The Gerber Grow-Up Plan is offered through the Gerber Life Insurance Company, which is part of the Gerber Products Company. The Company offers insurance products that it calls “Family Life Insurance Policies.” (1) Gerber Life offers the following different types of life insurance plans:
- Adult Life Insurance
- Term Life
- Whole Life
- Guaranteed Life
- Child Life Insurance
- Grow-Up Plan
- Young Adults
- Saving For College
- Gerber Life College Plan
The following article will focus primarily on the Gerber Grow-Up Plan. We will cover what the plan is, the benefits of the plan and possible drawbacks.
Gerber Grow-Up Plan
The Gerber Grow-Up Plan is aimed at parents, grandparents, or legal guardians who would like to purchase whole life insurance for a child from 14 days to 14 years old.
As is common with whole life, the policy builds cash value as well as providing a death benefit.
Age Requirements and Face Amounts
A Gerber Grow-Up Plan policy is life insurance for children available for kids ages 14 days to 14 years old. And a parent or grandparent can start with an initial coverage amount of between $5,000 to $50,000. As an added benefit, the plan’s insurance coverage automatically doubles when the child hits 18 years of age without any increase in the monthly premium.
Gerber Life also offers a Young Adult life insurance policy for teens ages 15-17. It is very similar to the Grow-Up Plan in that it is a whole life policy that builds cash value, with face amounts from $5,000 to $50,000 available. The main difference between the Young Adult plan and the Grow-Up plan is that you are required to call Gerber’s toll free number to apply for the Young Adult life insurance policy.
Insured Becomes Owner
As a parent, grandparent, or legal guardian, you own the policy until such time as the child becomes 21 years of age. When this occurs, the child becomes the owner of the policy with guaranteed lifetime insurance protection, so long as timely premium payments are made.
Guaranteed Future Insurability
There are four guaranteed future insurability purchase options where the insured can choose to buy additional life insurance coverage at the company’s standard adult rates. This additional coverage can be as much as 10 times the amount originally purchased. As long as the premiums are being paid, the company’s standard rate applies for the age of the insured at the time the additional insurance coverage is purchased.
Coverage Doubles at Age 18
The doubling of the face amount of the policy occurs automatically on the first anniversary of the policy after the insured turns 18-years of age. Thus, a $25,000 policy, for example, would become a $50,000 policy when the insured turned 18, while the monthly premium payments would remain the same.
Payment Protection Option
If the owner of the policy is disabled before the child reaches age 21, the Payment Protection Option (PPO) will cover all insurance premiums due. You can elect the PPO for an additional cost.
Maximum Lifetime Coverage
Any one policy has a maximum total amount of $500,000, which includes all Guaranteed Purchase Options being exercised.
Gerber Grow-Up Plan Benefits
When analyzing whether it makes sense to purchase Gerber Grow-UP Life for a child, there are a number of factors to keep in mind. As with any type of insurance, it is important to focus on the advantages the insurance provides in relation to the cost of the premiums.
These Grow-Up Plan benefits include:
Guaranteed lifetime coverage: Insurance coverage may be denied to adults who have experienced health issues. By purchasing whole life insurance for a child when he or she is young, you provide the child with the ability to maintain insurance coverage throughout his or her lifetime. If the child should develop health issues later in life, he or she will still be covered by insurance.
Unaffordable adult life insurance premiums: Even if a child is able to qualify for life insurance as an adult, these premiums are affected by a number of factors, including age, health, and type of profession. For this reason, purchasing whole life insurance for a child provides an opportunity to lock in affordable whole life insurance rates while the child is young and healthy.
Provide Financial Support: Because whole life insurance builds cash value over time, this policy can serve as an emergency reserve in times of financial need or offer another source of funds to achieve a financial goal. The ability to borrow against the policy enables you to utilize any funds available, with the option of paying back your loan down the road on your terms. The current interest rate on a Gerber Grow-Up Plan loan is 8%. (2)
Peace of mind: The unexpected can happen at any time, which is why acquiring sufficient life insurance protection is such an important part of the financial planning process. Extending this protection to cover a child over his or her lifetime offers the peace of mind that comes from having adequate insurance coverage in place.
Comparing Gerber Life and Traditional Whole Life
When determining whether purchasing a Gerber Grow-Up Plan (GGUP) policy is right for you and your child, it can be helpful to compare these policies to traditional dividend paying whole life insurance.
If you find that a GGUP policy offers desirable features not available in typical whole life policies, it may indicate that purchasing a GGUP policy is worth looking into.
A main point of differentiation between the Gerber’s child life insurance and traditional whole life policies is the face value. The Gerber product’s limitation on maximum contribution and coverage amounts means that these insurance policies may not provide sufficient coverage to meet all of an individual’s lifetime insurance and savings needs.
A point in the Gerber policy’s favor is the generally low cost of the insurance compared to the rates that might be charged for an adult insured when buying a traditional whole life policy.
Another feature that sets the Gerber policy apart is that the policy can be underwritten without the need for a medical exam. It should be noted that no exam whole life insurance is available from other top carriers as well.
The doubling of coverage upon age 18 without any increase in premium is another benefit of Grow-Up Plan not typically found with traditional whole life.
Additionally, the ability to lock-in a child’s ability to qualify for permanent insurance as an adult even if the child develops health problems is a substantial benefit of this type of insurance. Other carriers offer a guaranteed insurability option rider, which works in similar fashion to Gerber’s.
Gerber Life College Plan
As an alternative to the 529 Plan, Gerber Life offers the Gerber Life College Plan, which constitutes an endowment life insurance policy for which adults from the age of 18 to 75 are eligible, depending on which payment option is selected. These policies are intended to assist parents or grandparents build up a guaranteed amount of savings to be used for college education expenses for a child.
The Gerber Life College Plan offers three payment options: monthly, five payments, or a single payment, and enables the policy owners to contribute anywhere from $10,000 to $150,000, with a maximum of $50,000 at initial issue.
If death occurs prior to policy maturity, the full face amount minus any outstanding loan balance and interest due on the loan is paid out in a lump sum to the life insurance beneficiary or beneficiaries.
The Gerber Life College Plan pays a guaranteed benefit at the time the child enters college 10 or 20 years after the policy is purchased.
In this type of policy, the growth of the cash value generates taxable income after the policy has been in force for a few years. Money distributed from the policy is not required to be used to pay for the educational expenses of a child, instead it can be used in any way the policy owner wants.
As a result of this flexibility, the Gerber College Life Plan can double as adult life insurance by providing a guaranteed cash value amount usable for college or other purposes without limitation. Applicants are eligible to receive an instant decision at the time the application is received. The policy guarantees a fixed premium and an option to renew without a physical being required. The premium rates on the policy will never increase. No medical exam is necessary for underwriting purposes.
Gerber Life Insurance Conclusion
Gerber Life offers some pretty decent life insurance coverage for children and young adults. The main question you should have after reading this Gerber Life Insurance review is whether the Grow-Up Plan or College Plan is going to be the right choice for you.
We are here to help you answer that question. We are not Gerber Life, nor are we affiliated with the company. Our recommendation would be to contact Gerber Life and see what they have to offer. Then give us a call and see what we can offer in comparison. We represent the best life insurance companies in the U.S. and can help you make such an important decision as buying life insurance for the benefit of your children.