco Life Insurance Policy: | Cons of a Costco Life Insurance Policy: |
|---|---|
| A premium discount of 15 percent on average | Approval is not guaranteed for all Costco members |
| Policies are offered by trusted insurance company Protective | Your 15 percent discount only lasts five year |
| You can change your death benefit amount as needed | The cost of a Costco membership might be more than the discount you receive on life insurance |
| You can purchase up to 5 million dollars in coverage | You could find cheaper life insurance options from other companies |
| The ability for your premiums to be reconsidered if your health improves | Only term policies are offered |
| Multiple riders are available | Only 10 or 20-year term lengths are available |
| Convertible to permanent life insurance | Polices aren’t offered in New York State |
| An insurance broker might be able to offer a better Protective Life policy |
Benefits of a Costco Insurance Policy
There are more than a few reasons to consider getting a life insurance policy from Costco. Some top benefits are discussed below.
An Average Discount of 15 Percent
Life insurance premiums are rarely ever discounted. It’s almost unheard of. However, because Protective has designed an exclusive life insurance plan that is only available to Costco members, they are actually able to offer a 5-year discount of up to 15% on their term life insurance premiums.
It requires a Costco membership of either Executive or Gold Star, and the discount will be applied to the life insurance premiums upon approval for coverage.
According to Costco, the average member saves 15 percent. So, let’s say you were quoted a monthly premium of $35.00. If you got the 15 percent discount with Costco, you’d only be paying $29.75 a month. That means you’d save $63 in the first year of your policy and $315 over the first five years.
After the fifth policy year, your premium would automatically change back to the pre-discounted rate and will remain that price until the end of the level premium term length.
Policies from Protective Life Insurance
Life insurance is an important purchase and choosing a strong company is just as important as the actual insurance policy itself.
Protective Life is a trusted life insurance company that has been in business since 1907. The insurance company is well-rated, reviewed, and has a strong reputation for having good customer service.
One way of the best ways to verify the financial strength of an insurance company is to look at their look at professional ratings. Specifically when dealing with life insurance look for the company’s AM Best Rating.
Protective Life has an A+ rating from AM Best making it the 2nd highest rating out of 15 possible ratings. What does this mean to you?
A company with a strong rating should provide peace of mind knowing that the insurance company has a strong financial outlook in being able to meet their obligations to their customers.
The Ability to Adjust Your Death Benefit
When you have a Member Advantage Life Term policy, you can adjust your death benefit as your needs change. So, if you have another child or mortgage a more expensive home, you can increase your death benefit amount. You can also decrease your death benefit amount if you no longer need as much.
This allows you flexibility and can take the stress out of picking the perfect policy amount when you first apply. You don’t need to worry about guessing the exact amount you’ll need 10 years down the road when you have the option to change it at any time.
However, you’ll need to keep your policy within the benefit limits. You can’t go below $100,000 or above $5 million. There are a couple of other rules, too. You can only drop your death benefit amount after you’ve had your policy for 3 years or more.
When it comes to upping your death benefit amount, you will need to show proof of insurability and will be required to take a new medical exam.
High Coverage Amounts Are Available
The Costco Member Advantage Life Term policy offers you the ability to get as much as five million dollars in coverage.
Just like with any high-coverage policy, you’ll need to prove that your finances can support five million dollars if you apply for this much through Costco.
After all, all life insurance is designed to replace your income if you die. So you’ll need to show a high income or another source of wealth to be approved for a five-million-dollar policy.
Possible Premium Renegotiation
You’ll have the ability to have your premium reconsidered when you have the Costco Member Advantage Life Term policy. This can be useful if you’ve had a serious improvement to your health.
For example, if you’ve quit smoking, lost weight, or are better controlling a chronic condition, you might qualify for a different rate classification.
If you think your health warrants a second look, you can ask Protective to reconsider your premium. This could result in your premium going down and you saving money.
Multiple Riders Available
Not all insurance companies offer the same riders. Some term life insurance companies might only offer a limited number of riders.
There are multiple riders available with the Costco Member Advantage Life Term policy. Riders can help you customize your policy and prepare for the unexpected.
For many people, this means that riders add serious value to the policy. Plus, since the accelerated death and income provider riders are free, you can extra value without spending extra money.
Drawbacks to a Costco Life Insurance Policy
A Costco life insurance policy isn’t the right fit for everyone. Some of the major drawbacks are discussed below.
A Costco Membership Doesn’t Guarantee Approval
Your policy will be underwritten by Protective and not by Costco. Your Costco membership makes you eligible for a discount, but it doesn’t mean you’ll be approved for a policy.
If you have serious health concerns, dangerous hobbies, or other factors that make you a high-risk applicant, you might be turned down for a policy.
The Discount Only Lasts The First Five Years
Your 15 percent discount only lasts the first five years. Starting on year six, you’ll pay the full rate for your policy. That’s still five years of discount, which might be a good deal. However, it’s not always the best plan.
Let’s again look at a policy quoted at $35 a month. We already know that you would pay $29.75 in the first five years for a total savings of $315. However, let’s say that with your health, age, and other factors you could have gotten a 20-year term policy with the same death benefit from a different company for $31 a month.
That’s more than your discounted rated Costco, but it’s actually less overall. Over the course of that policy, you’d pay $7,440. With the Costco policy, you’d pay $8,085 over those same 20 years. That means that even with your initial 15 percent discount, you’d still have paid $645 more for the Costco policy.
The Cost Of A Costco Membership
This one might sound obvious, but it’s worth mentioning that Costco memberships aren’t free. Currently, a Costco membership costs between $60 and $120 depending on your membership level.
Of course, if you’re using your Costco membership to buy groceries and household goods, this probably doesn’t matter. If your Costco insurance discount is one of many discounts, you’re getting through Costco, that $60 probably works out to a terrific deal.
On the other hand, you wouldn’t want to spend $60 just to get a 15 percent discount. So, if you’re already getting use out of your Costco membership, it might be a good idea to look into insurance, but it’s definitely not worth it to join Costco just for the insurance plan.
Only One Life Insurance Product Is Offered
Costco only offers term life insurance. While term policies are the most popular type of life insurance and a great fit for most families, they’re not right for everyone. In some cases, a permanent policy, like a whole life insurance or universal life policy, might fit your needs a lot better.
It’s always a good idea to look at all your options, and unfortunately, with Costco, your options are limited.
Limited to One Company’s Rates & Policy Features
One of the best ways to get a good deal on life insurance is to shop around and get quotes from multiple companies. When you buy a life insurance policy with Costco, you’re only seeing rates from Protective.
While Protective is known for having very competitive rates, that doesn’t’ always mean they’ll be the lowest. By not shopping around, you could be losing on getting a much better rate with another company.
Rates are not the only thing you could be missing out on.
Insurance companies are always looking for ways to offer competitive products. In doing so, you can find many life insurance products that offer unique features such as living benefit riders that can pay a steady stream of income if you become ill with a critical or chronic illness.
Limited-Term Options
Costco only offers 10 and 20 term options. These are very common term options, but they’re not ideal for every family. Sometimes a 15-year policy might be your best bet. In other situations, you might need a 30-year-policy to completely cover your mortgage or other financial obligations.
Coverage Isn’t offered In New York State
There are no Protective policies offered in New York State, including the Costco Member Advantage Life Term policy. So, if you live in New York, you’ll need to find other term life insurance options.
Independent Brokers also offer Protective Life and it may be a better option
Although Costco life insurance is an exclusive term life insurance option made available only to Costco members, Protective Life is widely offered by thousands of independent brokers.
Protective’s term insurance called Classic Choice Term is made exclusively available to brokers as a competitive option to Costco’s Protective term life insurance. In our opinion, the term insurance plan may just be a slightly better option than the term insurance plan offered by Costco.
For starters, Classic Choice is available in many more contract lengths, including the newest 35 and 40-year term length, which are only offered with two major life insurance companies at the moment.
Issue ages with Classic Choice are higher than the 10 and 20-year options offered with Costco.
The most significant difference outside of term lengths would be the accelerated non-medical underwriting option available with Classic Choice. If you are between the ages of 18-45, you can apply for up to $1,000,000 with the possibility of no medical exam being required. The same applies if you are between 46 and 60 and are applying for $500,000 or less.
Both term insurance options share the same conversion option and the same policy riders when it comes to similarities.
When it comes to overall rates, Costco has the edge in cost during the first five policy years but tends to be higher than Classic Choice as a whole throughout the remainder of the term length.
| Features | Protective/Costco | Protective/Brokers |
|---|---|---|
| Plan Name: | Member Advantage Life Term | Classic Choice Term |
| Issue Ages: | 10-Year: 18-75 20-Year: 18-65 (18-62 Tobacco) |
10-Year: 18-80 (18-75 Tobacco) 15-Year: 18-75 (18-68 Tobacco) 20-Year: 18-70 (18-62 Tobacco) 25-Year: 18-60 (18-52 Tobacco) 30-Year: 18-58 (18-40 Tobacco) 35-Year: 18-50 (18-40 Tobacco) 40-Year: 18-45 (18-45 Tobacco) |
| Minimum Amount: | $100,000 | $100,000 |
| Maximum Amount: | $5,000,000 | $10,000,000 |
| Medical Exam: | Required | Non-medical options available |
| Conversion Option: | Yes | Yes |
| Policy Riders: | Accidental Death Benefit Rider Children’s Term Life Insurance Rider Income Provider Option Endorsement Terminal Illness Death Benefit Waiver of Premium |
Accidental Death Benefit Rider Children’s Term Life Insurance Rider Income Provider Option Endorsement Terminal Illness Death Benefit Waiver of Premium |
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Frequently Asked Questions About Costco Life Insurance
It’s understandable if you still have questions about life insurance from Costco. Check out answers to some common ones below.
Is the Costco Member Advantage Life Term policy a good deal?
For many people, it definitely can be a great option. The Costco Member Advantage Life Term policy is a term policy. That means it will be more affordable for most people than a whole or universal life policy.
Add in the 15 percent discount, and you could get a large death benefit amount for a very small premium. If you’re young, healthy, and already a Costco member, the policy might be a great deal.
That said, you should shop around first. You don’t want to miss out on an amazing rate from another company. It’s a smart idea to get quotes from other term life insurance companies and a quote from Costco before you apply anywhere.
Do I need to take a medical exam to get a Costco policy?
A medical exam will be required if you choose to apply for Costco life insurance. If you’re looking for a no medical exam alternative, there are plenty of excellent options to choose from, and we can help.
Use the quick quote form here at No Medical Exam Quotes to get quotes from top no exam term insurance companies today.
Is there an age limit on Costco Life Insurance Policies?
Yes. You’ll need to be 65 or younger for a 20-year policy. You’ll need to be 75 or younger if you’re interested in a 10-year policy.
What type of questions are asked during the telephone interview?
The questions on the telephone interview will be similar to completing an actual paper life insurance application. The interviewer will ask a few routine questions such as name, address, employer, income, etc.
Once the basic information has been complete, you will need to answer questions about your medical history. You will need to provide contact information to any doctors treating you for any medical issues.
After completing the telephone application, you will have the opportunity to schedule your medical exam. The medical exam will consist of a blood and urine collection, height and weight measurement, and blood pressure readings.
At the end of your exam, you will sign your telephone application, and the examiner will submit the entire packer to Protective to be underwritten for possible approval of coverage.
If you have been approved for the coverage, you will be notified, and your policy will electronically be sent to you via email.
How long will it take to get a Life Insurance Policy from Costco?
It depends on your application, medical history, and other factors. Most applicants can expect to see results in a few weeks.
Final Word
Costco’s life insurance might work for you if you’re already a Costco member. The 15 percent discount and large coverage amounts make it a great fit for some people.
However, even if the coverage is exactly what you’re looking for, we’d still advise that you shop around a little before committing. Get quotes from other term policies or work with an agent to see what’s available.
It’s rarely a good idea to only look at one company when you’re shopping for life insurance. After you’re done comparison shopping, a Costco policy might end up being the best option for you, but since you’ll have seen other options, you can buy your plan with a lot more confidence.
If you’re considering the convenience of a no exam policy, you’re already in the right place. At No Medical Exam Quotes, we can show you quotes from the very best no exam companies. Use our easy form to get quotes and get started on your life insurance shopping today.