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Costco Life Insurance Review for Canadians

Costco Life Insurance Review for Canadians
Costco Life Insurance Review for Canadians

Costco Life Insurance provides an intriguing option for Canadians, bundling discounted coverage alongside household essentials and gas. But does the convenience equate to true value? In this Costco Life Insurance review, we analyze their bundled term life, accidental death, and disability policies, rates, pros and cons to determine if Costco delivers worthwhile protection compared to leading life insurers in Canada.


Buying life insurance can be confusing with so many options. How do you know which provider will best protect your family? Here, we provide a comprehensive review to help Canadians decide if Costco’s offerings are worthy or if better choices exist.

What is Costco Life Insurance Offering in Canada?

Overview of Costco Life Insurance Offerings in Canada
Overview of Costco Life Insurance Offerings in Canada

Costco has partnered with Manulife, one of Canada’s largest and most well-established insurance providers, to offer bundled insurance coverage options to Costco members:

  • Term Life Insurance (10-year and 5-year policies)
  • Accidental Death & Dismemberment (AD&D)
  • Disability Income Protection

While marketed under the Costco brand, the policies are actually fully underwritten and administered by Manulife. Let’s explore each option’s key details for Canadians.

Costco Term Life Insurance

Costco offers Canadian members two types of renewable term life insurance policies through Manulife:

10-Year Term Life

  • Available for ages 18-70
  • Provides level, guaranteed premiums for an initial 10-year term
  • Death benefit coverage ranges from $50,000 to $1 million
  • Automatically renews every ten years until age 80 (premiums increase at renewal)
  • Can convert to a permanent life insurance policy prior to age 80
  • No medical exam is required for coverage under $250,000 for applicants through age 50
  • Includes living benefit, job loss premium waiver, and accidental death benefit

Full review: Term 10 Life Insurance

5-Year Term Life

  • Available for ages 18-65
  • Provides level, guaranteed premiums for an initial 5-year term
  • Death benefit coverage ranges from $50,000 to $750,000
  • Automatically renews every 5 years until age 75 (premiums increase at renewal)
  • Can convert to a permanent life insurance policy prior to age 75
  • No medical exam is required for coverage under $250,000 for applicants through age 50
  • Includes living benefit accelerated payout

Full review: 5-Year Term Life Insurance

Policy Limitations

  • Term lengths are limited to only 5 or 10 years initially
  • Renewal premiums increase annually after the initial term expires
  • Policies above $250,000 for ages 50+ require a medical exam
  • Pre-existing conditions may impact eligibility if undisclosed

Overall, Costco’s term life insurance provides temporary coverage but limited durations compared to other insurers.

Costco Accidental Death & Dismemberment

Costco members can add an Accidental Death & Dismemberment (AD&D) rider to their 5-year term life policy for extra protection. Key features:

  • Provides additional death benefit if death occurs due to a covered accident before age 75
  • Also pays partial amounts for dismemberment or loss of senses
  • Available death benefit coverage from $50,000 to $750,000
  • Premiums remain level for each 5-year term period
  • Automatically renews along with the base term life policy until age 75

Costco Disability Income Protection

An optional disability income rider can be added to Costco’s 5-year term life policy as well. Details include:

  • Provides monthly disability benefit payments in case of injury/illness resulting in an inability to work
  • Monthly benefit amount chosen based on income, from $1,000 to $5,000
  • Benefit duration options: 2 years, 5 years, or to age 65
  • 90 or 120-day waiting period options before benefits begin
  • Available for applicants aged 18-60
  • Automatically renews along with the base term life policy until age 65
  • Premiums remain level for each 5-year term period

Overall, the add-on coverage options from Costco allow members to customize their protection. But benefits and terms are still not as extensive as some other leading insurers.

Costco Member Discounts

As a big perk, current Costco members get guaranteed discounted pricing on life insurance, especially on higher death benefit amounts:

  • 10% discount on 5-year terms over $200,000
  • 25-30% discount on 10-year terms over $250,000 or $500,000

Executive members save an additional 5% on top of these member discounts.

However, even with discounts, Costco’s rates may not beat those of other insurers. Let’s analyze the key pros and cons.

Pros and Cons of Costco Life Insurance for Canadians
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Pros and Cons of Costco Life Insurance for Canadians

Pros of Costco Life Insurance for Canadians

Convenience of One-Stop Shopping

Getting life insurance along with your groceries and gas makes finances simple for Costco devotees.

Access to Manulife’s Financial Strength

Policies are backed by Manulife’s strong balance sheet rather than Costco directly.

Guaranteed Member Discounts

Saving 10-30% off retail rates is appealing, especially on higher death benefits.

Streamlined Underwriting

No medical exam is required for ages 18-50 on smaller policies. Quick and easy.

Ability to Renew

Renewable term policies maintain coverage later into life without new underwriting.

Cons of Costco Life Insurance for Canadians

Mixed Reviews of Claims Process

Despite Manulife’s solid financials, customer feedback on the claims process itself is mixed.

Must Maintain Costco Membership

If you cancel your Costco membership, your discounted insurance rates also disappear.

Limited Plan Options

Only 5 and 10-year renewable term life plans are offered to members.

Rate Hikes Upon Renewal

After the initial term, premiums jump each year as you age. They can become prohibitively expensive later in life.

May Still Find Lower Rates Elsewhere

Even with discounts, Costco’s rates are not guaranteed to beat competitors for all ages and needs.

Who is Costco Life Insurance Best For in Canada?

Given the pros and cons, Costco life insurance may make sense for:

Existing Costco Members

You’ll get the most value from the member pricing if you already shop regularly at Costco.

Seeking Short Term Coverage

The 5 or 10-year terms provide temporary family financial protection that aligns with near-term needs.

Need Higher Coverage Amounts

The discounts have a greater dollar impact on policies over $200,000 or $500,000.

Younger and Healthy

The potential to skip medical exams makes underwriting easy for younger healthy adults.

Who Should Think Twice About Costco Life Insurance?

Certain Canadians may want to take a closer look at other options:

Pre-Existing Health Conditions

Those with illnesses may pay higher premiums or get declined, limiting value.

Permanent Coverage Needs

Costco only offers term life, not whole or universal life, for lifelong protection.

Want Longer Term Lengths

Maximum coverage of 10 years may not provide long enough income replacement or coverage durations.

Unsure about Maintaining a Costco Membership

If you cancel your membership soon, the attached insurance discounts will disappear, too.

Costco Life Insurance Sample Monthly Premiums

Costco Life Insurance Sample Monthly Premiums
Costco Life Insurance Sample Monthly Premiums

To provide an example of how Costco’s 10-Year Term Life Insurance policy premiums are calculated and what sample rates look like across different ages, refer to the monthly premium per $25,000 table directly from Costco’s brochure:

Costco 10-Year Term Monthly Rates Per $25,000 (from brochure):

AgeNon-Smoker MaleNon-Smoker FemaleSmoker MaleSmoker Female
18-30$2.35$1.89$3.59$2.73
35$2.51$2.06$4.09$3.18
45$3.80$3.00$8.18$6.43
55$8.08$6.99$20.63$12.24
65$26.62$15.32$53.41$30.39

These rates are per $25,000 increment of coverage. So, to determine the total monthly premium:

  • Take the rate for your age bracket
  • Multiply by the number of $25,000 units needed to reach your desired coverage amount

For example, for a 35-year-old non-smoking female wanting $200,000 of coverage:

  • The rate for age 35 is $2.06
  • $200,000 coverage equals 8 units of $25,000
  • Multiplying the rate by units gives a monthly premium of $16.48

Below are sample monthly premiums for $200,000 of coverage calculated using the brochure rates:

Costco 10-Year Term Sample Monthly Premiums for $200,000 coverage:

AgeNon-Smoker MaleNon-Smoker FemaleSmoker MaleSmoker Female
35$20.08$16.48$32.72$25.44
45$30.40$24.00$65.44$51.44
55$64.64$55.92$165.04$97.92
65$212.96$122.56$427.28$243.12

These samples illustrate how premiums scale by age and smoker status for a consistent $200,000 death benefit under Costco’s 10-Year Term Life policy. Premiums are guaranteed not to change over the initial 10-year term period.

Getting Costco Life Insurance Without a Medical Exam in Canada

One major perk advertised by Costco is the ability to obtain life insurance coverage without undergoing a full medical exam. However, there are some important caveats to be aware of:

  • Applicants ages 18-50 can qualify for up to $250,000 in coverage without needing a medical exam when applying for Costco’s renewable term life insurance.
  • Older applicants age 51-55 can also get up to $250,000 in coverage without an exam.
  • For policies above $250,000, a full medical exam will be required, regardless of age. Costco does not offer a “no exam” option for higher coverage amounts.

So while medical exams are waived on smaller policies for younger members, applicants still need to complete an extensive health questionnaire and tele-interview when applying. This health questionnaire asks detailed questions about:

  • Medical conditions and treatments
  • Prescription medication history
  • Family health history
  • Lifestyle factors like smoking, alcohol use, driving record
  • Hobbies and activities

The answers provided on this health questionnaire will determine eligibility and rates offered. Even without a full paramed exam, life insurance is still subject to underwriting approval based on the health information disclosed.

Pre-existing medical conditions, high-risk occupations, extreme sports hobbies, or other factors could potentially lead to coverage denial or higher premiums – even without a medical exam.

In summary, while useful for younger applicants seeking smaller coverage amounts, Costco’s “no exam” life insurance still involves comprehensive medical questions and underwriting. It is not an instant approval option. Consumers must accurately disclose medical history and lifestyle to determine eligibility and pricing. For larger policies, exams cannot be avoided.

Working with an experienced life insurance advisor can help navigate the application to match appropriate carriers and terms to your unique health profile.

Costco Life Insurance Claims Experience in Canada

While the financial backing for Costco life insurance policies comes from Manulife’s strong balance sheet, it’s still important to consider how the actual administration and claims payment process is handled.

Here, reviews of the claims experience with Costco Life Insurance plans are somewhat mixed, according to policyholder feedback:

  • Some beneficiaries report frustratingly slow response times, with delays of weeks or months before claims are addressed.
  • The claims process often involves significant back and forth, repeatedly requesting duplicate forms and documents that were already submitted.
  • In more complex claim situations, there are reports of delayed decision-making by Manulife regarding payouts.
  • For consumers filing a claim, the process was not always smooth and seamless.

This suggests that while Manulife has the scale and systems of a large insurer, there is room for improvement in the claims administration process for Costco life insurance policies. The partnership arrangement may contribute to the issues.

If considering Costco life insurance, it is important to carefully read the fine print of the policy and understand exactly what your beneficiaries will need to provide to file a claim down the road. This includes death certificates, physician statements, investigative reports, and specific claim forms.

Also, confirm with your advisor what to expect regarding timeframes, document requirements, and payout procedures in the event your claim must be filed. Getting clarity upfront allows you to set proper expectations.

Ideally, your life insurance provider should make the claims process as smooth and hassle-free as possible for your beneficiaries during an already challenging time. Shop carefully to find a partner you can trust to pay claims promptly and compassionately when needed most.

Is Costco Life Insurance Worth It in Canada?

While the convenience and discounts are nice features, determining true value takes thorough comparison shopping:

  • Compare Costco’s rates to other top insurers using an independent broker
  • Calculate the impact of future price hikes upon each renewal
  • Make sure coverage amount and terms align with income and lifespan needs
  • Consider scenarios like loss of membership that would forfeit insurance discounts

Getting the right life insurance is too important not to do your due diligence. For some Costco devotees, bundling policies may make great sense. For others, deeper evaluation may reveal better options.

While Costco offers the convenience of bundling discounted life insurance with regular shopping, make sure to compare plans and rates to other top providers’ offerings as well.

For an overview of leading insurers available in Canada, see our comprehensive guide reviewing the characteristics and key benefits of the Largest Life Insurance Companies in the country : Canada Protection PlanRBC InsuranceCanada LifeDesjardinsWawanesa, Canadian Life Insurance, TD InsuranceIndustrial AllianceBMO Insurance, American Income Life Insurance Company in Canada, etc.

Get the right policy for the right price to protect your loved ones with just one visit.

Frequently Asked Questions about Costco Life Insurance

What types of life insurance does Costco Canada offer?

Costco currently offers only two types of renewable term life insurance: a 10-year term and a 5-year term. They do not offer any permanent life insurance options.

How do Costco's life insurance rates compare?

Costco provides discounted rates to members, especially on higher coverage amounts. However, their costs may still be beat by other top insurers in Canada based on your specific age and needs. Getting quotes from a broker can reveal where pricing is most competitive.

Can I get Costco insurance without a medical exam?

Costco allows ages 18-50 to qualify for up to $250,000 in coverage without a medical exam. Ages 51-55 can also skip the exam for smaller $250,000 policies. However, their health questionnaire is still extensive.

What are the coverage amounts and terms?

Both of Costco's term life policies provide death benefits ranging from $50,000 to $1 million. The 10-year term renews up to age 80, while the 5-year term renews up to age 75.

Does Costco sell whole life insurance?

No, Costco does not currently offer any type of permanent whole life insurance in Canada - only the renewable 10 and 5-year term life policies are available to members.

How do I cancel my Costco life insurance?

To cancel within the 30-day free look period, submit a written notice to Manulife for a full premium refund. After this period, send a written request along with your original policy documents to process a cancellation.

Can I renew my Costco life insurance policy after ten years?

Yes, you can renew a Costco 10-year term life insurance policy in Canada after the initial term expires. It renews annually up to age 80 with increasing premiums.

Does Costco sell mortgage life insurance in Canada?

No, Costco does not currently offer mortgage life insurance policies specifically. Their term life plans can provide general coverage to pay a mortgage if you pass away.

Is Costco life insurance A+ rated?

Costco life insurance in Canada is underwritten by Manulife, which holds an A+ (Superior) rating from A.M. Best. This reflects excellent financial strength.

Can I get a Costco life insurance quote online?

You cannot get an instant online quote for Costco life insurance in Canada. You need to call in and speak with an advisor to discuss options and receive a personalized quote.

Does Costco Canada offer universal life insurance?

No, Costco does not currently offer universal life insurance policies in Canada. They only provide 10 and 5-year renewable term life insurance.

How much is a $500K Costco life insurance policy?

A $500,000 Costco 10-year term life insurance policy would cost around $37 monthly for a 35-year-old. Costco members get 25-30% discounts on policies over $250K or $500K.

Is Costco life insurance cheaper than Sunlife?

Costco term life insurance can potentially be cheaper than Sunlife, especially if you qualify for their coverage amount discounts. But you need to compare quotes.

How long does it take to get approved for Costco life insurance?

It typically takes 1-2 weeks to get approved for Costco life insurance in Canada after completing the application, phone interview, and any required medical exams or tests.

Does Costco sell guaranteed life insurance in Canada?

Costco does not offer guaranteed issue life insurance in Canada. All policies require an application with health questions and underwriting approval. Pre-existing conditions can lead to denial.

Sources

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Written by Ben Nguyen

Ben Nguyen is an award-winning insurance expert and industry veteran with over 20 years of experience. He is the chairman and director of IDC Insurance Direct Canada Inc., one of Canada's leading online insurance brokerages.

Ben is renowned for his extensive knowledge of life, health, disability, and travel insurance products. He is the prolific author of over 1,000 educational articles published on LifeBuzz, BestInsuranceOnline, and InsuranceDirectCanada. His articles provide Canadians with advice on making smart insurance decisions.

With a Bachelor's degree in Actuarial Science and a Fellow of the Canadian Institute of Actuaries (FCIA) designation, Ben is frequently interviewed by media as an insurance industry spokesperson.

He has received numerous honors including the Insurance Council of Canada’s Pivotal Leadership Award, the Canadian Insurance Hall of Fame induction, and the President’s Medal from the Canadian Institute of Actuaries.

Ben continues to shape the vision and strategy of IDC Insurance Direct as chairman. He is dedicated to advancing the insurance industry through his insightful leadership.

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