Life insurance is a way to protect loved ones from financial loss when you pass away. Your policy should give your loved ones the financial coverage they need for funeral expenses and to live a comfortable life after you are gone.
If you are the main source of income for your family, or you have members dependent upon you, you should have life insurance. Parents, especially, with children under the age of 18 need to have coverage. There are, of course, many different providers and knowing which one is best requires some research.
Costco, the wholesale membership-based retailer, offers life insurance with savings allegedly up to 20% for members and a simple application process, but is it wise to buy your life insurance at the same place you buy bulk pretzels?
Costco Life Insurance Review
Costco started a partnership with Protective, and through Protective they are offering life insurance policies for members. Understand that any mention of “Costco Life Insurance” refers to the Protective Life Insurance Company.
That said, Protective Life Insurance has been in the industry for over 110 years and offers policies across the U.S.
Protective was selected as an exclusive life insurance provider because of their financial strength, stability, and value. Founded in 1907, Protective services over 7 million policies.
They have worked to demystify life insurance processes so that families can make informed choices. Applications submitted online are processed at some of the fastest speeds in the industry.
Protective has earned top ratings by all major agencies, with an A+ rating from the BBB, and has been listed as one of the top 10 best companies for life insurance across the United States by other publications. Annually they pay $2 billion to beneficiaries and they are well known for their strong customer service.
Below is a chart of Protective Life’s financial ratings:
|Standard & Poor’s||AA-|
As you can see, Protective Life insurance has very prestigious financial ratings from some of the most highly regarded independent financial rating firms.
On top of this, they also maintain a very high degree of customer satisfaction by industry standards. If you want to know more about Protective Life, we wrote this Protective Life Insurance Review that can tell you more.
We also always have our independent life insurance agents ready to help you understand your life insurance options and find the best life insurance policy for you and your family.
Costco Life Insurance Customer Service Review
Should you wish to make any changes to your policy, or have issues with an existing policy, you will need to rely upon the Protective platform to get answers.
Extensive Website Assistance
Thankfully, the website has an extensive FAQ section with detailed answers and embedded links. Where appropriate, there are emails and phone numbers for follow up on the specific issue.
Easy to Speak with Representatives
There is a live chat feature on the site for more immediate responses. They also offer live updates they provide via social media.
Overall, they have superior customer service when compared to most life insurance companies.
Costco Life Insurance Policy Features
Costco has worked with Protective since 2014 and they offer term life insurance policies which you can extend into permanent life insurance policies. Their biggest selling point is the price: as previously mentioned, customers can save up to 20% with a Costco Gold Start or Business membership plan.
Costco Member Advantage Life UL
The policy you can access is called “Member Advantage Life UL”. This is a universal life insurance policy which boasts term life insurance features. You have the option of a 10-year level policy or a 20-year level policy. Contingent upon your selection, the premiums and death benefits are guaranteed to stay the same for the duration of your policy.
When you start to unpack the features of the plans, the one thing that really stands out is that your premiums are much less expensive for the first 5 years of either plan. After the 5-year mark, they re-adjust and then remain the same for the remainder of the term.
Once your term period is over, you have the option to continue your coverage at the same rate. However, the death benefit will be reduced annually until it hits $10,000 at which point your premium turns into an increasing annual rate.
As noted, Gold Star or Business members save 20% on this cost.
How Much Life Insurance Coverage Does Costco Offer?
When it comes to life insurance, the biggest benefit for which you are paying is the death benefit. You get to choose the amount of coverage you have paid out upon your death, so long as you are current on all payments.
The amounts available range between $100,000 and $5,000,000. You are also allowed to exchange the policy for another Protective policy at any time within your first 5-year fixed term.
This is an important feature because it means you can change policies without going through the underwriting process again, which means you circumvent the medical exams. This is applicable up to 70 years of age.
Below is a chart with the policies and coverage offered by Protective Life through Costco. Note that these policies are for men and women who are 35 years of age, in excellent health, who are non-smokers.
|10 Year Term||$100,000||$7.35/mo.||$7.08/mo.|
|20 Year Term||$100,000||$9.47/mo.||$8.87/mo.|
As you can see, these term life insurance rates are very affordable when compared with the market rates. Often times, they are about 10% cheaper.
The limiting factor for Costco Life Insurance is the fact that they only offer 10 and 20-year term policies, and not 30-year term, or any types of whole life insurance.
While this type of insurance coverage is not very comprehensive, it is still very affordable and good coverage. Also, the option to convert term policies into whole life policies or renew into another term life policy is very powerful and makes these policies very versatile.
For someone who is looking to get into life insurance coverage at a low cost, with a great provider, with options to convert or renew, Costco Life Insurance may be the right choice.
How Health Issues Affect Life Insurance Rates
There are two main conditions that most people worry about impacting their ability to get coverage: smoking and diabetes.
Costco Life Insurance for Smokers
Protective lumps together cigarettes, cigars, electronic cigarettes, and chewing tobacco for “smokers”. Life insurance for smokers is often 2-4 times higher than it is for non-smokers.
Protective has “preferred smoker” rates for those who smoke infrequently, and these will provide a slightly lower rate compared to habitual smokers.
Protective requires smokers to undergo a medical examination to verify their level of health. They also encourage smokers to sign up for a policy even if those premiums are higher than average because, they emphasize, “some coverage” is better than no coverage. The company also stresses full disclosure at the time of your application.
Costco Life Insurance for Diabetics
When it comes to life insurance for diabetics, there are multiple factors reviewed before issuing a policy including how serious the condition it and, most importantly, how well you are managing it.
Diabetics who are not insulin dependent typically receive lower premiums compared to those who do not. The reasoning here is that most people who are actively trying to exercise and plan their meals will no be insulin dependent, which shows that said person is doing everything in their power to take care of their health.
With Protective you will also have an easier time getting a policy if you can prove your blood sugar is controlled effectively. They will likely ask for lab testing of your glucose levels before a policy is issued.
Additional considerations include how long you have been diagnosed. Someone who has been diabetic for several years is less of a risk factor because the longevity of the condition demonstrates they have learned to manage it.
Additional Features of Costco Life Insurance
With your policy you also get 2 extra features:
Terminal Illness Accelerated Death Benefit Endorsement
An accelerated death benefit from Costco pays out a lump sum up to 60% of your death benefit if you receive a diagnosis for a terminal illness. This payout covers immediate medical expenses. The balance is deducted from your final benefits paid out upon death.
Income Provider Option Endorsement
This allows you to pay out initial smaller lump sums followed by a regular income up to 30 years following your death, rather than giving out the entirety of your policy in a lump sum upon death.
Optional Benefits for Costco Life Insurance
There are 3 additional benefits, classified as “riders” available which come with a fee:
Children’s Term Life Insurance
The child rider provides natural and adopted children with coverage from your policy, up to 18 years of age. Children can receive up to $20,000 of coverage until they reach 25 at which point they are able to convert the coverage to their policies.
This allows you to maintain premium payments should you become disabled and no longer be able to work. After 6 months of disability your monthly payments are credited to your life insurance policy so that it remains active while you are disabled.
Accidental Death Benefit
Accidental death benefit extra coverage offers a higher level of payouts if your death is the result of an accident.
Pros and Cons of Costco Life Insurance Policies
Let’s take a second to explore some of the pros and cons of using Costco as a life insurance provider:
|Affordable term life insurance coverage||Only 10 and 20 year terms offered|
|Ability to convert and renew policies||No whole life insurance offered|
|Multiple riders and policy add-ons||Only offer insurance coverage from one provider|
|Great customer service||Discount expires after first 5 years of term|
|Reliable, trustworthy insurance providers||Only available to Gold members|
|20% discount for first 5 years||Many more life insurance options out there|
Costco does only offer insurance through one company, so you cannot compare prices from among a handful of companies and still use the member discount.
This makes it a bit difficult to determine whether the company is the best company for your needs, especially if you have a preexisting condition.
Costco only offers term lengths of 10 and 20 years, whereas other companies offer increments from 15 up to 35. They are also limited to term insurance, so you cannot get a universal policy. They do not offer policy features like life insurance with living benefits.
Protective Insurance By Itself
However, it is important to note that Protective Life Insurance, on its own, has a range of permanent and term life insurance policies.
You can choose a whole life or universal life policy. These offer a cash value which increases with time and can be drawn upon during the term of your policy. These, however, are not offered through Costco so you cannot use any Costco membership discounts.
How to Choose Your Life Insurance Plan
Term Life Insurance vs. Whole Life Insurance
Costco’s term life insurance policies cover you for the set amount of time (10 or 20 years) and are more affordable compared to permanent insurance policies. As such, the ability to wait and convert the less expensive term policies at the end of their coverage can reap potential long-term savings.
Permanent life insurance is calculated based on a probability of death calculator. Permanent policies tend to be more complex and expensive compared to term policies, but they can maximize tax growth for your cash value.
What Affects Life Insurance Rates?
Your rates, regardless of length, will be calculated using your life expectancy. Things like age, gender, current health, and family history can negatively impact your life expectancy and are, therefore, going to raise your rates.
Even if you have a pre-existing condition like diabetes, or you smoke, you can still receive an affordable policy. When you apply, you will be asked about your current health and any previous conditions.
You will also be asked about family health. In some cases, your health insurance might be asked to provide access to medical records, obviously along with your consent. You may need to submit to a medical exam before your policy is issued.
Tips for Purchasing Life Insurance
It is in your best interest to purchase your life insurance policy (from Costco, or anyone else) before it becomes necessary. The earlier you get the policy, the healthier you will likely be which means the lower your premiums will be.
Given that Costco locks in the premium rate for your policies, this begets better savings compared to other plans. Remember, too, you can add on that 20%-member savings.
It is important to note that if you are in an unhealthy bracket right now, you can always take a few months to get healthier, improve a chronic condition, or perhaps quit smoking.
Even diabetics can lower their numbers for a few months before applying for coverage. This can decrease premiums you are offered and once you have the policy, those premiums are locked in place.
Is Costco Life Insurance the Right Choice?
Overall, Costco Life Insurance is just one of many options out there. They have partnered with a reputable organization with a long history of sound financial decisions. Naturally, each case is different, so it is in your best interest to shop around for the best policy to suit your lifestyle, health, and needs.
While the internet makes comparing rates very easy, it does not allow for companies to take into account your specific health situation, and can often times result in misunderstandings about the extent of coverage in a policy, and the rates people expect to pay.
Skip the confusion and aggravation, speak with a professional and begin working towards affordable life insurance protection for you and your family today.
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