Costco Life Insurance Review: Will You Save With Their Policies?

Getting life insurance is an important decision and likely not one you think about when you’re shopping for the week’s groceries.

However, you may find that you can get a great policy at one of your favorite grocery stores, Costco.

But is Costco really the place to get your life insurance? Check out my review below.

About Costco Life Insurance

Costco is known for saving its members money on food, household products, furniture, and even clothing, but many people don’t know that they can save members’ money on life insurance too.

Fortunately, the insurance doesn’t come directly from Costco. They’ve actually partnered with Protective Insurance to offer their members an affordable and effective life insurance option.

Protective has an A+ Better Business Bureau rating and ‘AA’ ratings from Standard & Poors and Moody’s.

While it may seem strange to buy your life insurance the same place you buy Goldfish crackers in bulk, there are potential savings for members. Whatever it takes to save money, right?

The Highlights

  • Policies available in 10 or 20-year terms
  • Simple policies that are easy to understand
  • Premiums remain fixed for 5 years and then increase
  • Fast application process
  • Ability to convert the policies into permanent life insurance policies

Member Advantage Life Term

Costco offers a few life insurance policies, but the most popular is the Member Advantage Life Term policy.

This policy has features like a term life insurance policy, but the terms change when the initial coverage term expires. You can also convert it to a Universal policy at some point.

How it works

You choose from a 10 or 20-year level policy. Don’t let the name fool you though. The premiums are the same only for the first 5 years.

After that, they increase for the remainder of the term. For the 10-year policy, you’d pay higher premiums than the 5 year term. And for the 20-year policy, you’d pay higher premiums for 15 years.

Once your 10 or 20-year term ends, you may continue your coverage at the same premium, but there’s a catch.

Your death benefit decreases each year until it’s at $10,000. At that point, your premiums then increase annually.


Members have quite a selection of coverage options, starting at $100,000 and going up to $5 million.

If you decide to get a different kind of policy during the first 5 years, Costco allows you to transfer your policy to another Protective insurance policy without penalty or undergoing more underwriting.


Costco advertises a 15 percent savings over regular insurance rates for its members.

To put it into perspective, let’s look at the example Costco provides for a 40-year old male, non-smoker with $100,000 coverage, and a 20-year policy.

A gold member would pay $9.81 per month for the first 5 years and $11.48 per month for the remaining 15 years.

An executive member would pay $9.35 per month for the first 5 years and $10.88 per month for the remaining 15 years.

Members vs non-members

If members save 15%, that means non-members would pay $11.54 per month for the first 5 years, so members save $20 per year for the first 5 years.

After the first 5 years, members would pay $13.50 per year for 15 years, for a total of $2,430, or $364 more than non-members.

Riders included

Like most life insurance policies, Costco offers a variety of riders two of which are included at no cost:

Terminal Illness Rider

If you’re diagnosed with a terminal illness, you may access up to 60 percent of your death benefit to cover the cost of treatment.

This reduces the amount your loved ones receive upon your passing, but it helps cover the expenses you incur.

Income Provider Option Endorsement

If you’d prefer to pay your beneficiaries in smaller amounts rather than one lump sum, you can choose this rider. Your loved ones will receive benefits for 30 years after you pass.

Additional riders

The remaining riders are available for an extra fee:

Children’s Term Life Insurance

You can provide your children with up to $20,000 in life insurance.

The coverage lasts until they are 25 years old. If they choose to, they can convert the policy to keep it themselves.

Disability Benefit Rider

If you become disabled for longer than 6 months, you don’t have to pay your premiums, but get to keep the insurance.

Accidental Death Benefit Rider

If your death is an accident, your beneficiaries will receive a larger death benefit payout.

Costco Life Insurance Rates for Smokers

Smokers always pay higher premiums than non-smokers because of the risk they pose.

Costco, however, lumps all types of smokers in one category. This increases rates for occasional cigar smokers just as much as it does for the pack-a-day smoker.

Costco Life Insurance for Diabetics

Like most insurance policies, Costco has lower premiums for diabetics who have their insulin and blood sugar levels under control versus those that don’t.

If you can prove you aren’t insulin-dependent, you may keep your premiums down.

Pros & Cons


  • Costco offers affordable policies with a few options
  • There are many rider options
  • You get a discount on insurance backed by a solid insurance company
  • Great customer service
  • Lower premiums for 5 years


  • Your rates increase after 5 years
  • You only have one insurance company option
  • You only have 2 term choices (10 or 20 years)

What Customers Say

For the most part, customers are happy with Costco’s life insurance policy. Most complaints are about the lack of coverage options or policies.

Some customers have reported an issue with customer service, but those complaints are few and far between.

Customer service complaints are actually common with any life insurance company as they are dealing with customers in a heightened state, especially when filing a claim.

Applying For Coverage

You apply for Costco’s life insurance online. You’ll need your member ID to get started.

After you complete the application, a representative will call you to discuss the next steps which are the paramedical exam and underwriting.

You’ll also discuss your medical history and potential costs of the policy.

Other Policies & Companies

Universal Life isn’t the only life insurance option available today.

It’s important to understand the other choices you have, and even more important to shop around for the best rates.

Term Life Insurance

Term life insurance lasts for a specific term, such as 10 – 30 years.

If you’re alive when the policy expires, you may renew it at a higher premium based on your older age and medical conditions or buy a new policy.

You don’t get back any of the premiums you paid into the policy.

Permanent Life Insurance

Permanent life insurance lasts for your lifetime. You don’t have to worry about renewing it or undergoing a medical exam again.

Many permanent life insurance policies also have a cash value, which you can use while you’re alive to supplement your retirement income, pay for large expenses, or even cover your premiums.

Final Expense Insurance

Final expense insurance is for seniors without life insurance. It’s a permanent life insurance policy that covers your final expenses (funeral, burial, and final medical expenses).

Most policies don’t require a medical exam and offer guaranteed coverage but at much smaller amounts, typically no more than $50,000.

Recommended Companies

New York Life Insurance

New York Life is one of the most well-known life insurance companies today.

They offer a large variety of policies including term and whole life policies, their term policies even have future options that protect you for the rest of your life if your term expires.

Protective Insurance

Protective, the company that Costco partnered with has a large variety of other policies aside from the Term Advantage offered to Costco members.

If you want a permanent life policy or universal life policy, consider what Protective offers including guaranteed level term life insurance with consistent premiums over the entire term.

AIG Life Insurance

AIG offers some of the most affordable premiums in the life insurance industry along with flexible terms.

They introduced and still highly encourage term life insurance laddering, which gives clients the option to purchase policies in various terms.

Each of those terms covers specific factors, such as a mortgage, a child’s college education, or even a spouse’s cost of living for a certain period.

Gerber Life Insurance

Gerber offers whole life insurance policies for children. If you’re thinking of setting your children up financially, now is the best time to start and life insurance is a great way to do it.

Gerber also offers life policies for the whole family including term and whole life. Their premiums are affordable and their policies flexible, including no-medical exam policies.

Should You Choose Costco Life?

Costco partnered with a reputable life insurance company, so the policies are reputable and for many, affordable. But is it the only option out there, and should you take it?

That depends on your circumstances but I suggest that you shop around.

Include the Costco life insurance policy in your comparisons and see which policy offers the best coverage, most affordable premiums and best features for your particular needs.

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