Just like many Americans you love Costco since they offer you lots of savings when it comes to money and time due to the bulk items. It is definitely a great place to buy groceries, household items, tires but life insurance? Well, yes as you already heard, Costco is now offering life insurance to its members through a discounted rate and that is probably why you are here. And by here I mean the best life insurance agency online and will make sure that by the end of this article you’ll know everything about Costco Life Insurance and whether or not is right for you.
*Costco Life Insurance savings are only for the first 5 years of the policy term. Click here to compare their quote to over 30 other large carriers.
What is Costco Life Insurance Anyway?
Insurance Provider
The life insurance policy offered through Costco is not Kirkland but rather an existing life insurance company named Protective Life. This carrier has been around since 1907 and has an “A+” rating, we also offer this company so it’s definitely reliable. Protective offers a variety of different insurance products along with life insurance. However, the plan through Costco is custom made for them and is the only one you can purchase.
Plan Details
The plan is called Member Advantage Life UL and is actually a term life insurance product that can be locked in up to 20 years. After term expires the policy will not vanish but reduce the death benefit until it reaches the amount of $10,000 at which the premiums will start increasing. According to their site, you can get up to 20% discount based on your membership level and of course your eligibility. (your risk class health and etc.) This is very similar to the term life insurance product they currently offer through agents and agencies but you are getting some discounts. The Protective Term stands out since it is built on a universal life chassis which is a permanent type of life insurance and because of this you can make changes to your policy death benefit which is cool.
Just like any other large life insurer, Protective allows you to cancel the policy at any time. Overall this is a good option but can be disastrous once we throw in some variables since each company will look at you differently. Will touch on that later but let’s see what is required to secure a plan with them.
Process:
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You’ll need to complete an application which consists of entering all your personal information and answering health questions.
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You’ll speak with a representative from protective who will review your application and ask more questions.
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The next step is scheduling and completing a medical examination. For the exam, the company will send out a nurse who will draw blood, collect urine, check blood pressure and your build. And, yes the exam is required unless you work with a no exam company.
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After all that the company will conduct an underwriting process(link) to establish if you qualify for coverage and at what rate. The approval process takes between 2 to 6 weeks on average.
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If approved you’ll get your policy in the mail and sign any final paperwork. At that point, you’re covered!
What the Cost of Costco Life Insurance versus other companies?
So the way the plan is set up is that Costco Members get savings in the first 5 years of the term policy. In other words, you’ll pay a reduced amount in the first 5 years and then a higher premium for the remainder of the term. Also, a gold and business member get a lower discount than the executive membership. Please keep in mind that if you have certain medical conditions, you smoker or have dangerous hobbies you may not qualify for these rates at all. But let’s see how a healthy 40-year-old male looking for 20-year term would do with a $500,000 coverage.
Costco
Gold/Business Member: Years 1-5: $25.12 per month
Years 6-20: $30.60 per month
20 Year Total: $7015
Executive Member: Years 1-5: $23.93 per month2
Years 6-20: $28.89 per month
20 Year Total: $6635
Another Large Carrier
Anyone: All Years $28.32/mo John Hancock
20 Year Total: $6796
As you can see the savings are not that great since if you shop with an independent agency you can still get a very competitive rate. If you’re a gold or business member is not worth your while to get life insurance through Costco but it is about a $100 of savings over 20 years with the executive membership. It is also important to note that any issue such as a smoking habit or health condition will make this situation totally worse since Protective Life is not as competitive for rate classes outside of preferred rate.
Should you buy this plan or not?
YES
This is definitely a good option in the event that you’re in great or perfect health with no family history of cancer, stroke or heart disease and no dangerous hobbies. Oh, and also only if you have the executive membership since that will save you a very small amount but for gold or business members you’re better off shopping around.
Definitely NOT
However, if you have any pre-existing condition, family history of illnesses, bad driving record or some James Bond hobbies then you need to work with an independent agency that lets you compare rates with all the companies. The reason is simple, no one company will look at you the same and agencies like ours need to use many companies to nail down one ideal for you. For example, almost all companies rate cigar users and e-cig users as smokers which increases their rate by 60% but we have a company that gives our clients non-smoker rates for that.
Another issue may be that if you want a policy fast or are afraid of needles and need an no medical exam policy since the Costco plan requires an exam. I would say one-third of our clients prefer to apply for a no exam policy due to speed and convenience.
If you need a plan for longer than 20 years this will also not work for you since the program only offers a 10 and 20-year term. So if you want 15, 25, 30 years or a lifetime plan look elsewhere.
You may also want to keep in mind that by buying a policy directly through the carrier you won’t be assigned an agent that will service your policy. I can tell you from experience that there is nothing better than having a veteran agent service your policy by answering any questions or helping you make updates throughout the years. So if you’ve grown up seeing your parents have a close relationship with their insurance agent or financial advisor you may feel a void when dealing directly with a carrier.
In my humble opinion, you wouldn’t go to an insurance agency for fresh produce so why got to Costco for life insurance. It is much better to work with a company that only does life insurance because they will help you complete a needs analysis to know how much and how long you need to be insured for. They will also shop for different plans based on your overall risk profile and if they are really good will even draft you a cover letter to the company is more likely to give you a better rate. In addition to all that if you get turned down by Protective through Costco you’ll have to restart the process all over again with a new application, exam and medical records but by working an independent agency you won’t have to start from scracth as your exam and records can be used again to reapply.
Work with InsureChance!
Based on everything we reviewed about Costco Life Insurance program it is a great choice for an ideal applicant with an executive plan membership. For anyone outside of this, you’re better off shopping around with all the companies out there and the great news is you don’t have to do this yourself since we give you the tools. Here at InsureChance, we work with over 60 top rated life insurers and you can compare rates with all of them by using one of our comparison tools. Simply select the type of plan you want to shop for, pick your overall health and let all the big companies compete for your business. If you’re ready to move forward simply request an application or call one of our super duper friendly agents that will assist from point A to Z at 888.492.1967! Welcome to InsureChance!
