Costco Life Insurance is probably not the first thing that springs to mind when you think about the wholesale club.
Provided by Protective Life Insurance since 2014, it offers term life insurance which can be extended to permanent life insurance.
Their major selling point is the price. Costco claims they can save their customers up to 20% on their life insurance premium if they have a Costco Gold Star or Business membership.
Are they as cost-effective and comprehensive as they claim?
Here’s our review of Costco Life Insurance for 2020.
Costco Life Insurance: Who's the Provider?
Costco’s main business is its wholesale club, it works in partnership with Protective Life Insurance to offer their life insurance policies.
They’re a well-established firm, founded in 1907 and headquartered in Birmingham, AL. It has grown steadily over the years, merging in 1927 with the Alabama National Insurance Company.
It gradually increased its offering to cover all 50 states and acquired West Coast Life in 1997.
Following further acquisitions of the Chase Insurance Group and MONY Life Insurance Groups (in 2006 and 2013 respectively) it has positioned itself as one of the leading providers of life insurance in the United States.
Highly rated by all the major rating agencies, it is frequently listed among the top ten best life insurance companies in the US.
Features of Protective Life Insurance Through Costco
The life insurance coverage offered through Costco and provided by Protective is called Member Advantage Life UL.
Member Advantage Life UL is a universal life insurance policy with term life insurance features.
With Member Advantage Life UL, you are given the option of either a 10-year level or 20-year level premium policy. Depending on what level contract you pick, the premiums and death benefit are guaranteed to remain the same throughout the level period.
For example, if you choose the 10 year level period, premiums will be guaranteed to remain the same for the next 10 years.
As you dig into the features of this plan, one aspect that stands out is that the premium payments are cheaper for the first 5 years for both the 10 or 20-year initial period plans.
After this, they will re-adjust and remain level for the remainder of the term period.
Once the level term period is completed, you will have the option to continue coverage at the same price, but the death benefit will be reduced every year until it reaches $10,000.
Once the policy reaches a benefit of $10,000 your premium will turn into an increasing annual rate.
As mentioned early, if you’re a Costco Gold Star or Business membership owner, you can also benefit from a 20% savings on your life insurance policy.
However, in the cited example, this only took the premium down from $9.55 to $9.10 per month and the discount is only for the first 5 years of the contract. After the 5th year, the premium will be re-adjusted to the actual cost of the life insurance and remain that price until the end of the level term period.
Available Coverage Amounts
The major benefit you are paying for is the death benefit. The level of coverage is chosen by you and will be paid out on your death, providing that you have kept up to date with payments on the policy.
Available coverage ranges from a minimum of $100,000 and can go as high as $5 million.
Costco Life Insurance also allows you to exchange your policy for another Protective Life policy at any point during the initial fixed term.
This means that you will not have to go through the underwriting process again, so medical exams will not be necessary. This applies up to the age of 70.
Additional & Optional Policy Benefits
The Costco Life Insurance Policy offers some additional benefits, which we have broken down into those that are included, and those that carry an additional fee.
Included with Coverage at No Extra Charge
- Terminal Illness Accelerated Death Benefit Endorsement
This will pay out a lump sum of up to 60% of the death benefit on diagnosis of terminal illness, to help cover immediate expenses. The balance of this will be deducted from the final benefits paid on death.
- Income Provider Option Endorsement
Rather than simply paying an entire lump sum to the beneficiary on death, this allows an initial smaller lump sum payment, followed by an income to be paid for up to 30 years following your death.
Optional Add-Ons at an Extra Charge
- Children’s Term Life Insurance Rider
This allows you to add natural and adopted children to your policy, up to the age of 18 years. This covers them up to $20,000 of coverage until they are 25, at which point they can convert this coverage to their own policy.
- Disability Benefit Rider
This rider helps you to maintain your premium payments in the event of becoming disabled and not being able to work. After six months of total disability, monthly payments will be credited to the life insurance policy to keep it active while disabled.
- Accidental Death Benefit Rider
Should your death result from an accident, this additional level of cover will provide a higher level of payout for your beneficiaries.
Drawbacks to Buying a Costco Life Insurance Policy
Even though Costco life insurance is being offered through a top life insurance company, there are several drawbacks to consider.
- Costco only offers one life insurance company making it impossible to know you’re getting the best price when there are several competing companies out there to choose from.
- Being limited to only one company makes it very difficult to know if your applying with the best company should you have any health issues that may have an effect on the overall underwriting process.
- Costco life insurance is only available in term lengths of 10 or 20 years while other companies can offer the options of 15, 25 and even 30 years.
- Costco life insurance is limited to only term insurance with the option to convert to universal insurance. This means no return of premium life insurance, indexed universal life insurance or whole life insurance options.
- Costco’s life insurance coverage does not offer new exciting policy features such as life insurance with living benefits.
- They are not an independent life insurance agency nor are they life insurance agents.
It’s also important to mention that you will need to be a Costco member to apply, meaning if you aren’t already, you need to factor the cost of membership into any premium calculations.
As Costco has only been offering life insurance through Protective since 2014 there is limited customer feedback available, as most policies will have not as yet paid out.
Looking at customer feedback across the board for Protective Life Insurance though shows strong levels of customer satisfaction.
While Protective Life Insurance is not accredited by the Better Business Bureau (this accreditation is voluntary) they still gave it an A+ rating.
They currently list just 39 closed complaints in total, to which the firm has responded. For a company of this size, this is a modest number.
Whether Costco Life Insurance proves to be the right product for you or not, the reviews for Protective Life Insurance mean it may be worth investigating.
Other Products from Protective Life Insurance
In addition to Costco Life Insurance, Protective Life Insurance offer a range of both term and permanent life insurance options.
They have two types of permanent life insurance options:
These permanent options have a cash value that can increase and be drawn on during the term of the policy.
This wider range of premiums may offer greater choice than the Costco product offering, which is just limited to an extendable fixed-term policy
Costco Life Insurance: Should You Buy?
Costco may be a no-brainer for groceries, electronics, and other household products, but are they a company you want to purchase your life insurance coverage from?
Although Costco offers a very good life insurance product from a highly reputable company, we feel that there may be better options available to you.
The life insurance offered through Costco is offered by many other independent life insurance agencies.
Working with an independent life insurance agency, such as Top Quote Life Insurance, to search the marketplace can make sure you are getting the best price for your life insurance coverage.
In addition to getting the best price, an independent agency will be able to fit you with coverage that makes the most sense based on your financial needs and lifestyle. This takes the guesswork off of you.
At Top Quote Life Insurance, we review all the major players in the life insurance industry to help you make the best choice. We also know which life insurance companies are favorable to certain health and medical conditions.
Even if you like what Costco has to offer we also provide quotes from Costco’s life insurance provider Protective Life Insurance, along with a panel of other great insurers, to ensure you get the best deal.
Click here to start comparing quotes tailored to your needs.
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