Is Protective Life and Costco A Good Idea?

I’ve had several questions about the new Protective Life offering of life insurance through Costco. One client emailed, “So, I wanted to run something by you.  My husband and I were in Costco on Friday and they had an insurance booth set up.  The company was Protective Life, offering what they called a Member Advantage Universal Life product.  Apparently this is an exclusive for Costco.  I wanted to see if you were familiar with the company/product/underwriting.”

I am familiar with the Protective Life offering through Costco, and as with all things Protective, I and some of my clients have learned the hard way “buyer beware”. My understanding is that Protective has developed this product specifically for on line through Costco and Costco booth use. It offers a discount?? in the first 5 years of the policy and then a higher premium for the balance of the level death benefit period. Is it really a discount or just smoke and mirrors to make it appear that way.

So the client above has health issues, severe sleep apnea with sporadic compliance with the cpap and a left ventricular diastolic dysfunction, which I have shopped and found the best companies for. When she went to the Costco/Protective booth the person there quoted her a standard rate, but did indicate she might be able to get preferred. Well, first let’s talk about Protective’s long time stance on sleep apnea. They have never offered a preferred rate, even to someone with mild sleep apnea and total compliance with treatment let alone severe sleep apnea with questionable compliance. The diastolic dysfunction isn’t severe, but it doesn’t help this person’s cause with Protective. Having watched Protective over the last 20 years I am sensing that the person she was talking to had no, absolutely no idea what she was saying as it relates to Protective underwriting. Kind of a “I’m not very smart at this bait and switch”. The representative for Protective in Costco is paid to get applications signed and not worry about what happens after that.

So I went on line to Costco and found their link to Protective Life and started a conversation via chat. I laid out the specifics of the case seeking a quote. The person I was chatting with was, according to what I could see, a Protective agent. After reviewing the details he quoted a price and sent an illustration that was twice what the above client was quoted in Costco. BUYER BEWARE!! Searching further on line I found that, depending on the level of membership you had with Costco, you could get an even larger break during the first 5 years.  Isn’t that a little like running a credit check and offering a better rate to someone with a higher credit score? It’s one thing to offer a product through Costco that has a break built into it. To offer a larger break based on the level of membership, well, isn’t that rebating, an incentive to buy? So, upgrade your membership and get a break? Isn’t rebating illegal?

Bottom line. So to summarize we have Protective Life, a company with a reputation of being far less than forthcoming with customers and agents. We have Costco with a reputation for the variety and price of merchandise being their draw. So, way out of character they offer one product from one company for life insurance. We have Protective Life whose pricing and competitive prowess in the life insurance, especially anything with impairments, has waned over the last several years. We have life insurance with Protective Life and Costco that will leave customers with no option for customer service than to call the home office since no servicing agent will be assigned. Oh, and did I mention that Protective is now owned by Japanese conglomerate Dai-ichi Life. Protective/Costco BUYER BEWARE. If you have questions or would like to find the advantages of not falling for Costco/Protective Life insurance, call or email me directly. My name is Ed Hinerman. Let’s talk.