Costco Life Insurance Review: Exclusive Discounts For Members
Most Americans know Costco as a one-stop-shop for groceries and household items. The paid membership warehouse store sells most of their goods at low prices, from toilet paper to TVs to their signature $5 rotisserie chicken.
But Costco doesn’t stop at the everyday essentials. The superstore also offers exclusive life insurance to Costco members, promising an average of 15% in savings – a convenient solution for people looking for a simple and affordable financial protection plan.
But is it worth it? In this Costco life insurance review, we take a deeper look at everything the retailer has to offer in terms of life insurance.
What To Look For In An Insurance Provider
Before we delve into Costco life insurance, let us talk about the five factors we always consider when reviewing life insurance companies:
Policy And Coverage
The three most common types of life insurance products are:
Term life insurance: This type of insurance policy only lasts for a set duration, or a term. As such, it's considered the simplest and most affordable type of insurance. Term durations can last anywhere between five and 40 years, depending on the life insurance company.
Whole life insurance: Unlike term life insurance, whole life provides permanent coverage and a cash value component which policyholders can usually withdraw from or borrow against. Because of this, a whole life policy will typically cost five to nine times more than a term policy.
Universal life insurance: This type of policy is similar to whole life in that it provides policyholders a death benefit, a cash value, and lifelong protection. However, a universal life policy also comes with the added bonus of flexible premium rates and death benefits. There are several kinds of universal policies, from indexed universal to variable universal life.
Each insurance company will have its own take on the aforementioned policies, with differing minimum and maximum coverage limits, issue ages, term lengths, and policy riders. It's important for you to know what you need – how much coverage, for how long, etc. – before shopping around.
Depending on the company, the life insurance application process can be tedious and lengthy. If you're not particularly keen on waiting too long, it's integral you find an insurance company that can expedite the process. Though it's common for an insurance company to take weeks or even months to process an application, some insurance providers are making changes to streamline their processes and deliver results faster.
Some companies also allow applicants to request quotes and even send in applications online. This is good for people who are busy or who don't enjoy over-the-phone or face-to-face interactions with agents.
Finally, most life insurance companies require applicants to answer health-related questions and take a medical exam before their application can be processed. Though some companies can waive this requirement, it often comes at a higher cost.
Your health, age, and lifestyle can have a significant impact on the price of your premiums. This is because insurance companies are always looking to minimize risks. The younger and healthier you are, the fewer risks you pose to a company. In fact, life insurance rates are said to go up by three to five percent for each year you age.
Life insurance is a long-term decision. Thus, it's important you buy from a company that doesn't just satisfy your insurance needs, but can also provide you with the service that you deserve.
When we review insurance companies, we don't just compare rates and policies, we look at ratings from third-party agencies such as the BBB and the National Association of Insurance Commissioners. The latter keeps a record of consumer complaints and comes up with a score based on how well the company compares to the average insurance provider. We also look at customer satisfaction ratings and reviews online.
Be sure to assess how accessible a company is when it comes to customer complaints and questions. Observe how many available channels there are for inquiries and concerns, such as hotlines, chat features, emails, and financial experts.
Financial Strength Ratings
Finally, we look at a company’s financial health by checking their ratings from third-party agencies like A.M. Best, Moody's, and Standard & Poor's. These agencies provide opinions on a company's ability to honor claims, its creditworthiness, and its predicted performance in the future.
Costco Life Insurance
Costco is an American membership-only warehouse club that has over 700 locations across the globe. Although Costco is a membership club, non-members can still purchase alcohol, buy medicine from the pharmacy, and eat at the food court in most stores.
While the brand is more known for its wholesale goods, members can also purchase health, auto, travel, and life insurance through Costco. For the latter, the service is provided by the Protective Life Insurance Company, a Birmingham, Alabama-based life insurance company. They've been Costco's life insurance provider since 2014, and have since provided more than $12 billion in coverage to Costco users.
Protective has been in the business for over 100 years. The company provides term, whole, and universal life insurance policies, along with fixed, indexed, immediate, and variable annuities which policyholders can use in their retirement. Protective is known as one of the most reliable life insurance companies today, and holds an A+ A.M. Best rating and a 0.37 NAIC complaint ratio.
Policy And Coverage
Costco only offers one type of life insurance product, which is a term life insurance policy called Member Advantage Life Term. This policy can provide between $100,000 to $5 million worth of insurance coverage for either 10 or 20 years.
It is exclusive to Costco membership cardholders, who get (on average) a 15 percent discount that applies for the first five years of the policy term. Once the initial period is up, the annual premium increases on the sixth year, then remains level for the duration of the term.
Terminal illness: "Accelerated death benefits" is another name for this kind of rider, as it allows you to use up to 60 percent of your death benefit should you become diagnosed with a terminal illness. This helps you and your family regain some financial stability while you cope with your diagnosis.
Children’s term life insurance: With this rider, children (natural, adopted, or stepchildren) from ages 15 days to 18 years old can receive life insurance coverage up to age 25. Once the covered child turns 25, they can then opt to maintain an independent life insurance policy from Protective. The coverage for children ranges from $1,000 to $25,000. Note that Protective only offers permanent insurance to those looking to convert their policy to an independent life insurance policy.
Accidental death benefit: This rider increases the death benefit paid out to your beneficiaries should you die from an accident. You can get up to $250,000 more in coverage.
Income provider option endorsement: With this offering, policyholders can receive their death benefit payout as a lump sum payment and a guaranteed income stream (up to 30 years). This is for people who may need the extra help to cover final expenses, debts, and monthly or yearly obligations.
Waiver of premium: Should you become disabled, this rider helps ease the financial burden associated with hospitalization, physical therapy, medication, and job loss by offering to waive your insurance premiums for several months.
Applying for Costco life insurance is simple enough. Here's what you have to do:
Get Quotes Online
If you're comparison shopping for term life insurance policies, you can request life insurance quotes through Costco's website. Make sure to provide the following information:
Date of birth
Desired coverage amount
Desired coverage duration
Your Costco membership type
Your health profile (choice among Excellent, Very Good, Good, and Fair)
Once you click submit, you'll be redirected to the Costco Protective life insurance website, where you'll receive quotes for the reduced premium you get to pay for the first five years, as well as the premium for the next six to 20 years. You'll also receive quotes for other coverage amounts.
Keep in mind that the life insurance quotes you receive online aren't final, and are subject to change based on the information you provide at your interview and medical exam.
If you're happy with your quotes and wish to proceed with your application, you'll be asked to provide your Costco membership ID number and name, along with other personal and contact information.
Wait For A Call
After submitting your information, you can expect a call from a Protective life insurance agent who will discuss your policy in further detail. They'll also conduct a 20-minute interview where you'll be asked about your medical history and any underlying health conditions that you may have. This, along with the medical exam, will help Protective life insurance determine the exact premium rates that are right for you and your overall condition.
Schedule A Medical Exam
Most Member Advantage Life Term applicants are required to undergo a medical exam. But logistics don't have to be your concern, as Protective sends their medical representatives straight to your doorstep. That way, you won't have to take time off to visit a hospital or a clinic.
It should be noted that not all applicants are required to take the medical exam. Those in excellent health will likely be eligible for acceptance even without a medical.
Wait Out The Underwriting Process
At this point, you've done your part of the application process. It's time for you to sit back and just wait for your application to be processed.
According to the website, the Costco life insurance underwriting process takes about "a few weeks". According to one applicant, it took about a month to receive her policies. Note that the average underwriting time is about three to eight weeks. For those who didn’t have to take the exam, they often got their results within three days to a week.
Finalize Your Costco Life Insurance Policy
You will be notified by Protective once your application is complete. Then, you'll be given access to all your documents electronically, making it easier to keep track of your Costco term life policy.
The main selling point of Costco life insurance is its potential to save policyholders up to 15 percent on premiums. And while this discount applies only to the first five years of the policy, it should be noted that the premiums from the sixth year onwards are still considerably lower than the average rate.
For example, when we requested a quote for $500,000 worth of life insurance coverage for 20 years, Protective life insurance gave us $16.39 a month for the first five years, then $19.13 for the following six to 20 years. This is for a 25-year-old non-smoker male in Alabama. Meanwhile, the industry average for the same profile is $27.01 a month.
Customer Satisfaction And Service
Protective life insurance has an impressive track record when it comes to customer service.
Firstly, Protective has a hotline for answering customer questions and concerns that is open during business hours, as well as an online virtual assistant that is online 24/7. Aside from this, Protective also allows customers to manage their policies online – giving them the option to pay premiums, add beneficiaries, make changes, and request claims from the comfort of their own homes.
As far as customer satisfaction goes, Protective has always done well. They have an A+ rating from the Better Business Bureau, as well as an impressive NAIC complaint ratio of 0.37. NAIC, or the National Association of Insurance Commissioners, keeps a record of consumer complaints received by life insurance companies. The national median is 1.0, meaning that Protective received far fewer complaints than average.
Financial Strength Ratings
A.M. Best rating: A+
Better Business Bureau rating: A+
Standard & Poor's rating: AA-
Moody’s rating: A1
*Note that these are based on the financial strength ratings of Protective life
Discounts exclusive to Costco membership cardholders: Costco’s life insurance provides its members with up to 15 percent in savings for up to five years. After that, you get level premiums until the end of your term.
Policies are provided by a trusted life insurance brand: Protective is one of the best life insurance brands out there. As such, Costco insurance customers are assured excellent service.
Offers online quotes: Not all insurance providers offer their life insurance rates online, making it harder for people who are still in the decision-making stage. With online quotes made readily available, life insurance comparison is much easier.
Does not offer permanent life insurance: If you're looking for more life insurance options, Costco probably isn't the right choice for you. As of the moment, Costco's only insurance offering is its term policy. On the other hand, Protective offers several different types of insurance, from term to universal life.
Limited term duration options: Costco life insurance only comes in two term duration options – 10 or 20 years. If you want more coverage, you can try purchasing a policy directly through Protective instead. At Protective, you can choose between 10 and 40 years worth of coverage.
You must be a Costco member to avail: If you're not a Costco member, you unfortunately cannot avail of Costco life insurance.
The Bottom Line
If you're looking for term life insurance that you can get in a snap, Costco’s life insurance could prove to be a satisfying choice. Since their policies are issued by a reliable and known brand like Protective, you can rest assured that you'll get good service.
But, if you're looking for permanent life insurance or more variations in term durations, it seems you'll have to look elsewhere, as Costco only offers one policy in two term duration options – Member Advantage Life Term insurance for 10 or 20 years of coverage.
At the end of the day, Costco life insurance may not be the best life insurance policy out there, but it's a convenient option if you're already a member.
Don't think Costco life insurance meets your life insurance needs? At Wesley LLC, we make sure to help our customers reach their best life insurance decisions. If you don't want a policy through Costco or Protective, you can check out more of our reviews and articles to help you find something that fits.