If you are a Costco member and shop at Costco often enough, you’ve undoubtedly seen signs advertising their life insurance. You’ve probably wondered about it. Do they offer the same discounts on life insurance as they do on everything else?
Costco offers life insurance underwritten by Protective Life. They claim members save 15% over other similar products. Protective life was founded in 1907 in Birmingham, Alabama. They offer life insurance in all fifty states (including through Costco) and in 2018 they paid out $3.4 billion dollars in claims.
Costco paired up with Protective Life in 2014. They have provided more than $12 billion dollars in coverage to Costco members.
- Pros and Cons of Costco Life Insurance
- Products Offered by Costco Life Insurance: 20/100
- Financial Strength Rating of Costco Life Insurance: 90/100
- Customer Satisfaction Rating of Costco Life Insurance: 70/100
- Consumer Complaint Rating of Costco Life Insurance: 90/100
- Digital Experience Rating of Costco Life Insurance: 60/100
Pros and Cons of Costco Life Insurance
|– Easy online quote|
– Competitive rates
– You might be able to avoid a medical exam
|– Only offer one life insurance policy|
– Must be Costco member
(or become a Costco member)
Products Offered by Costco Life Insurance
That should really read “Product offered” because they only have one type of policy: term life insurance. If that’s exactly what you want, that’s great. Customers shopping for any other policy will have to go elsewhere. If you are interested in whole life insurance, here is our guide to the best whole life insurance companies. You might also be interested in learning the usefulness of universal life insurance through the real case studies.
The policy is called a Member Advantage Life Term. It’s available in terms of 10 or 20 years. For the first five years, you get one rate. For the remaining five or fifteen years, you get a slightly higher rate, but it stays the same for the remainder of the term.
After the term is over, you can choose to continue your term coverage with higher rates, which will increase every year.
Costco asks you a number of questions in order to determine how much life insurance you might need. In addition to the standard birth date, gender and address, they also ask you:
- Mortgage balance
- Amount need to pay off debts
- How many years of income replacement will you need?
- Amount of additional funds needed
- How many children you’d like to send to college
- Preferred category of college
- Available savings, including investments
- Total amount of existing life insurance policies
How many years of income replacement you will need seems like an odd question: How would you know? It sounds like they’re asking you to predict when you might die, which you have no way of knowing. Ditto for the amount of additional funds needed; won’t it depend on when you die and how much money you’ve saved by then?
After you enter how many children you’d like to send to college, it also asks you “Preferred category of college: Public in-state, public out-of-state, community or private. Won’t that depend on what your child wants to study and how successful of a student they were in high school? Just a thought.
After you enter your information, it comes back with an estimate of how much life insurance you will need, and then you can get a quote for a few amounts of life insurance. After that, a Protective Life representative will call you and interview you. You will probably have a medical exam, although applicants ages 18 to 45 requesting less than $1,000,000 and people from 46 to 60 who want $500,000 worth of coverage may not be required to have a medical exam based on the interview.
- Terminal illness accelerated death benefit. Learn more about living benefits of life insurance
- Income provider option endorsement
- Disability benefit rider
- Accidental death rider. Learn more about accidental death life insurance
- Children’s term insurance rider. Learn more about life insurance for children
Although they only offer this one policy, the rates are competitive.
For a 30-year old male, they gave us this quote:
If these rates seem high, note that this is for a $1.5 million life insurance policy.
>>MORE: The Best Life Insurance Companies (we cover 30+ companies)
Financial Strength Rating of Costco Life Insurance
A.M. Best rates Protective Life an A+, or superior. Since Protective Life will be paying your claims, their financial strength is important because they have the resources to pay claims.
Customer Satisfaction Rating of Costco Life Insurance
Costco life insurance was not reviewed by J.D. Power, but Protective Life was. The median average score across all categories was 761 and Protective Life sits just beneath that, with an overall score of 754.
Protective life scored similarly in the individual categories, but since only one product is offered through Costco, some of these categories don’t apply.
Consumer Complaints Rating of Costco Life Insurance
The NAIC ranks insurance companies based on an index. The index reflects a complaint ratio. The median average is 1.0, meaning a company got the expected amount of complaints. Protective life got an index of .37, so they received less complaints than you might expect.
Digital Experience Rating of Costco Life Insurance
You can easily get a quote online. You can also figure out how much life insurance you might need thanks to their online insurance calculator. You can also apply for insurance online, although after the initial application there will be a phone interview and possibly a medical exam.
You can manage your policy, pay your bill, update your beneficiaries and update your payment information online as well.
Neither Costco nor Protective Life offers a mobile app.
“Any customer can have a car painted any color he wants as long as its black.” Henry Ford said that regarding the Model T, but it applies to Costco’s life insurance as well: if you’re happy with the one life insurance policy they offer, prices are competitive, and it may well work for you.
Protective Life ranked as average for customer service, so if you only expect average service, you might be happy with this policy.
If you’d like to consider any other type of policy, Costco cannot accommodate you and you will have to shop elsewhere. This is our guide to the best life insurance companies, we cover 30+ life insurance companies for your consideration.