Gerber Life Insurance Grow-Up Plan

[kelleyrn2000]

I'm just wondering if anyone here has the Grow-up plan from Gerber. In the fine print is says "loan interest rate is 8% per year" and I have no idea what that means. I was thinking about getting this for my kids, but the letter sent to me doesn't have alot of details about how it works. Can someone explain, and is this a good plan? TIA!

 

[windycitymom]

Life insurance is to replace income. Kids don't need life insurance imo. You are better off opening up a savings account/college fund for your child rather than buying whole life insurance. Adults are better off with term life insurance. There is no good reason to buy whole life insurance. Agents make more money on whole life policies which is why they like to sell it. Check with your financial planner.

 

[redlawyer]

Don't touch it with a ten foot pole. Like PP said, just open a bank account for the kids and put you money there.

 

[MrsPete]

Yep, the others are right. You need life insurance IF your death (and the loss of your income) would hurt your family. Since a child doesn't bring in salary, his death would not hurt a family financially.

Some people buy this type of insurance under the idea that it guarantees that the child will be able to have insurance when he's an adult -- IF he develop an unusual disease that'd make insurance difficult for him to obtain. The catch there is that although the company promises to insure the child, they do not promise at what rate they'll do it. It's unlikely that this company's rates would be competative for a difficult-to-insure adult.

You're better off starting a savings account for the child.

but the letter sent to me doesn't have alot of details about how it works. Can someone explain,

It works like this: You pay them money, and they keep it.

 

[angwill]

Personally, I feel if you want a life insurance policy for your kids I would ask your car/home owners insurance agency for a pay 10 for life policy. I paid $20 per month for my DS $20,000 policy for 10 years and now that it is paid off it is his for his lifetime.

 

[angwill]

The reason I bought a policy for my child is so that if something happens to him there will be no worry about funeral costs for us as parents or his wife if/when he gets married and where the money will come from when that time comes. I watched too many friends and family worry about paying for a funeral and for a total of $2400 for $20,000 policy, in my opinion, it is well worth it to me.

 

[mjkacmom]

The reason I bought a policy for my child is so that if something happens to him there will be no worry about funeral costs for us as parents or his wife if/when he gets married and where the money will come from when that time comes. I watched too many friends and family worry about paying for a funeral and for a total of $2400 for $20,000 policy, in my opinion, it is well worth it to me.

But statistically, I'd rather take the small gamble and have a lot more money in my pocket instead, having invested it in mutual funds. You'll never find a financial advisor who would suggest whole life, and even our friend, who sold us our term life insurance, agrees they're not worth it.

 

[angwill]

But statistically, I'd rather take the small gamble and have a lot more money in my pocket instead, having invested it in mutual funds. You'll never find a financial advisor who would suggest whole life, and even our friend, who sold us our term life insurance, agrees they're not worth it.

Isn't free will great. To each their own. I would not do anything different than I did. I also have investments put aside for my son besides the whole life policy.

 

[mjkacmom]

Isn't free will great. To each their own. I would not do anything different than I did. I also have investments put aside for my son besides the whole life policy.

It certainly is, and the OP wanted to know if it made financial sense, and I'm going to say that the majority of the answers will be no.

 

[ceecee]

Personally, I feel if you want a life insurance policy for your kids I would ask your car/home owners insurance agency for a pay 10 for life policy. I paid $20 per month for my DS $20,000 policy for 10 years and now that it is paid off it is his for his lifetime.

My mom did this for me as well. It was inexpensive and I was able to borrow the some of the principal with no penalty during college.

 

[angwill]

It certainly is, and the OP wanted to know if it made financial sense, and I'm going to say that the majority of the answers will be no.

Technically, if you read what the OP wrote she never asked anything about if it made financial sense.

 

[miknsusn]

OP, as others have said, your kids don't need any life insurance unless you are getting it to cover burial expenses. If this is the case, check into adding a rider onto your own term life insurance. That is probably the cheapest way to go (and what Dave Ramsey reccomends, if you care)

 

[Jen_in_NH]

I've been looking into this for my son, but haven't been able to get it yet. I know that it isn't the best financial move for savings or anything, but if I can get it started now, it will save him trying to find it as an adult. He is a Type 1 diabetic, and no one will approve him cheaply.

 

[kelleyrn2000]

Technically, if you read what the OP wrote she never asked anything about if it made financial sense.

I guess I was kind of vague in my original post. But I think the above responses have answered my questions and the more I think about it, the Gerber Plan isn't going to be worthwhile at this point. Thanks for the responses!

 

[daleswife]

I had the grow up plan for both my kids for a while. but when DH changed jobs we got more insurance for them for less money. They charge you 6.12 a month per policy for the 10K policy. and when your kid hits 21 it will double. then they can take it over and decide to get more coverage. Its really a decient policy to have. I cancelled the kids policy and got back every penny I paid them.

As far as the financial gain from life insurance on a kid. some of us dont have the funds to bury a child if need be. I know that if one of my children were to pass, Id have a hard time coming up with the money for funeral costs....At least paying that little premium a month, I have that piece of mind to know that things will be taken care of if they pass. Thats why we have the insurance on the kids, its not for the money that the policy will give us, its so we can give them the burial they deserve.

 

[Sammybeau's Mom]

Just FYI: Dave Ramsey said this was not a good thing to do.

 

[DeniseMancini]

Loan interest rate is 8% per year", means that it is a whole life policy that generates a cash value alongside the policy. If you wish to take out a loan against this cash value, it is available to you at an 8% interest. Children do not need life insurance because it is meant to replace the income of a breadwinner, and children do not earn a living. Most parents however focus on the other uses of a life insurance policy. For instance, it locks in low premiums and guarantees future insurability for kids when they become adults. You need to think over this carefully and decide if your kids need a life insurance policy, because it is a very personal decision.

Denise at AccuQuote
Disclaimer: I work for AccuQuote and this is my personal opinion

 

[j's m]

Nothing is worse than having your young child die. Add to that, the cost of the burial if there is no insurance and no savings.

It happened to my sister, her 2 1/2 year old died suddenly. Thank goodness my parents had a plot and paid for the funeral.

We don't ever want to think about things like this, but maybe sometimes we have to. Insurance isn't just for losing the wage earner.

I have no idea about children's insurance since my DS is uninsurable.

 

[MrsPete]

I'm just wondering if anyone here has the Grow-up plan from Gerber. In the fine print is says "loan interest rate is 8% per year" and I have no idea what that means. I was thinking about getting this for my kids, but the letter sent to me doesn't have alot of details about how it works. Can someone explain, and is this a good plan? TIA!

It works like this: A whole bunch of people pay into this plan, and the company makes millions. It is not a good investment.

Very few people will actually need this insurance because most American kids live to adulthood. If you're concerned about funeral costs, you can probably get a small term policy through your own employer for a lesser cost. We pay $1/month for a small burial-cost policy on our children; no matter how many children we have, it's still $1/month.

As someone else said, you buy life insurance so that if you die, the people who depend upon you will have money to replace your salary. With the exception of child movie stars and a few other individuals in unique situations, children don't earn a paycheck; thus, they don't need life insurance.

Some people say they want to get the insurance in case their child develops a disease or condition that makes him un-insurable in the future. This is another fear-technique that the insurance folks have instilled in people. Note that they guarantee that your child'll be able to extend this policy into an adult policy later . . . but they don't say what it'll cost. If your child has the bad fortune to become "uninsurable" (which really means that that insurance would cost so much that no one would buy it), they'd jack the price up so that you couldn't afford this policy either.

Insurance companies never lose.

Really, you're better off saving the money you would've spent on this policy and putting it into a college fund /emergency fund.

 

[MrsPete]

I cancelled the kids policy and got back every penny I paid them

But they kept the interest that they generated during the years that they used your money! That's where they make their big money. If you'd invested the cost of the premiums, you'd have that initial money AND more.

Like I said, insurance companies never lose.

Basic rule of thumb: When a company pushes its product heavily as this insurance plan does, you have to wonder WHY. People will seek out a product that's worthwhile and necessary. Products that aren't really necessary must be advertised -- the company has to convince you that you need it. For example, no one comes to you and tells you to buy bread and milk. You know that you need them. But companies sure do send you credit card applications left and right. Why? Because you aren't going to seek them out yourself, and they want to convince you that you need their product. Children's life insurance falls into the same category.