The Gerber grow up plan for college promises guaranteed growth and the flexibility to use the money to pay for college or other expenses. But, the investment earnings are taxable and do not keep pace with college tuition inflation. The Gerber Life Insurance College Plan also offers inferior performance as compared with the return on investment available on FDIC-insured Certificates of Deposit and 529 college savings plans. Continue reading below for better understanding of the Gerber grow up plan for college.
What is the Gerber Grow-Up Plan?
The Gerber Grow-Up Plan is a whole life insurance policy specifically for children. As the name implies, the policy will cover your children for their entire lifetime. Although it’s very unlikely that your child will pass away anytime soon, it’s comforting to know that there is a financial safety net in place should something happen.
Coverage is available from $5,000 to $50,000, and parents or grandparents can apply for it. The policy must be purchased when the child is between two weeks and 14 years old. When the child turns 18, the coverage amount doubles. When they turn 21, they will become the policyholder. Since the Gerber Grow-Up Plan is a whole life insurance policy, it offers the option to build cash value. Some people like to use this to save money for college or other future prospects for the child.
The Gerber life insurance grow up plan is absolutely a worthwhile investment.
You’ll have insurance protection so that if your children or grandchildren were to pass away, it would provide a quick cash payout to cover their funeral costs.
In addition, the insured children will have the guaranteed option to purchase additional life insurance later in life regardless of their health circumstances at that time.
What is Gerber Life College Plan?
Gerber Life’s College Plan is not a traditional college savings fund, like a 529 plan, but is rather an endowment life insurance policy. An endowment policy builds cash value at a guaranteed rate and has level premiums, similar to a whole life insurance policy.
However, unlike a whole life policy, coverage with an endowment policy lasts only for a fixed number of years. If you pass away during the period of coverage, your beneficiaries would receive the entire face value of the policy. If, however, you live longer than the period of coverage, you receive the policy’s face value which, at that point, would equal its cash value.
Gerber College Plans come with face values between $10,000 to $150,000, and are priced according to your health, since you’re the one who’s insured for the length of coverage.
Gerber’s endowment life insurance policy is called a College Plan, on the assumption that you’ll use the policy’s proceeds to pay for your child’s education. As an endowment life insurance policy, however, Gerber’s College Plan has several key differences compared with other college savings alternatives, such as 529 plans. Here’s how it’s different:
- The premiums are not state tax-deductible.
- You cannot choose how your cash value is invested; rather, the policy’s value at maturity is guaranteed.
- Endowment life insurance isn’t considered by colleges in financial aid calculations.
- You’re free to use the proceeds however you choose, not just for educational expenses.
While the College Plan provides life insurance coverage, it doesn’t have all the benefits of other life insurance policies. The biggest distinction is that your cash value investment gains are not tax free, which reduces the policy’s overall benefits. Considering the policy’s returns are fairly low, simply buying term coverage and investing in an alternative college savings account would probably be more lucrative.
To illustrate, say you’re a 35-year old father who just had a child and wanted enough money to pay your kid’s college costs 20 years from now. Gerber’s College Plan would charge $436.02 per month for a guaranteed coverage amount of $131,000. Over a period of 20 years, you would have paid $104,645 in premiums. Subtracting those premiums paid from the policy’s coverage amount yields a gain of only $26,355 before taxes. That figure represents an average rate of return over that period of only 2.1%, and even that yield would be further reduced after taxes are included.
Gerber’s College Plan might be a good option only if you’re concerned about your ability to consistently contribute to a college savings plan or are extremely risk-averse. Returns are guaranteed and, in the event you have an emergency and need access to money, you can either access the policy’s cash value through a loan or by surrendering the policy.
Policy loans come with an 8% interest rate, but you’re free to keep the money as long as is needed. Surrenders come with large fees initially, and typically no cash value is accumulated for the first three years of coverage. That said, once you pass the policy’s midway point, you are able to recoup the sum of all premiums paid.
Gerber Grow Up Plan For College – Everything you need to know
From the minute your little one was born, you’ve had larger-than-life plans for baby. If a college education is part of that plan, now is a great time to learn the ins and outs of the Gerber Life College Plan. Continue Reading to know why:
1: Family protection today, a financial head start for tomorrow: The Gerber Life College Plan is an individual endowment policy that provides adult life insurance coverage for parents for a specified period of time chosen by you – between 10 and 20 years. At the end of that term, you’ll receive a guaranteed payout for your child. You can use the money to cover your child’s college expenses or anything else that your child needs on his or her path to financial independence.
Should the unthinkable happen to you before the policy matures, the full benefit amount will be paid to your child or other beneficiary. You’ll gain peace of mind, knowing that your family has the financial protection of adult life insurance while your child is young, as well as a nest egg for your child’s future.
2: Greater financial security with a guaranteed payout: The money in your College Plan policy will grow over time, with each premium payment. When you’ve made all premium payments and the coverage term comes to a close, you will receive the guaranteed payout – which can go a long way in helping your child beat the rising debt that many young people take on after high school or college.
With whatever payout amount you choose – ranging from $10,000 to $150,000 – you’ll be able to give your child a head start, according to what you can afford.
3: Changes in the economy won’t affect the payout amount: Another great benefit is that your College Plan will not be affected by the fluctuations in the stock market, as can be the case with some other ways to prepare for college expenses. You know exactly how much you will have at maturity, as long as all premiums are paid.
4: Flexibility for your child: The Gerber Life College Plan differs from a 529 Plan or an educational IRA in that there are no restrictions regarding how to use the payout money. Your child could use it to pay for tuition, or to start a business, or for a down payment on a home – the possibilities are endless. That can be an important consideration, since your child’s needs in 10 or 20 years may be different than what you imagine for your child now – and that’s okay.
Whatever path your child decides to take, you’ll be helping to provide a head start for your son or daughter to enter the working world.
5: The sooner you start, the better: Because the accumulated value of a Gerber Life College Plan grows over time with each premium payment, it pays to think ahead. The sooner you apply for a policy, the more time that you will have to reach your desired payout amount, and therefore the smaller the amount of your monthly premium payment.
- Gerber Life Insurance Provider Portal | Get coverage for all ages
- Gerber Life eservice Login – How to Login to eService Center
- How to Login to Gerber Life Insurance as an Agent
How To Get Gerber Grow Up Plan For College
Getting a College Plan now can secure life insurance coverage for you and a guaranteed payout for your child later.
They will happy to help you determine if the College Plan is right for your family. The can Call Gerber Life representative at 1‑866‑503‑4487 to speak with a helpful Gerber Life representative, and you’ll be on your way to a better tomorrow, today.