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Most people know that for food, furniture, and office supplies, Costco is the one-stop shop for wholesale deals for its members. What you might not realize is that Costco can save you money on different types of financial protection as well. Costco offers discounted travel, health, auto, and life insurance to its members.
But when planning for the financial security of your loved ones, Costco shouldn’t be the only place you look. Costco life insurance might offer lower prices for someone in good health, but the discount only lasts for the first five years of the policy and 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 a competitive price.
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
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.
Costco offers term life insurance through Protective, which is the most affordable type of life insurance. 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 with a Protective agent during the underwriting process to provide information about your background and medical history so that they can determine your life insurance premiums. By buying through Costco instead of through another broker, you 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.
While purchasing a life insurance policy through Costco might be the most cost-effective option for some people, it’s not the best policy option for most because it lacks flexibility.
Your life insurance policy term should last at least as long as your longest debt. So if you have a 30-year mortgage, Protective’s longest term policy through Costco will end 10 years before your loan does, leaving your loved ones financially vulnerable.
If you have pre-existing conditions or hobbies that could lead to increased life insurance premiums, being restricted to one life insurance company means you can’t compare quotes and may end up paying more for your coverage than you would elsewhere. 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.
Protective life insurance ranks well 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 rate reconsideration after you’ve had your policy for a year. Individuals who aren’t in optimal health might not see rates as low as other Protective customers, but they could still pay competitively priced premiums.
However, Protective tends to have a slower-than-average application approval and the policy cannot be canceled online — the company requires a phone call for policy cancellation.
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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 your financial viability.
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.
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.
|AGE||COSTCO RATES FOR $500,000 POLICY||INDUSTRY AVERAGE FOR $500,000 POLICY||COSTCO RATES FOR $1,000,000 POLICY||INDUSTRY AVERAGE FOR $1,000,000 POLICY|
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.
Compare the market, right here.
Policygenius saves you up to 40% by comparing the top-rated insurers in one place.
While a Protective life insurance policy coupled with a Costco membership discount is pretty affordable for healthy people, the discount only lasts for the first five years of the policy. And if you do have a more complex health history, Protective may not offer the most affordable rates for your circumstances. We recommend shopping around with different providers before you commit to purchasing life insurance.
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.
Costco partners with Protective to sell term life insurance policies.
Despite the Costco discount, most people can find better rates and more flexibility by shopping around for coverage.
Nupur Gambhir is a life insurance editor at Policygenius in New York City. She has researched and written extensively about life insurance since 2019, with specialties in life insurance companies, policy types, and end-of-life planning. Her writing on insurance and finance has appeared on MSN, The Financial Gym, and end-of-life planning service Cake. Previously, she worked in marketing and business development for travel and tech.
Amanda Shih is a life insurance editor at Policygenius in New York City. She has a passion for making complex topics relatable and understandable, and has been writing about insurance since 2017 with specialities in life insurance cost and policy types. She's previously written for Jetty and LegalZoom.