Life Insurance Lessons from Costco

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Why do you think Costco attracts so many shoppers and continues to out-perform its competitors?

Costco has a simple formula that we can apply to our life insurance buying habits: Higher volumes, focused choices, no frills or expensive advertising and more qualified, happy staff. Once you roll your monstrous shopping cart through Costco’s warehouse, do you spend $50 – $100 on a few items that you’ll need for the next few days, walk out and come again half a week later to do the same? Of course not! You spend $500 on a large cart full of stuff every few weeks! Does Costco offer you exhaustive brand choices? Not really. You tend to trust what they’ve chosen to put on the shelves, whether it’s blue jeans, the latest books, Kirkland batteries, peanut butter or toilet paper and you’ll probably buy a lot of it! Costco employees are treated well. I recognize many of the people from when our local Costco opened in 1988! I can count on smiling faces when I shop there and they are very qualified to help. Life insurance buying is similar. If you buy several policies at several different times, there will be administrative costs attached to each policy and factored into the pricing. However, if you consolidate several coverages together under one policy (one cart), you will only pay one administrative cost. Structured properly, your cost per thousand will also fall with higher total coverage amounts. Be careful next time you’re asked to check the “Want some life or disability insurance” box every time you take out a loan, especially with your mortgage. You may be stepping into the trap that distracted retail shoppers fall into every day. Be extra careful when the credit card company calls you back offering their “balance protection” coverage.

The Benefits of Life Insurance Consolidation

It is typical for us to see cases where people are paying separately for multiple life, disability and critical illness coverages under their own policies, group policies, direct with their mortgage providers and attached to their various consumer debt and credit card obligations. Ultimately, there are inefficiencies that could be costing hundreds or even thousands of dollars a year. Invested appropriately, these savings could mean the difference between financial independence or “just getting by.” Insurance companies are more competitive now than they have ever been and the landscape has changed dramatically over the past few years. It pays to have a guide by your side who can help you navigate through the complexity. Ironically, Costco offers life insurance but they don’t get close to the experience and pricing that a qualified independent broker can provide. You will be best served through a truly independent and qualified insurance advisor following this simple process:

  1. Help you determine your true needs in the context of a broader financial plan.
  2. Evaluate your existing coverages features, contractual terms and pricing.
  3. Design the best insurance program for your needs.
  4. Go to the market and find the best carriers to insure those risks.
  5. Walk you through the underwriting process.
Don’t feel embarrassed if you feel your insurance portfolio is not the way it should be. Most people never learned this in school! Find a trusted advisor who can take care of this for you. If you like, we offer a very simple life insurance needs calculator which will help to start the conversation. Simply click the box below to get started.

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