The Gerber Baby College Plan provides a safe, secure and easy way to help pay for college, with both guaranteed growth and the additional benefit of adult life insurance.
Planning for college can be daunting, but it doesn’t have to be! There is no right way to save and prepare. It’s all about finding what works best for your family and financial situation. We’re here to help you understand the Gerber Baby College Plan – How to Pay for College.
Check out the various savings alternatives below, which families often combine to pay for college expenses.
1: Bank Savings Account
This is a traditional method for growing your child’s savings through regular deposits. Remember that interest rates on these accounts are very low, so it will be hard to build wealth beyond what you contribute. Also, the interest earned on bank savings accounts is taxable.
2: Coverdell Education Savings Accounts
Also known as ESAs, these accounts allow you to save up to $2,000 each year for each child. This is a tax-free account, and the funds don’t have to be used for college. Savings can be used to pay for college or any K-12 expenses. Contributions can be made until your child reaches age 18 and must be spent before the child turns 30.
3: 529 Plan
This tax-free college savings plan offers two types of options: a college savings plan and a pre-paid tuition plan, each with its own requirements, benefits and limitations. The money can be invested in a choice investment options. Although the 529 Plan has tax advantages, there are penalties for withdrawing funds for a non-eligible college expense or for claiming non-education related tax credits. The 529 Plan may be subject to the fluctuations that occur in the stock market, meaning there is greater financial risk.
4: Stocks and Mutual Funds
These investments are more aggressive ways for growing your child’s college savings. They can increase in value quickly but are subject to changes in the stock market, and there is no guarantee of a payout.
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Gerber Baby College Plan
The Gerber Life College Plan is an individual endowment policy that provides adult life insurance and matures in 10 to 20 years. The money grows over time, without risk. Since you’ll know from the start the amount that your child will receive at the end of the term, planning for college will be easier.
The payout money can be used for funding higher education or for anything else, such as starting a business, or technical training, or the down payment for buying a home. In the unthinkable event that you pass away before the policy matures, your child as beneficiary will receive the full payout amount.
What’s Best for My Family?
Think about what you’re most comfortable with. Are you okay with taking on a little risk, or do you want something stable? Would you like to limit funds to college use only?
Whatever you decide, it’s best to start early. You’re protecting and preparing your child for his or her future in every other way, so it makes sense to take the final step and make sure that your child will be financially prepared as well.
Have questions about your college planning options? Call Gerber Life at 1-866-503-4487 today.
What are the Benefits of Gerber Life?
Policy Values – you can opt for a policy in the amount of $10,000 all the way up to $150,000.
Guaranteed Money – Unlike other college investment plans, which invest your money into stocks and mutual funds, the Gerber Life College Plan will never return less than what you put into it (unless you borrow against the funds and pass away prior to repayment).
Fixed Monthly Payments – you will pay a fixed installment each month during the term of the policy.
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Is Gerber Life the Best Way to Invest for College?
The answer depends on your tolerance for risk…just like every other investment on the planet. The Gerber Life College Plan could be for you if you like the idea of not losing a dime of the money you are setting aside over the long term, with the “safety net” of the insurance policy paying out the full amount if you don’t make it.
BUT, and this is a large but, if you were to simply buy a term life insurance policy for SIGNIFICANTLY less per month versus your Gerber installments and place the rest of the money in a 529 college savings plan with a reasonable rate of return, you’d have SIGNIFICANTLY more money to pass on in the event of your untimely death, and the 529 money would return quite a bit more over any period of time you measure against Gerber’s plan.
The term life policy may cost as little as $25 per month for $100,000 in coverage. If Gerber is asking you for $150.00 per month and only offering $25,000 in life coverage, you’d be paying $125.00 more for one-quarter of the life insurance coverage portion of their plan.
Now, take the left over $125.00 you saved with the term life policy and place it in a 529 college savings plan for the same 20-year period and you’ll likely earn much more money on your investment…and your child will have an additional $75,000 if you kick the bucket before you’re done saving for their college.
Do yourself a favor and compare term life insurance policies online. You’ll probably be happy to see you can obtain similar coverage for a tenth of the cost of the Gerber Life College Plan and have a ton of money left to invest in the 529 plan, which will likely at least keep pace with inflation for goodness sake.