gerber grow up plan? Life insurance for kids?

[PaDisney02]

Hi, I have the gerber grow up plan for my two kids and I'm just wondering how many others have it? I read various articles on whether or not life insurance is worth it for children....what are all of your opinions? Am I wasting my money?

 

[BriarfoxinWA]

Hi, I have the gerber grow up plan for my two kids and I'm just wondering how many others have it? I read various articles on whether or not life insurance is worth it for children....what are all of your opinions? Am I wasting my money?

I have a policy on each of my boys - both are through Globe Life Insurance. I don't know if it is a waste or not. Probably is but its relatively cheap.

 

[Christine]

I've always read in those financial advising articles that there is no reason for it.

The purpose of life insurance is to provide an income to survivors should the insured become deceased. This income would take the place of what the insured was providing to the benificiaries while alive.

Using that definition, what financial support is your child providing you while alive? What financial detriment will your child incur to you should that child die? For most people, it is funeral and medical expenses. So, if you feel that the death of your child would/could place a financial strain on you, then it might be okay to buy it.

 

[mjkacmom]

DH is a CFP, and insists these are NOT a good investment. I guess if you don't have extra money for funeral costs, it can help, but if you invested the money you spend on premiums in a mutual fund, your child will have WAY more money later on.

 

[4greatboys]

We did the Gerber grow up plan for all 4 of our boys. It was a reasonable amount.

 

[dawson5]

does your work offer life insurance? My husband's work offers life insurance (along with long and short term disability) and we were able to add our children on. I think they are covered up to $10,000 and it costs like $4/mo for all three. I think it ends up being $1.32 a week (about). For us it seemed like a good deal. If it was $30/mo per child, not a great deal, make a payment into a savings account.

 

[jlewisinsyr]

Work in the financial industry and I don't think they're worth it. The test for insurance is that it should offset a catastrophic loss, in the case of death that would be financial needs for the survivors. Considering a child, in most cases, does not generate income, the test fails.

 

[scrapquitler]

My Dad's finance guy told me when I asked that the only way this is a good plan is if you have a child that has some medical condition that will make it impossible for that child to obtain Life insurance later on in his or her life time.

 

[dawson5]

My Dad's finance guy told me when I asked that the only way this is a good plan is if you have a child that has some medical condition that will make it impossible for that child to obtain Life insurance later on in his or her life time.

we have boys, we thought it was enough of a medical condition So far no broken bones, but they've knocked out teeth and had a concussion from football. Oldest is due to get his license

 

[The Mystery Machine]

My Dad's finance guy told me when I asked that the only way this is a good plan is if you have a child that has some medical condition that will make it impossible for that child to obtain Life insurance later on in his or her life time.

Well you won't be able to get it in the first place more than likely. My dd is uninsurable since she had a repaired heart defect.

I am hoping that when she gets a job she can get life insurance thru her work.

As far as the "test failing" I suppose that is true for most kids however if you were able to get life insurance early and your child dies of long term illness, you might find you have many medical bills to pay off. I could see it helping there.

 

[jlewisinsyr]

Well you won't be able to get it in the first place more than likely. My dd is uninsurable since she had a repaired heart defect.

I'd look more into the uninsurable bit. More and more companies (including the one I work at) have been playing around with new modeling technology which has change a lot in terms of what is considered a risk and what is not. Now I don't think she'll be able to get the lowest rate, but I would find it hard to believe that she is completely uninsurable in the modern marketplace. Things like paternal and maternal heart conditions used to make their children rate in high risk but more and more companies are realizing there is a mix between genetics and personal lifestyle, with genetics taking more of back seat to personal lifestyle.

As far as the "test failing" I suppose that is true for most kids however if you were able to get life insurance early and your child dies of long term illness, you might find you have many medical bills to pay off. I could see it helping there.

Don't confuse the need for proper and adequate health insurance for the need for life insurance.

 

[mickeyplanner08]

OK, just another perspective. My friend's funeral held last month was close to $12,000. A small policy on your children can provide for those costs for a minimal amount. I don't know what the amount was through my husband's work for $10,000 on each of the kids, but it was less than $4 per pay period (and might have been less than $4 a month). Unless you have a large chunk of change to cover those very unexpected costs, it may be worth it for your peace of mind.

 

[Christine]

OK, just another perspective. My friend's funeral held last month was close to $12,000. A small policy on your children can provide for those costs for a minimal amount. I don't know what the amount was through my husband's work for $10,000 on each of the kids, but it was less than $4 per pay period (and might have been less than $4 a month). Unless you have a large chunk of change to cover those very unexpected costs, it may be worth it for your peace of mind.

That's basically what I heard the policy is for.

 

[CowboyCO]

I have a $10K policy on both my kids for $3/month. If God forbid, something should happen, the policy would pay for the funeral expenses and time away from work while grieving. My DW hates that I have it, because she doesn't want to think about it. It's not an investment. It's insurance. Insurance shouldn't ever be an invesment, because if you want to invest, you should invest.

 

[golfgal]

I've always read in those financial advising articles that there is no reason for it.

The purpose of life insurance is to provide an income to survivors should the insured become deceased. This income would take the place of what the insured was providing to the benificiaries while alive.

Using that definition, what financial support is your child providing you while alive? What financial detriment will your child incur to you should that child die? For most people, it is funeral and medical expenses. So, if you feel that the death of your child would/could place a financial strain on you, then it might be okay to buy it.

DH is a CFP, and insists these are NOT a good investment. I guess if you don't have extra money for funeral costs, it can help, but if you invested the money you spend on premiums in a mutual fund, your child will have WAY more money later on.

If you look at the policies this way, yes, they are not worth it but you buy life insurance on kids to make sure they can get it when they are older-adults and have their own families to support. Many illnesses children get make them uninsurable as adults. It is worth the few dollars/month for that protection.

We have sizable plans on our kids mainly to get them started on their own retirement planning later on. We have some very nice whole life plans on them that have some very nice cash values on them. Yes, we can put that money into mutual funds but then you pay tax on the dividends and you pay tax on the money when you use it vs the whole life polices we have where they grow tax free and you can use the money tax free. It is a MUCH better deal for our purposes.

Many CFP's will tell you that mutual funds are the way to go because they make more money on the mutual funds and they don't understand whole life insurance policies. For the 9+% rate of return we have been getting on our whole life, I would MUCH rather park this money there then in mutual funds, not that mutual funds aren't good, just not for this purpose.

As adults, our kids will be able to purchase close to $2,000,000 in insurance no questions asked. To me, that is worth every penny.

Being a CFP doesn't mean all that much other then you passed a test quite frankly.

 

[Christine]

Being a CFP doesn't mean all that much other then you passed a test quite frankly.

I'm not a CFP, I don't know a CFP, nor will I ever go to one. I try to do a lot of reading on my own. I have never found one piece of advice that stated that whole-life insurance policies were a good thing. I've only heard the negatives. The only people who have ever talked them up are insurance agents, which I guess in that regard, are no better than CFPs.

Bottom line is, everyone has to do the thing that helps them sleep better at night and the thing they can feel most comfortable with. Even though I'm not a huge fan of Suze Orman's style, that is the one thing she says that makes sense. While she believes in investing, she says not to do it if it upsets you too much. If you sleep better with it in a 1.5% interest savings account--so be it.

 

[jlewisinsyr]

Bottom line is, everyone has to do the thing that helps them sleep better at night and the thing they can feel most comfortable with. Even though I'm not a huge fan of Suze Orman's style, that is the one thing she says that makes sense. While she believes in investing, she says not to do it if it upsets you too much. If you sleep better with it in a 1.5% interest savings account--so be it.

I cannot stand Suze, I find her advice very self defining and almost stubburn at times.

 

[MrsPete]

Others have already given the answer:

You purchase a life insurance policy to replace income. The vast majority of children do not bring home an income.

For example, a father who is the sole support of his family MUST have life insurance; if his income was lost, his family would be devestated financially. The mother in this traditional-family model should also be insured because if she should die, the father would be forced to pay (quite a bit) for services she is now providing: child care, transporatation, etc. But consider the children in this situation . . . if one of them were to die, the family would not be worse off financially. They would not need to replace income.

It is wise to have a SMALL burial policy. Through my work, I can buy a $10,000 per child policy for $1 per family per year.

That's a throw-away amount of money. Before you start spending real money, calculate up what you'd have if you invested this small amount each month. What's more likely? That your child would appreciate that money when he's just getting out on his own, or him dying young? Also, they promise that your child will be able to continue this insurance as an adult . . . but do they say at what price? It won't be that low price you're paying now. If the child turns out to have a condition that makes him difficult to insure, they can simply price the policy out of a middle-class person's reach.

Bringing up a similar subject, you're much more likely to become disabled than to die while your children are small. In addition to life insurance, adults should have disability insurance. Going back to the above traditional family example, the nightmare situation isn't the father's untimely death -- the financial nightmare situation is that the father becomes disabled, runs up huge medical bills, needs extensive medical care, AND is not bringing home a paycheck OR collecting on his life insurance. Mom, now caring for both children and an ill spouse, may be unable to go get a job. Without disability insurance, this family is screwed.

All this sounds cold-hearted when you discuss it, but it's important.

 

[mjkacmom]

We have sizable plans on our kids mainly to get them started on their own retirement planning later on. We have some very nice whole life plans on them that have some very nice cash values on them. Yes, we can put that money into mutual funds but then you pay tax on the dividends and you pay tax on the money when you use it vs the whole life polices we have where they grow tax free and you can use the money tax free. It is a MUCH better deal for our purposes.

Many CFP's will tell you that mutual funds are the way to go because they make more money on the mutual funds and they don't understand whole life insurance policies. For the 9+% rate of return we have been getting on our whole life, I would MUCH rather park this money there then in mutual funds, not that mutual funds aren't good, just not for this purpose.

As adults, our kids will be able to purchase close to $2,000,000 in insurance no questions asked. To me, that is worth every penny.

Being a CFP doesn't mean all that much other then you passed a test quite frankly.

Actually, DH is a CFP and ChFP, and has been for 20 years, and works for a large financial services company, and is salaried, does not work for commissions. He has his MBA from NYU, and teaches financial planning courses at Rutgers University part time. And yes, he does understand whole life policies.

 

[ZachnElli]

I have a $10K policy on both my kids for $3/month. If God forbid, something should happen, the policy would pay for the funeral expenses and time away from work while grieving. My DW hates that I have it, because she doesn't want to think about it. It's not an investment. It's insurance. Insurance shouldn't ever be an invesment, because if you want to invest, you should invest.

Ditto everything he said except I'm the wife and I don't hate it. $3 a month for 3 kids for $10,000 to offset any funeral costs if the worst should happen, not a bad deal to me. My dh spends more on his mocha latte!