Should You Buy Life Insurance
from Costco?

By Michael Horbal - Updated on 07/06/2023

Costco life insurance is a Protective Life Insurance Company product offered to Costco members only.

Protective Life is a great company; we work with them and many other life insurers.

The Pros and Cons of Costco Life Insurance

Before you buy any term life insurance policy, consider the product’s pros and cons.

Should you buy life insurance from a big-box retail store like Costco?

It’s worth considering but read this first to become an informed consumer about this product type.

Most niche programs like Costco or the AICPA Term Life program have certain pros and cons.

The Pros

  • Cheap – The price is great if you qualify for the best-rate class.
  • It’s easy – You can apply online quickly
  • Fast – Some people may be approved with no exam required.
  • Executive membership gets you an additional 5% discount!

The Cons

  • Only two term lengths are available
  • You may have to take a paramedical exam to qualify
  • The conversion privilege is limited
  • Discount ends after five years
  • Gold membership costs 5% more
  • The Costco program is not for universal or whole-life products.

With the discount, Costco may be an excellent option for you, your spouse, or even your ex-spouse.

The no-exam aspect isn’t anything unique, as many life insurers offer $500k – $3 million with no medical exam.

Something we haven’t been able to get an answer on is:

What happens to your discount if you are no longer a member of Costco or change your membership level???

If you’re new to life insurance, check out our Life Insurance 101 guide.

Better companies are available if you smoke cigars or cigarettes or chew tobacco.

How to decide if Costco life insurance is right for you

Before you decide if Costco life insurance is right for you, consider these four important points.

First – Decide if a 10-year or 20-year term life insurance policy is right for you.

While Protective Life offers term lengths up to 40 years outside the Costco program, this program is only available in 10 or 20-year durations.

Second – Your health – The better your health is, the more appealing the Costco life insurance cost is.

Here’s why.

Costco term life insurance offers four underwriting rate classes:

Select Preferred, Preferred, Non-Tobacco, and Tobacco rate classes.

Like most companies, Costco’s Protective life insurance policies have specific underwriting rules to qualify:

Select Preferred Underwriting Highlights:

  • No nicotine use for the past five years
  • Up to 12 cigars per year are ok
  • No DUI in 5 years
  • No family history of heart disease, or cancer in parents or siblings before 60
  • Blood pressure max 135/85
  • Cholesterol max of 275, ratio 4.5
  • Height/Weight Chart – BMI of 28+/-

Preferred Underwriting Highlights:

  • No nicotine use in 24 months
  • Up to 24 cigars per year
  • No DUI in 5 years
  • No death of heart disease, or cancer in parents or siblings before 60
  • Blood Pressure max 140/90
  • Cholesterol max of 275, ratio 5.5
  • Height/Weight Chart – BMI of 30+/-

If you qualify for the Select Preferred rate class, this Costco life insurance plan is a good deal and is hard to beat.

Third – Is Costco life insurance always the best deal?

Definitely not, especially if you do not qualify for Select Preferred rates.

For example, if a parent died from cancer before 60, the best Costco life insurance rate you will qualify for is the “Preferred” rate.

Compare that to Banner Life – the best rates are available if a parent dies from cancer before 60.

If you have a pre-existing medical condition such as diabetes, heart disease, or cancer history, you should definitely consider other life insurers.

Last but not least – Consider your membership level – the Executive level offers an additional 5% +/- discount over the Gold level.

It seems like a no-brainer if you buy life insurance from Costco, make sure your membership is at the Executive level.

Member Advantage Riders

The member advantage program at Costco has several life insurance riders available, including:

  • Accidental Death Benefit
  • Children’s Term Life Insurance
  • Income Provider Option Endorsement
  • Terminal Illness Accelerated Death Benefit
  • Waiver of Premium

Accidental Death Benefit – This optional rider provides an additional death benefit if you die due to accidental death. Up to $250,000 is available at an additional cost to you.

Children’s Term Life Insurance – This optional rider provides $1,000 – $25,000 of life insurance per child.

Income Provider Option Endorsement – There is no cost for this rider that allows you to have the death benefit settlement proceeds paid out over time to your beneficiary.

Terminal Illness Accelerated Death Benefit – Up to 60% of your death benefit or $1,000,000 (whichever is less) may be paid to you while living if you’ve been diagnosed with a terminal illness.

Waiver of Premium – This additional cost rider waives your premiums in the event of disability.

Some riders are expensive, and we see them used for business cases like SBA life insurance or key person coverage rather than individual coverage.

Alternatives to Costco life insurance

We can access over 50 life insurance companies as independent life insurance agents.

When you request a quote from us, two things happen.

One – You’ll receive instant term life insurance quotes ranked from cheapest term life to most expensive.

Two – We’ll contact you to ensure you qualify for the rates you see.

There is never any pressure or obligation with our service.

You’ll get the information you need to decide about your life insurance.

How to apply for Costco life insurance

If you decide to apply for the Member Advantage Life Term product, you have to take the following steps:

Step One – Get a free quote

Ten inputs are required to get your quote – coverage amount, term length, state of residence, membership type, gender, date of birth, height, weight, tobacco status, and health.

Step Two – Fill out an application.

You’ll enter your contact, beneficiary, ownership, employment, and income information.

Underwriting will check your MIB record, prescription databases, and medical records if needed.

Step 3 – Complete a phone interview.

You’ll be contacted by a representative to review the information you provided and to discuss further details of the life insurance process.

Step 4 – Get a free medical exam.

During the phone interview, a paramedical exam will be scheduled for you. Some people may be able to skip this step – you’ll know during the phone interview.

Step 5 – Wait for underwriting approval.

The waiting time for approval ranges from days to as many as eight weeks. It will all depend on whether a medical exam and physician records are required. Once everything has been received and reviewed, you’ll receive an underwriting decision from the company.

Step 6 – Accept or reject your policy

Once approved, you may either accept or reject the life insurance policy. You are under no obligation to accept it, and there is no cost if you reject it.

FAQ about Costco life insurance

You may have some questions before you consider applying.

What are the minimum and maximum amounts of coverage?

The minimum is $100,000, and the maximum available is $5,000,000

Is the policy convertible to permanent life insurance?

Yes, conversion is available for a limited time—up to 8 years for the 10-year product and 18 years for the 20-year term product.

Is there a product guide available?

Yes, please see below for the consumer-approved guide.

Final Words

Costco life insurance is a great option if you are in excellent health.

If you don’t qualify for the best rates, it makes sense to compare other options, as another life insurer may be better, even with the member discount.

Get a free, no-pressure, no-obligation life insurance quote today.

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