Gerber Grow Up Plan Review
B.A. Risk Management
Life Insurance Agent
Most Americans will recognize the Gerber Baby from a mile off. The Gerber Baby brand has been around for so long that parents and grandparents are today bringing up little ones once raised on the same baby food.
Founded in 1927, Gerber became a household name with baby food and clothing, before being acquired by Nestlé. The longevity of Gerber makes it one of the most trusted baby product brands, despite the arrival of several competitors.
Gerber’s subsidiary, Gerber Life Insurance, banks on this reputation to sell its products. The life insurance company is no less popular than the baby food company, being one of the most sought-after brands among consumers throughout the US.
But even though the insurance company has been in business since 1967, not many changes have been made to how it functions. This is the reason why the company is yet to reach the level of its competitors. Gerber Life is licensed to sell policies throughout the US as well as Canada and Puerto Rico. As of 2017, Gerber Life has approximately $50 billion in policies.
Being a life insurance company, Gerber Life offers different types of policies, both for children and adults. But the one that is the most popular is the Grow-Up Plan. The reason for its popularity is the advertisements on TV and in print, and also on social media platforms like Facebook despite Facebook going through all those issues. The hype surrounding the policy has made it more widely known than Gerber’s other policies.
As the name suggests, this is a policy for children. But as with any children’s life insurance policy, parents must first find out if the policy is worth the investment. Let us take a look at the Gerber Grow-Up Plan.
Gerber's Grow-Up plan is listed as the top choice for children in our best life insurance companies guide. Mutual Of Omaha also has a children's whole life insurance policy that should be considered as an alternative if you are interested in comparing rates. The alternative option to a whole life policy is to add a child rider to the parent's term life insurance policy.
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Gerber Grow-Up Plan Overview
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The Grow-Up Plan is a children’s whole life insurance policy, providing financial protection, building cash value, and offering the guarantee of life insurance coverage for a lifetime.
According to Gerber Life, new parents are made to believe that the Grow-Up Plan is more affordable than any other child's insurance policy. For instance, a $5,000 policy for a little boy under one year of age is as little as $3.41 per month, and for a girl, under one year of age, it’s only $2.84 per month. The company wants consumers to believe, is that the premiums never go up.
The coverage amount doubles when the child turns 18, at no extra cost. When the child turns 21, the ownership of the policy transfers to the insured, and he or she can cash out the policy if they like. Under the Gerber program, your child as an adult can also buy additional coverage at standard rates, up to 10 times the original coverage.
Parents, grandparents, and permanent legal guardians can apply for the Grow-Up Plan when the child is between 14 days and 14 years old. The company promises that as long as the premiums are paid, the policy accumulates a cash value.
Another marketing vehicle for child life insurance is that buying insurance is more expensive, so why not lock in a lower premium at an early age. Since affordability is a key factor here – $36 – $50 a year (for coverage of $5,000) is pretty cheap – most new parents are lured. But is the investment worth it? To answer this question, we must first understand if children need life insurance at all.
Is child life insurance necessary?
First and foremost, life insurance exists to compensate for the loss of income when the policyholder suddenly dies. This typically refers to adults who have an income. Any adult with dependent children, parents, siblings, or spouse, can apply for life insurance coverage, to make sure the ones that rely on their income are financially supported if anything were to happen to him or her.
Then why would a life insurance policy on a child be needed?
The loss of a child can be one of the most devastating impacts on one's life. Many parents are unable to return to work after experiencing such a tragedy.
Additionally, the average funeral cost is roughly $7,000 which some families may not have on hand.
Other reasons families consider a Gerber Grow Up plan include:
#1: The child's future insurability:
If your child develops an incurable genetic condition, it not only affects his chance of getting child insurance but also his chances of getting life insurance as an adult.
Children with disabilities have a tough time getting insurance coverage when they grow up. For instance, if a child is diagnosed with Down’s Syndrome at 18 months of age, he or she becomes ineligible for both child insurance as well as life insurance as an adult.
If there is a genetic condition that runs in the family and/or if your child might get it in the future, get life insurance for your child. It is critical.
Gerber guarantees your child the right to buy or add additional coverage to their policy as an adult.
#2: Funeral costs:
Whether from an ailment or an accident, the death of a child is always emotionally devastating and can also pose a certain financial strain on the family under some circumstances. For instance, not many families might be able to afford the funeral costs for the deceased.
This could be a financial burden on the family that is not well off or does not have any savings. Purchasing life insurance for the child offers peace of mind since the final expenses would not be a financial strain on the family if a tragedy occurs.
However, it is also relatively rare for young children to pass away. This is part of the reason why life insurance premiums for children’s policies are comparatively lower than that of adult life insurance policies.
#3: Your loss of income:
If you are the sole income earner, this puts the family under severe financial burden. While your child’s income may not be something you’d need to worry about, your income is essential.
If you need to leave your job or take unpaid leave to grieve or to take care of other responsibilities, the insurance money will help keep you going as long as you are not working.
Gerber Life Grow-Up Plan: Pros and Cons
The children’s life insurance by Gerber is more aggressively advertised than any other whole life insurance policy. Parents (or grandparents or legal guardians) only need to answer a series of questions, but there is no medical exam required. As with any insurance policy, there are some distinct advantages and disadvantages of the Gerber Grow-Up Plan. Let’s talk about the advantages first.
Benefits of Gerber Life Grow-Up Plan
Wide selection: Gerber Life Insurance Company offers numerous other policies too, besides the Grow-Up Plan. Many people prefer a whole life insurance policy that has a nice selection of coverage options. This is what Gerber does better than many other insurance companies.
For infants and young children, the Grow-Up Plan is a popular choice. There are other options too, for those who are 18 or older.
There’s a college savings plan, a traditional Whole Life Plan, Guaranteed Life Plan, Accident Protection, and Term Life Plan. If you buy life insurance for your child, the ownership not only transfers to the child after 21 but can also be turned into any of the above policies at no extra charge.
For instance, once your child is 21, he or she can either cash out the Grow-Up Plan or purchase an Accident Protection Plan or Term Life Plan instead. This is not something that many life insurance companies offer.
Trusted name: Gerber has been around for years, and has garnered enough trust when it comes to baby products. People naturally assume that Gerber is a leading name in all things related to babies, so they tend to trust their Grow-Up Plan.
Some consumers, in general, feel more confident about purchasing insurance from a company that they have known for such a long time. Gerber has been a household name for nearly 100 years, enough to instill that sense of trust and confidence in people.
Downsides of the Gerber Grow-Up Plan
Not best for college savings: A major selling point of Gerber Life is that the cash value of the Grow-Up Plan helps pay for college. But in reality, with the rising education costs, it is hard to consider this a plan that could contribute significantly towards education expenses.
Insurance Riders: A Better Way to Insure Your Child
Instead of putting money in a child's life insurance policy, you may be able to add a child to your life insurance policy. If you have good reason to be concerned about your child’s future insurability or desire child life insurance coverage and cash value is not a concern, one option is to purchase a child protection rider on your own life insurance.
A child rider is children's life insurance in that can be added to your insurance at a nominal charge. In most cases, when the child turns 25, he or she can convert the rider into full adult insurance for up to as much as five times as the original rider coverage without any medical exam. It is an affordable way to insure your child while also offering the option of turning it into permanent life insurance after age 25.