Costco Life Insurance Review – Is it worth it?

Like many of you probably are, I am a Costco member. The last time I was in the store shopping, I was struck by an ad offering Costco term life insurance for a discount.

You guys know me by now. I’m an Insurance Geek and an independent life agent, so of course, I instantly had to know. Is Costco’s life insurance a good deal? I dug into my inner geek and did a little homework so you don’t have to. Here’s what I came up with.

So is Costco now an insurance company?

Yes, Costco life insurance is a real thing, however, they are not a life insurance carrier.

Costco has formed a relationship with Protective Life Insurance Company to offer a specially designed and priced term product called Member Advantage Term Life. It’s sold exclusively through Costco and not independent life insurance agents.

Protective life insurance distributes all of its life insurance products through independent insurance agents and brokerages like us. As soon as I saw this advertisement, I wanted to know how the pricing stacked up to the Classic Term Product that we offer through Protective.

Protective is an A+ rated life insurance carrier and a great company. You can see our full review on Protective here.

Let’s review the two products

With Protective Classic Choice term products available through independent agents, clients can pick the amount of coverage they need with a term period of 10, 15, 20, 25, or 30 years. The death benefit will be guaranteed, and the premiums will be level each year during the selected term period.

Classic Choice Term

Premiums
Level

Underwriting Classes
Select Preferred, Preferred, Non-Tobacco, Tobacco

Term Lengths Offered
10-year plan: 18 – 75
15-year plan: 18 – 70 (18 – 68 for tobacco)
20-year plan: 18 – 65 (18 – 62 for tobacco)
25-year plan: 18 – 55 (18 – 52 for tobacco)
30-year plan: 18 – 55 (18 – 43 for tobacco)

Minimum Face Amount
$100,000
Maximum Policy Face Amount (death benefit):
OVER $5 million

Maturity Age
The policy may be renewed to a maximum age of 90

Rider Offered

Accidental Death Benefit Rider
Child Term Rider
Income Provider Option
Terminal Illness
Waiver of Premium

Costco Member Advantage Term

Costco offers a product called Member Advantage Life through Protective. The Costco term life insurance product provides a lower premium in the first 5 years then increases in year 6. The premiums remain level in years 6 – the Rest of the Term.

The amount of the discount is also dependent on the membership level.

Premiums
Not Level

Underwriting Classes
Select Preferred, Preferred, Non-Tobacco, Tobacco

Term Lengths Offered
10-year plan: 18 – 75
20-year plan: 18 – 65 (18 – 62 for tobacco)

Minimum Face Amount
$100,000
Maximum Policy Face Amount (death benefit):
$5 million

Riders Offered

Accidental Death Benefit Rider
Child Term Rider
Income Provider Option
Terminal Illness
Waiver of Premium

Let’s take a look at the cost

I ran some scenarios for myself.

41 – Nearest Age 42/Male/Preferred Plus/Non-Tobacco/Ohio
$1,000,000 – 20 Year Term

 Carrier Annual Cost Over 20 Years
Protective Classic Term  $15,010.00
Costco Executive Member Advantage Life by Protective $15,027.00
Costco Gold Start Member Advantage Life by Protective $15,805.20
Other Carriers
Sagicor Sage Term 20 $12,215.40
Transamerica Trendsetter Super 20 $13,600.00
John Hancock Vitality Term 20 $13,660.00
Pacific Life Promise Term 20 $14,719.80

Conclusion

I bought the Sagicor $1,000,000 term life plan for myself.  The best part about that product vs the Costco term life insurance is that I will save $3,590 over the 20 years.  The kicker is I did not have to take a life insurance medical exam with the Sagicor product either!

So before you buy life insurance at Costco,  let us guide you and run the numbers first! You could be spending thousands you don’t need to.