Costco, the popular membership-based warehouse, offers term life insurance through Protective (one of Policygenius’s partners). As with many other services and products sold by Costco, its life insurance product is exclusive for its members and offers special discounts and features.But Costco shouldn’t be the only place you look when shopping for affordable life insurance.
Most people are better off working with a life insurance broker to find a policy that caters to their specific needs at the cheapest price. Policygenius works with 12 life insurance companies – including Protective – and can help you feel confident that you’re getting the coverage you need at the best rate possible.
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. Protective is also offered through the Policygenius marketplace.
Costco offers term life insurance through this partnership, which is one of the most affordable types of life insurance. Term life insurance lasts for a set number of years and comes with few rules and tax restrictions. It’s the best option for people looking to provide a financial safety net for their family in case they unexpectedly pass away.
If you purchase a Protective life insurance policy through Costco, you can choose a term of 10 years or 20 years, and coverage amounts between $100,000 and $5,000,000.
You’ll work also with a Protective agent — not a Costco employee — during the application process. By buying through Costco instead of through another broker, you’ll receive discounted policy premiums for the first five years of your policy.
During the sixth year, the premiums increase and remain the same for the rest of your policy.
Is Protective a good life insurance company?
Protective life insurance ranks high against other life insurance companies in most circumstances.They’re a reputable company that maintains an A rating across most ratings organizations, like AM Best, S&P, and Moody’s.
Protective typically offers cheaper premiums than other insurers, allows you to manage your policy online, and even provides an option for you to get a lower rate after you’ve had your policy for a year if your health improves.
If you have one or more medical conditions, you might pay more in premiums than other Protective customers, but you could still pay relatively affordable premiums compared to other insurers.
While working as a licensed agent, Protective was usually an affordable option for many of my clients, especially for people who didn’t have any medical issues. However, this insurer usually requires a medical exam, which is a turnoff for many people who have the option of getting coverage for the same price with a company like Legal & General America, which also does business as Banner Life and William Penn, or Brighthouse Financial without taking an exam.
→ Read Policygenius’ full review of Protective life insurance
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 with multiple insurers, you might not be getting the lowest rate for your profile. In many cases it’s possible to find a policy that costs less than comparable coverage with Costco, even if you’re in good health.
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.
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’ll 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’ll 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 policy through Costco versus the average cost of life insurance across the industry.
Age | Gender | Costco rates for $500,000 coverage amount | Industry average for $500,000 policy | Costco rates for $1 million coverage amount | Industry average for $1,000,000 coverage amount |
|---|---|---|---|---|---|
25 | Female | $16.41 | $21.41 | $27.03 | $33.67 |
Male | $21.09 | $28.20 | $36.10 | $46.32 | |
35 | Female | $19.83 | $26.28 | $34.11 | $43.40 |
Male | $23.23 | $31.92 | $40.92 | $53.77 | |
45 | Female | $37.91 | $49.91 | $70.30 | $89.75 |
Male | $49.27 | $63.84 | $93.02 | $117.64 | |
55 | Female | $86.26 | $110.40 | $167.00 | $205.33 |
Male | $119.82 | $152.59 | $234.10 | $280.00 |
Methodology: Rates are calculated for male and female non-smokers in a Preferred health classification obtaining a 20-year $500,000 or $1 million term life insurance. Life insurance averages are based on a composite of policies offered by Policygenius from Legal & General America, Brighthouse Financial, Corebridge Financial, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, and Transamerica. Rates 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 10/01/23.
You'll notice that the prices offered from Protective with the Costco discount are lower than the industry average. However, it’s likely that if you have a complicated medical history, you’ll get better rates with another life insurance company. And if you’re in good health you could probably get a comparably priced policy without taking a medical exam.
Working with an independent life insurance broker is the best way to get the most affordable rates.
