Q

Should you buy life insurance at Costco?

A

Costco offers discounted life insurance policies through Protective to members. It's worth considering for people in good health, but comparing prices across multiple companies will likely get you a bigger discount.

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Costco is a membership-based, one-stop-shop for wholesale food, furniture, and office supplies. Essentially, Costco has it all.

And when we say Costco has it all, we mean it. Costco offers discounted travel, health, auto, and life insurance to its members.

But when planning for the financial security of your family, Costco shouldn’t be the only place you look. Costco life insurance might offer short-term lower prices for someone in good health, but there is only one policy option, leaving you with limited flexibility. While healthier people could consider buying through Costco, most people are better off working with a life insurance broker to find a policy that caters to their specific needs at the most competitive price.

Key Takeaways

  • Costco members can get discounted coverage through Protective Life Insurance.

  • The discount applies for the first five years of the policy, then premiums return to their normal price.

  • Costco life insurance might be cheaper for healthy individuals, but not for people with a more complicated medical history.

  • Shopping around for an insurer is the best way to get the most affordable rates.

How does Costco life insurance work?

Purchasing life insurance through Costco doesn’t mean you’re purchasing a Costco-branded policy. Costco’s life insurance page leads you to apply through a reputable life insurance company, Protective, which is also offered through the Policygenius marketplace.

Costco offers term life insurance, which is the most affordable type of life insurance, through Protective. Term insurance lasts for a set number of years and expires after that period ends. If you purchase a Protective life insurance policy through Costco, you can choose between a 10- or a 20-year term with coverage between $100,000 and $5,000,000.

You will work also with a Protective agent — not a Costco employee — during the underwriting process. By buying through Costco instead of through another broker, you will receive discounted policy premiums for the first five years of your policy. During the sixth year, the premiums increase to their normal pricing and remain the same for the rest of your policy.

Should you buy a life insurance policy through Costco?

While purchasing a life insurance policy through Costco might be the most cost-effective option for some people in the short-term it’s not the best policy option for everyone.

Every life insurance company varies in their approach to different medical conditions or lifestyle choices, and some will offer you lower rates than others. By not shopping around amongst various insurers, you might not be getting the lowest rate for your profile. And though term life insurance is right for most people, if you need permanent life insurance, you won’t have any policy options with Costco.

Is Protective a good life insurance company?

Protective life insurance ranks high against other life insurance companies in most circumstances.

Protective typically offers lower-than-average rates across the board, allows you to manage your policy online, and offers you can get a lower rate after you’ve had your policy for a year if your health improves. If you're not in optimal health, you might not see rates as low as other Protective customers, but you could still pay competitively priced premiums.

Read Policygenius’ full review of Protective life insurance

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What do you need to know about your Costco life insurance policy?

There are some key stipulations for Costco life insurance policies:

  • Coverage availability varies by state and is not offered in New York.

  • The average discount is 15% and only applies for the first five years of your policy.

  • If you need to increase the death benefit amount after you sign for your policy, you will need to prove that your income requires that coverage amount.

  • You can decrease your death benefit amount after your policy’s third year, but you’ll need to maintain a minimum coverage amount.

  • A Costco membership doesn’t automatically qualify you for Protective life insurance coverage. You will still need to go through the underwriting process.

How much does Costco life insurance cost?

How much you actually pay for your life insurance policy depends on multiple factors, including your family’s medical history, your health, and what you do for a living. Protective’s generally affordable rates coupled with a Costco discount make it easy to save on life insurance if you’re in good health.

Check out the table below to get a sense of how much you might end up paying for a life insurance policy through Costco versus the industry average.

AgeSexCostco rates for $500,000 policyIndustry average for $500,000 policyCostco rates for $1,000,000 policyIndustry average for $1,000,000 policy
25Female$13.79$21.08$20.09$34.16
Male$16.26$26.89$26.33$44.84
35Female$15.76$25.44$25.99$42.74
Male$18.22$30.21$28.88$51.71
45Female$20.68$47.89$35.60$86.85
Male$24.54$60.79$42.63$113.09
55Female$31.54$108.85$57.56$207.88
Male$40.06$151.27$74.58$287.61

Methodology: Sample premiums are for a non-smoker males and females with a Preferred health rating; life insurance averages are based on a composite of policies offered by Policygenius from AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Protective, Prudential, SBLI, and Transamerica and may vary by insurer, term, coverage amount, health class, and state. Costco averages reflect rates discounted at 15%, which applies only to the first five years of the term. Not all policies are available in all states. Rate illustration valid as of January 2022.

You'll notice that the prices offered from Protective with the Costco discount are a lot lower than the industry average. However, every life insurance provider assesses risk differently. If you have medical conditions or habits that make it more expensive to buy life insurance — e.g. diabetes, high blood pressure, or smoking — it’s possible that a different life insurance company would offer you lower rates for your situation than Protective will. Working with an independent life insurance broker is the best way to get the most affordable rates.

Frequently asked questions

Should I buy life insurance from Costco?

If you’re relatively healthy and the policy options suit your needs, a Costco life insurance policy is worth considering, but we recommend comparing quotes from multiple providers before committing.

What life insurance company does Costco partner with?

Costco partners with Protective to sell term life insurance policies.

Does a Costco life insurance policy offer a better deal than other life insurance?

Costco may offer lower rates than the industry average if you are in good health. It's important to shop around to see where you can get the lowest life insurance rates.