Benefits of Costco Membership

After BJ's closed the branch where we had our membership, we decided to give Costco a try. We had a Costco membership in the past, but the store was a bit farther and we were not using it often to justify the membership. After BJ's closed, we had no choice, but to go to Costco. And I am glad that we did. Once I became a Costco member, I quickly realized that its membership benefits go beyond the discounts on bulk purchases at its warehouses. Here are some of the non-obvious/overlooked benefits of a Costco membership.

Car, Home, and Umbrella Insurance

Costco offers a car and a home insurance products through its tie-up with Ameriprise Insurance. Ameriprise is an insurance arm of American Express (AMEX). AMEX is known for its superior customer service and ranks consistently higher among all credit card companies. Costco members get a significant discount for insurance products. I had my car insurance through Geico before Costco. Geico used to cost me $325 for a 6-month premium. With Costco-Ameriprise insurance, my initial 6-month premium was only $190 for the first 6-months, and then went down to $160 after that. If you are an Executive member of Costco, then roadside assistance is free of cost on your insurance policy, possibly saving you another $60 on your AAA membership. Update 1/22/2013: I recently bought 2009 Honda Accord. My new comprehensive insurance on both cars (Rav4 + Accord) is now $480 for 6-months.

Similarly. my yearly premium on my homeowner's policy was $750 with Geico-Travelers. Now, with Costco, my yearly premium is only $450  $413 (Update: 9/9/2012 Ameriprise keeps on lowering my premium each year). Overall, I have saved more than 50% (total of $620) on both my car and homeowner's policies through Costco. This itself is enough to justify the $110/year Costco Executive membership. (Total Savings: $555)

Update 6/15/2012: Very recently, I also bought an Umbrella policy through Costco Ameriprise at an excellent price point. For $1 million dollar policy (for owner of 1 house + 1 car), I received a quote of $130. Previously, when I had the Umbrella policy 3 years ago with Geico, I used to pay ~$200. So, I'm receiving savings of $70 instantly on the Umbrella policy. Plus, I'm also receiving a multi-policy discount of $17 on my car insurance. The total savings on Umbrella policy is ~$87. (Total Savings: $680)

Update 9/9/2012: Very recently, I bought a brand-new 2012 Toyota Rav4 because my previous Corolla has been totaled due to an accident. On my new SUV, I got the comprehensive insurance with a deductible of $1000. My 6-month premium on this policy to my surprise is ONLY $310. Interestingly, when I had the same comprehensive coverage through Geico during my initial years of purchase of the used Corolla, my premium was approximately $750. (Total Savings: $900)

Mortgage

Costco also offers mortgage products through its tie-up with top national lenders who have committed to providing superior pricing, excellent member service, and fast response times. If you obtain mortgage through Costco's website from any of the lenders, then lender fees are capped and will never go above what Costco displays on its website. Plus, you consistently get better interest rates than advertised by any of the online or brick-and-mortar outlets. For example, if you are an Executive member, your lender fees will NOT go above $600. When I was refinancing mortgage last year, Bank of America quoted me lender fees of $675. I ended up refinancing my existing BOA mortgage through CapWest Mortgage who has teamed up with Costco. They charged me lender fees of $595. (Total Savings: $80)

Auto-Buying Program

Costco has also teamed up with 2200 car dealers nationwide to offer low pre-arranged pricing for its members. One of the advantages of this program is that you would not need to do any haggling with car dealers. Typically, negotiating car prices (even if you are buying a new car) is one of the stressful experience. I personally have not bought a car through Costco's auto-buying programs. But, I have heard rave reviews from a co-worker who used it and loved the customer service he got from the dealer.
Update 1/22/2013: I tried Costco Auto Program when buying Rav4 and again on Honda Accord recently. On both occasions, I did not get any better deals than Internet prices posted on dealers' website. In my opinion, Costco Auto Program is not useful.

Health Insurance

Costco has also teamed up with Aetna to provide a competitive health insurance offering. Coincidentally, my employer sponsored health insurance also through Aetna, so I have not needed to buy any health insurance through Costco. But, I am personally interested in learning more about getting high deductible health plan (HDHP) with a Health Savings Account (HSA) through Costco. HSA is appealing to me for tax saving reasons, but it is currently not offered with my employer sponsored plan. I have not yet ventured out of the comfort zone because maths doesn't seem to work for out of pocket health insurance premiums. Since I have employer sponsored health insurance with subsidized premiums, I will stick with that for now. But, Costco might be a great insurance for self-employed, unemployed, or under-employed individuals who are looking for a trustworthy insurance product.

Costco Travel

Costco also offers vacation travel products. I have seen a lot of good deals, although I have not used any of the deals so far. But, in the future I plan on using a deal on our vacation next year. (Update 5/24/2012: I decided to take an impromptu trip for this memorial day weekend. I have booked a rental car through Costco. With Costco, renting a mini-van for 1 day with a fairly last minute booking is costing $65. At Orbitz, the same car at the same location is renting for $75. (Total Savings: $10)

Cash backs (Executive Membership)

Apart from the benefits mentioned above for insurance and mortgage for Costco Executive members, Costco provides a 2% cash back of all non-gasoline purchases made at Costco. If you are a family of 4, this could easily mean an extra 20-40 dollars every year. I received ~$20 in my first year, and we don't even spend like average American household because we're only a 3 person family (including a young baby) that eats only fresh vegetarian food. (Total Savings: $20)

Conclusion

Costco Membership provides the best value for your money. In this post, I did not even mention the hundreds of dollars my family has saved by buying quality products in bulk and using their coupons to save even more on already lower prices. If you count those, your Costco membership is priceless.
First Year Annual Savings with Costco: $720
Second Year & Beyond Savings: $1000