Costco Life Insurance – Should You Buy Life Insurance from Costco?

Costco offers its members access to a term life insurance product called Members Advantage Life Insurance, underwritten by Protective Life Insurance Company.

While Protective Life is a trusted insurer, deciding if buying life insurance through Costco is right for you is important.

This comprehensive guide covers everything you need to know about Costco life insurance, including its pros and cons, coverage details, and alternatives to consider.

Key Takeaways: Is Costco Life Insurance Worth It?

Before purchasing any life insurance policy, weigh the pros and cons carefully before deciding if Costco is right for you:

Pros 1	Cons
Competitive Rates: If you qualify for the top health class, the initial 5-year discount makes Costco very competitive.	Limited Term Options: Only 10, 20- and 30-year terms are available, which might not suit everyone’s needs.
Convenient Application: The online application process is straightforward.	Medical Exam Likely: Unless you’re very young and healthy, you’ll probably need a medical exam to qualify.
Membership Perk: Executive members get an additional discount, adding to the potential savings.	Temporary Discount: The member discount ends after 5 years, after which premiums increase.
Fast Approval: Some applicants might qualify for coverage without a medical exam, leading to a quick decision.	Membership Cost: You need a Costco membership to be eligible, which is an added expense for non-members.
	Conversion: No conversion privilege is indicated on the Costco Protective website.

Protective Life Insurance Company underwrites and issues Costco’s term life insurance policy. Here are the details of the Member Advantage product:

• Minimum Policy – $100,000
• Maximum Policy – $5,000,000
• Issue Ages:
  • 10-Year Term – Ages 18-80 (75 for tobacco)
  • 20-Year Term – Ages 18-70 (62 for tobacco)
  • 30-Year Term – Ages 18-58 (43 for tobacco)
• Riders Available:
  • Accidental Death Benefit
  • Children’s Term Life Insurance
  • Income Provider Option
  • Terminal Illness Accelerated Death Benefit
  • Waiver of Premium

Understanding Niche Programs

Like Costco or the AICPA Term Life program, most niche programs have certain pros and cons. It’s important to note that Costco Protective Life only offers term life insurance; universal or whole-life products are not part of the program.

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

If you’re new to life insurance, our Life Insurance 101 guide provides great information about how it works, and what to look for when buying coverage.

Here’s a quick breakdown to help you decide if Costco Term Life Insurance is best for your needs.

• Costco life insurance may work well for:
  • Healthy Individuals – Those in excellent health qualify for a great rate.
  • Simple Term Life Needs – If you need a 10, 20, or 30-year term.
  • Budget Conscious Buyers – The initial discount is appealing.
  • Convenience Seekers – Streamlined application process.
• Costco life insurance does not work well for:
  • Health Conditions – Applicants with pre-existing conditions may not qualify.
  • Family History – A family member’s heart disease or cancer could affect your rate.
  • Tobacco Users – Smokers may find better rates elsewhere with Banner Life or Prudential.
  • Permanent Coverage Needs – Costco doesn’t offer universal or whole life insurance.
  • Membership Cost – You have to be a Costco member to get this policy.

No, better rates are available elsewhere, especially if you do not qualify for Select Preferred rates.

Costco Life Insurance’s underwriting guidelines are strict, so we reviewed them to ensure the accuracy of our price comparisons. For example:

• Costco has stricter rules for family history: If a parent had or died of cancer before age 60, you wouldn’t get the “very good” or “good” rate with Costco.
• Banner Life is a better choice in this situation: They offer their “preferred best” rates if a parent dies of cancer before age 60.²

Here’s the correlation with other companies’ rate classes.

Costco Life Health Class	Other Companies Health Class
Excellent3	Preferred Best, Preferred Plus, Select Preferred, Super Preferred
Very Good4	Preferred Best, Preferred Plus, Select Preferred, Super Preferred
Good 5	Preferred, Standard Plus
Fair6	Standard Plus, Standard

Monthly premiums – Costco rates show the discounted rate for 5 years followed by the regular rate for the last 15 years. RiskQuoter options remain the same for 20 years.

Rate Class	Costco Executive	Costco Gold	RiskQuoter 7 Options
Excellent	$15.30 8 $17.43	$16.07 $17.64	$17.27
Very Good	$18.26 $20.83	$19.05 $20.83	$17.27
Good	$26.94 $30.82	$28.29 $31.03	$20.48
Fair	N/A	N/A	$25.95

Is Costco Life Insurance a good deal? It depends on the approved underwriting rate class.

If you have a high-risk medical condition such as diabetes, heart disease, or cancer history, you should consider other life insurers like Corebridge Financial or Prudential.

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

• What it does: Provides an additional death benefit of up to $250,000 if you die due to accidental death. This is in addition to the main life insurance policy you buy.
• Why consider it: If your occupation or hobbies, like private aviation, scuba diving, etc., carry a higher risk of accidental death, this coverage may be worthwhile.
• The downside: Statistically speaking, you are less likely to die from an accidental death.
• Cost: Accidental death riders are inexpensive compared to traditional term life insurance
• Available to: Members aged 18-60, with coverage stopping at age 65.

• What it does: Provides a death benefit if your child passes away.
• Why consider it: It can help ease the financial burden of paying for funerals and final expenses.
• The downside: This rider still costs money, and some parents don’t like the idea of having life insurance for their children.
• Cost: Riders for children are inexpensive, and the rider covers all of your children for one low price.

This optional rider provides $1,000 – $25,000 life insurance per child. This child rider is comparable to many other companies.

When your child reaches age 25, they can convert the child rider to a permanent policy up to 5 times the amount of the child rider.

• What it does: Instead of paying a lump sum at death, this rider pays the death benefit settlement proceeds out over time to your beneficiary.
• Why consider it: If you have concerns about your beneficiary spending all the money too quickly or want eternal control, this may be an option for you.
• The downside: Once you select this option and benefits begin, you cannot change the payout to a lump sum.
• Cost: There is no additional cost for this option.

The IPO endorsement allows you to spread death benefit payments over a 1-30-year period.

You can have one or multiple beneficiaries and distribute death benefits equally or how you see fit.

The life insurance settlement options include lump-sum, regular income stream, or both.

• What it does: With this rider, if you are diagnosed with a terminal illness while still living, you can receive an advance payment of up to 60% of your death benefit, or $1 million (whichever is less).
• Why consider it: It’s a no-cost option that is automatically included with most policies.
• The downside: It reduces the death benefit your beneficiaries receive when you die.
• Cost: This rider is free, but once exercised, most companies charge a one-time fee of several hundred dollars.

• What it does: If you become disabled and unable to work, your premiums are waived during the period of disability.
• Why consider it: This rider ensures your beneficiaries are protected even when you can’t pay the premium.
• The downside: Waiver of Premium is an additional cost rider that can be expensive.
• Cost: Cost varies by your age, health, and the company you choose.

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

Costco Life Insurance can be a good choice, but it’s important to understand when exploring other options that might serve you better. As an independent life insurance agency, we have access to over 50 top life insurance companies!

Here’s why comparing your options is smart:

• Finding the absolute best price: Other companies might offer lower rates depending on your situation and needs, including Protective Life products offered by independent agents like us.
• Health conditions: Some companies specialize in providing life insurance for pre-existing conditions.
• The right coverage: Costco might not be the solution if you need longer-term lengths or permanent life insurance.
• Personalized advice: We analyze and review your situation and recommend the best company and product based on your needs.

You must exercise caution with Costco Life if you have a family history. Below are the guidelines for Costco and Protective Life through the independent agent channel.

You will not qualify for the Costco “very good” rate if there is any family history of heart disease or cancer.

Underwriting through the independent agent channel would only penalize you if the parent or sibling died.

Costco Life (Very Good) Underwriting Guidelines	Protective Life9 (Select Preferred) Underwriting Guidelines
Family History of onset and/or death from heart disease (i.e., coronary artery disease)	No death from cancer, heart disease, or any cardiac-related condition of either natural parent or sibling prior to age 60.
Family history of genetically pre-dispositioned cancers (i.e., colon, lung, malignant melanoma, as well as gender-based ovarian, breast, and prostate)

Get your personalized comparison today!

Request a free, no-obligation quote, and we’ll carefully review your needs. Our service is free of pressure.

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

Step 1: Get a Free Life Insurance 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.

For your health category, you need to choose between:

• Excellent
• Very Good
• Good
• Fair

As you review the options, an information box below these choices will change to reflect how family history or health conditions may be a factor.

Protective uses a different system of rate classes than the terms “excellent,” “very good,” “good,” and “fair”.

• Select Preferred
• Preferred
• Standard

Step 2: Complete the Online 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

A representative will contact you to review your provided information and 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 the Underwriting Decision

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 not obligated to accept it; there is no cost if you reject it.

We can help you with this process by providing you with quote comparisons from all the top companies so that you can make a decision.

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 the 2024 Costco Member Advantage Consumer Approved Guide.

You have questions about Costco life insurance, and we have the answers.

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. Another life insurer may be better, even with the member discount.

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